frame trap. By Jefferson Meola

For a government that does not have a strong and lasting instrument of popular support, the performance of the economy becomes a key factor in governance.

In the Brazilian context, the compromise of governance carries greater and more dramatic risks than the “simple” wear and tear and loss of Lula’s popularity: the destruction of democracy as the far-right and fascism return to power.

The oligarchic military coup that overthrew President Dilma is an instructive resource for education about the dangers of the death of democracy in economic distress scenarios faced by a popular democratic government.

Fatal to Dilma’s mandate, which saw her social base of support evaporate as a result of the pernicious effects of fiscal austerity, Joachim Levi’s agenda of financial saviors and market god killers carried out by Joachim Levi’s abandonment of a policy of social development. Policy.

Proposal for a new financial framework [NAF] Finance Minister Fernando Haddad incorporates the risks of great difficulties facing Lula’s government similar to those faced by Dilma in the context of the 2015/2016 coup plot.

In the publication “Four Roofs and a Funeral: The New Financial Framework and Minister Haddad’s Social Liberal Project”, Professor Pedro Paulo Zahlout Bastos, from the Unicamp Institute of Economics, explains that it is necessary to amend this proposal so that the framework is not modified. It became a death trap for the Lula government.

Pedro Bastos warns that “contrary to what Minister Haddad and other members of the economic team claim, NAF does not guarantee a ‘balance’ between fiscal and social responsibility, rather it is a potential contradiction that can only be avoided in the short term. In the medium term, there is no escape. of contradiction (with mathematical certainty).

The economist asserts that “NAF reaffirms the neoliberal logic of the old spending cap […]because it implicitly specifies that public spending will grow below economic growth, unless the tax burden increases from year to year.

From his point of view, the proposed fiscal rule already has several ceilings: one of them limits the growth of primary public spending to 70% of the change in tax revenues, and guarantees the other 30% to debt service; and the other cap, which “caps spending growth to a rate of 2.5% annually if tax revenue grows by more than 3.57% annually.”

Bastos understands that NAF sets the third ceiling as the “goal for the primary outcome of public accounts,” which is “mobile and tougher over time.” Finally, he cites the fourth ceiling, which “specifies that public spending cannot grow by more than 0.6% annually when annual tax revenue growth falls below 0.86%, which tends to occur under cyclical slowdowns leading to recession.”

If NAF standards were in place in the first Labor governments, the growth of social expenditures that ensured the massive success and popular affirmation of Lula’s government would be limited to less than half the norm now proposed by Haddad: “Public spending grew 5.3% per annum (more than double the maximum that would allow It has the National Aid Fund, which is 2.5%), while social benefits grew 6.6% annually, and public investment 8.5% annually, driving private investment, he explains.

In addition, the NAF may make it difficult to implement the rule of real increase in the minimum wage according to GDP, as this positive policy automatically increases expenditures with the retirement of the INSS and pensions.

With the short cap on the set of public expenditures, Treasury Secretary Ruggero Cerrone has already suggested the possibility of the government proposing a constitutional amendment to abolish the mandatory constitutional minimums for the SUS and for education, which is totally unacceptable.

Although such expenditures with health and education were exceptional from the NAF ‘ceiling’, they may still suffer from the effects of the proposal, due to pressure for limited public resources to be reallocated by the NAF in other essential areas, such as housing and sanitation. infrastructure, science and technology, social assistance, etc.

It is appropriate that the Lula government thoroughly review the NAF proposal before it is sent to Congress. Primary surplus and limits on public spending and investment are neoliberal dogmas that serve the interests of finance, but prevent growth capable of meeting the urgent needs of the vast social majority.

For the rule of the Lula government and the survival of democracy, correct economic and monetary policy is essential to prevent coup attempts by oligarchy that do not have an established commitment to democracy.

As Pedro Bastos asserts in his work, “Neoliberalism did not bring social harmony and a spectacle of growth, but rather social exclusion, low growth, disillusionment with democracy and the return of fascism with new masks.”

Join our WhatsApp group, Click on this link

Join our Telegram channel, Click on this link