Fiscal framework: result does not reflect Lula’s base – 05/24/2023 – Market

There was no strong resistance to the fiscal framework project when the text was presented. The mayor, Arthur Lira (PP-AL), indicated a quick vote, while centrão leaders asked for specific adjustments and mentioned praise from the financial market for the work of Fernando Haddad (Finance).

The political game, then, began to have greater weight in defining the path of the proposal. The risk was that the centrão wanted to use this vote to send another message to President Luiz Inácio Lula da Silva (PT) of dissatisfaction with the pace of release of positions and amendments.

Behold, Lira worked as a safeguard for the government. The mayor asked allies —who represent the majority of votes– to spare the fiscal framework from political issues and give the market directions for the country’s public accounts.

To approve the project, Lula then made corrections to the articulation, but he had to spend little. He has so far released fewer amendments than in previous years. And it was not necessary to be directly involved in the negotiations.

The alliance with Lira for the new fiscal framework, which began during the transition of government, gave Planalto the necessary security in the vote.

The score of 372 votes to 108, announced on Tuesday night (23), was celebrated by the Lula government, but does not reflect the president’s political strength within the plenary. The result exposes, once again, an alignment of Congress with financial market agendas, and, therefore, not necessarily with Lula.

The bill from the Chamber to Planalto will still arrive and, probably, with an additional charge.

The hard core of Lula’s political base cracked. Pressured by the president, PT supporters supported the proposal – but some voted resentfully. PSOL and Rede, which have ministries, were against the text.

A few weeks before the vote, Lira sent the message to Planalto that the government’s task was to control attacks from the left on the project and that, thus, the votes in the Chamber for approval of the text would be guaranteed.

The government operation managed to tie all the PT votes – but it did not prevent criticism from members of the bench to the fiscal measure.

The poll also showed that the left has limited breath.

The framework would be approved by more than 300 votes even if the 23 PT deputies who signed the document against the project and the entire caucus closest to Lula (Avante, PCdoB, PDT, PSB and PV) adopted the same posture as the PSOL and the Network – of rejection of the text.

The proposal for the fiscal rules was reported by an ally of Lira, deputy Cláudio Cajado (PP-BA). The significant balance of approval was achieved with the support of the PP (39 votes), Republicans (34 votes) and part of the PL (30 votes), the party of former President Jair Bolsonaro.

Since the end of last year, Planalto’s political articulation has flirted with wings of these parties, which were allied with the previous government, and whose votes may migrate to Lula depending on the negotiation.

In the MDB, PSD and União Brasil, which won ministries on Lula’s Esplanada, there were few dissidences.

Centrão leaders already predicted broad support from these benches to the government when there are economic votes, especially in those with more liberal direction in the economy.

Despite having a profile closer to the interests of the market, influential members of Congress were responsible for conducting, in recent years, a series of dribbles to the spending ceiling.

The country’s main fiscal anchor came to be seen by congressmen as an obstacle to investments and maintenance of the high level of parliamentary amendments.

Lira, who was re-elected as head of the Chamber with Lula’s support, has also said that, depending on the proposal in the economic area, he should work together with the government. The tax reform will be, in the coming months, the new item on that agenda.

But, immediately, the game is different. With the approval of the framework in the Chamber, the Planalto challenges are now in the political field, with open CPIs and pressure on ministers. And it will require new adjustments in the political articulation.

The mayor and the centrão want the money for the amendments, which are blocked. The money irrigates the electoral strongholds of deputies with works and projects and they gain political weight with an eye on next year’s municipal election.