This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.theguardian.com/world/2016/dec/13/brazil-approves-social-spending-freeze-austerity-package

The article has changed 9 times. There is an RSS feed of changes available.

Version 1 Version 2
Brazil senate approves austerity package to freeze social spending for 20 years Brazil senate approves austerity package to freeze social spending for 20 years Brazil senate approves austerity package to freeze social spending for 20 years
(35 minutes later)
Brazilian senators have approved a 20-year social spending freeze described by a senior UN official as the most socially regressive austerity package in the world. Brazil’s senate has passed a controversial spending cap that will limit public spending to inflation for the next 20 years, despite protests in at least eight states and the Federal District of Brasília against the measure.
The senate approved the cap on Tuesday by a 53-16 margin, though leftist opponents of the austerity measure sought to delay the vote as long as possible. The spending cap, known as PEC 55, will now be signed off on 15 December.
Senators must still vote on some details of the bill, such as requests to exempt education and health spending from the cap, which are expected to be rejected by lawmakers. Its approval was seen as vital for the beleaguered government of centrist President Michel Temer who took over from the leftist Dilma Rousseff, after a divisive, eight month impeachment process was concluded in August.
President Michel Temer – who came to power after engineering the impeachment of his former running mate, Dilma Rousseff – has argued that the spending cap is essential to improve Brazil’s credit rating and ensure economic recovery. Temer has staked his government’s credibility on measures to reduce public spending – which soared out of control under Rousseff as Brazil sunk into a debilitating recession – and his ability to control the bickering parties in an unruly congress.
But last week, the UN special rapporteur on extreme poverty and human rights, Philip Alston, described the plan as an attack on the poor – and a violation of Brazil’s obligations under the International Covenant on Economic, Social and Cultural Rights. “Today was a show of force that Temer still has a majority in congress to approve these reforms,” said João Castro Neves, Latin America director at Washington DC-based consulting outfit Eurasia. “From a more market perspective it’s also a victory cause it’s a first step towards a more sound fiscal framework.”
“This is a radical measure, lacking in all nuance and compassion,” he said in a statement on Friday. “It is completely inappropriate to freeze only social expenditure and to tie the hands of all future governments for another two decades. If this amendment is adopted it will place Brazil in a socially retrogressive category all of its own.” But the spending cap has been described by a senior UN official as the most socially regressive austerity package in the world, while Brazilian leftists argued that it will damage the country’s already fragile health and education systems. In a poll published Tuesday by the Datafolha polling institute, 60% of Brazilians said they opposed it.
Authorities braced for protests outside Brazil’s congress organized by labor unions and leftwing groups opposed to cutbacks. They say they will undermine education and health services and will hurt Brazil’s poor. “The poor have woken up,” Leonardo Sakamoto, a popular commentator, wrote on his blog on Tuesday. “They have realized that they will have to pay someone else’s bill for the economic crisis with the gradual reduction in quality of public services, which they are dependent on.”
Police frisked young men and women as they arrived at Brasilia’s ministry-lined esplanade and seized pen knives, slings and marbles used by protesters to unbalance police horses. Marcelo Freixo, a deputy in the Rio de Janeiro state assembly for the Socialism and Freedom party, said the rich should pay more of the bill for Brazil’s economic crisis.
The unpopular constitutional amendment limits the growth of federal government spending to the rate of inflation for 20 years, with a presidential review after a decade. It cleared the senate in a 61-14 vote in the first of two votes on 29 November. “We defend the taxing of great fortunes; taxing of inheritance; debt collection of big tax dodgers and the end of tax breaks for bankers,” Freixo tweeted. Despite huge gaps between rich and poor, Brazil’s highest rate of income tax is just 27.5%.
A Datafolha poll on Tuesday showed that 60% of Brazilians oppose the cap. The survey, published by the Folha de S Paulo newspaper, said opposition was strongest among young people, those with higher education and lower-income Brazilians, while the rich tend to support it. Violence broke out during protests against an earlier vote on the spending cap on 29 November, when demonstrators overturned chemical toilets outside congress and set fire to barricades.
Temer’s government has also sent congress a proposal to reform Brazil’s costly pension system, without which economists say the spending cap will not by itself restore fiscal balance. More protests can be expected, said Vitor Guimarães, a national coordinator for the Homeless Workers Movement, a leftist group that opposed the impeachment process by blocking roads and occupying public buildings.
Pension reform is expected to face fierce opposition next year as unemployment rises and the country’s worst slump since the 1930s Great Depression threatens to stretch into a third year. “Social movements will keep up the struglge,” he said.
Temer is already under fire over allegations that he sought illegal campaign donations from a huge construction company deeply involved in a multi-billion pound corruption scandal at state-run oil company Petrobras.
Senate president Renan Calheiros, a member of the same centrist party, is clinging on to his job after being charged on 12 December by Brazil’s prosecutor-general for corruption and money laundering. He was suspended by a supreme court judge on 5 December after being indicted in a separate corruption case the decision was reversed by the court two days later.
“Your excellence is only in this chair because of PEC 55,” Lindbergh Farias, a senator for Rousseff’s Workers’ party, told him during Tuesday’s session, in comments reported by the Congress in Focus site, a watchdog.
Temer’s government said minimum health and education spending would be preserved. The budget increase for 2017 will be 7.2%. The government also said Temer had telephoned US president-elect Donald Trump on Tuesday, who congratulated him “for the reforms and measures to promote the growth of Brazil”.
Temer indicated he was determined to press on with the next of his austerity measures – a detailed reform of Brazil’s generous pensions system, in which some professions can retire as young as their late 40s.
“Are there conflicts and problems in the country? There are. But we can’t let this paralyze Brazil,” Temer tweeted on Tuesday.
Castro Neves said that the spending cap was harsh but argued it would force a much-needed debate on Brazil’s bloated public spending, much of which is fixed in law. And adjustments can be made down the line, he said.
“Brazil’s budget is too rigid. You have a lot of mandatory spending,” Castro Neves said. “It’s going to create that debate because trade-offs are becoming to become more evident. There’s no free lunch.”