Government isolates Congress and postpones the approval of the new fiscal anchor

The federal government has isolated Congress in formulating its fiscal anchor proposal and may pay the price politically for that. The Minister of Finance, Fernando Haddad (PT), surprised parliamentarians after anticipating, from April to March, the presentation of the complementary bill (PLP) that suggests the replacement of the current spending ceiling.

Party leaders and deputy leaders in Congress are unaware of the content of the proposal prepared by Haddad. Although it is the prerogative of the economic team of any government to propose and submit proposals without an open dialogue with parliamentarians, political leaders like to be consulted and participate in debates, especially structuring agendas such as the new fiscal framework.

Federal deputy José Nelto (PP-AL), vice-leader of the party in the Chamber, maintains that its leader, André Fufuca (MA), and other party leaders from center and center-right parties are not aware of the content of the proposal, nor do they participate in meetings with the economic team. “Unless you’re only debating with your party, the PT, but I don’t think even the PT participates in this debate”, he says.

In conversations with other leaders of the Chamber, Nelto understands that there is not a climate of indignation or animosity among congressmen in relation to the government’s decision to remove Congress from the process of setting up the new fiscal anchor. But he classifies the posture adopted by Haddad and the Planalto Palace as a political mistake.

“At the very least, the government is wrong in not opening this debate earlier. This shows that it will have great difficulty in approving this fiscal anchor”, analyzes Nelto. “If he was already discussing with leaders of the National Congress, he would find it easier and would reduce the period of debate, processing and approval”, he adds.

Isolation of Congress may nullify Haddad’s signal to the market

The surprise generated by Haddad to parliamentarians occurred after a speech at an event by the BTG Pactual bank. “We’re going to probably announce in March what we understand is the proper fiscal rule for the country,” she announced on Feb. 15. At the same event, the president of the Chamber, Arthur Lira (PP-AL), warned that “a radical text for one side or the other will not be successful in the plenary of Congress”.

Political scientist Enrico Ribeiro, managing partner of Consillium Soluções Institucionais e Governmentamentais, considers Haddad’s comment as a clear signal to the market. “Concentrating the text on the Executive and on the economic team and bringing the presentation forward to March demonstrates to the market the government’s commitment to maintaining fiscal stability precisely at a time when the readjustment of civil servants, the beginning of the tax reform and the fuel issue will be discussed” , comments.

As the wording of the ceiling-breaking PEC requires Planalto to send to Congress a complementary bill for the institution of a new responsible fiscal regime by August 31 of this year, the anticipation of the deadline to March reflects Haddad’s expectation of receiving a positive signal from the market, assesses Ribeiro. As the discussion is linked to the tax reform, which the economic team expects to approve in the first semester, the gesture of the head of the economic team suggests that the fiscal framework could also be approved in that period.

Likewise, Lira’s speech can also be interpreted as a warning to the government. Ribeiro admits that, in part, the decision of the economic team to remove Congress from drafting the text is dangerous. “It doesn’t give the government a predictability of what may come out of Congress beforehand. Bringing parliamentarians and leaders to discuss before sending is always in good shape in a coalition government, because it allows creating the most favorable conditions and environments quickly. and certainty”, he comments. “But nothing indicates that the government will not do that”, he adds.

Without participating in the debate, congressmen analyze that the approval of the new fiscal anchor could be left for the second half of the year and, consequently, nullify Haddad’s signals to the market. “This is a broad debate of 90 to 120 days. It is a debate of 90 to 120 days, in which Congress will work on this project listening to civil society, economists and governors. The project will have a long way to go” , assesses congressman José Nelto.

Deputy Gilson Marques (Novo-SC) also understands that the approval of the proposal in Congress is for the second semester. “From my experience of a structuring reform, such as the Social Security, as the fiscal anchor is very intertwined with the tax reform, there should not be enough time for the first half, despite being the objective of Bernard Appy [secretário do Ministério da Fazenda]. But I imagine it’s possible in the second half,” she says.

How is the processing of the new fiscal anchor in the National Congress

As the government detains the initiative for the proposal, deputy Celso Sabino (União Brasil-PA) naturally assesses the decision to restrict, formulate and organize the terms and texts of the new fiscal framework based on the analysis of its technicians. Likewise, he maintains that it will be the prerogative of Parliament to discuss the matter in its time.

“Obviously, I will also see with an even greater naturalness that the text, when it begins to be debated in Congress, is matured, re-examined and perfected by congressmen in the relevant committees or with a working group, if perhaps the President of the Chamber understands that it is this is the best way to proceed, or through analysis by a rapporteur who, in this case, will certainly listen to all party leaders”, he assesses.

President of the Joint Budget Commission (CMO) in 2022, Sabino points out that a likely improvement is natural to the legislative process. “We have numerous cases and examples of proposals that were sent by the government and underwent alterations in the eyes of Congress to improve the proposal”, he highlights.

Deputy José Nelto reinforces that the proposal’s processing in Congress could be shortened if Haddad promoted an opening of dialogue with the leaders. “Without any debate and prior consultation with Parliament, we will have to bend over backwards and work twice as hard”, he says. “We are going to examine point by point and call the sectors of society to a broad debate, with the opening of public hearings to do the best for Brazil in an article that will receive hundreds of amendments”, he adds.

Senators are skeptical about the hypothesis of a quick processing of the new fiscal framework. Most of those consulted by People’s Gazette preferred not to issue an opinion at this time on the subject. In addition to the proposal starting to be evaluated by the deputies, who will be able to make changes, the lack of knowledge about the general lines also weighs on the mood. Thus, say some senators, it is difficult to predict what developments the proposal will have.

“This is a complex issue that needs to be discussed exhaustively by Congress, without any haste. The Minister of Finance hinted at the possibility of approving the fiscal framework in April, but it makes no sense”, observes senator Plínio Valério ( PSDB-AM). He finds it strange that there are bets on quick approval even before the project has been sent to Congress. “In addition, when the text is being discussed in the Legislative, we, deputies and senators, will be able to make changes and revisions in the text”, he ponders.

There are still senators who understand, from now on, that the final definition of a new fiscal anchor will consume a prolonged period of debates in Parliament, even because of the possible controversies that it will bring with it. “The current government is unlikely to send a better rule than the spending ceiling. Despite having been disrespected in times of serious crisis, the ceiling has always been reliable. I think the PT will seek a framework without rigid parameters and that allows all types of spending above the Budget without legal risks for the government”, evaluates Carlos Viana (Podemos-MG).

Centralization of the debate on the new fiscal anchor reflects the lack of a majority

Leaders in Congress attribute the government’s decision to control the process of formulating the new fiscal anchor to the absence of a consolidated majority in both Houses. “I think they’re waiting to have a negotiated, bought and convinced majority to then present something interesting”, analyzes deputy Gilson Marques. “They don’t want to risk disclosing something so they don’t ‘get’ it for nothing. They will hold everything as they are holding it so, when it is safe, they can present their idiotic ideas”, he adds.

Disbelieving in the hypothesis that the government will present a fiscal anchor higher than the current spending ceiling and critical of the relationship between the government and the political parties in Congress, Marques understands that the current period is “predictable” in the midst of the beginning of a government and a new legislature. “This phase of legal or illegal, moral or immoral extortion must be happening and you don’t know at what price, it really takes a while”, he evaluates.

Deputy José Nelto disagrees with Marques’ criticisms of the relationship between the government and Congress, but admits that the Executive does not have a majority in the Chamber and agrees with the analysis that, without a consolidated base, the tendency is for the Planalto to remove leaders of the debate on the new fiscal anchor.

“I think the government can and will build [uma maioria], but he still doesn’t have it, and he knows it”, he says. “From what I have contact with in the Chamber, the appointment of ministers does not represent the deputies. The government will have to build the majority bit by bit. The deputies are not giving the slightest ball to the current ministers “, he adds.

A People’s Gazette reported in January that there is a feeling of discredit in the Chamber after President Luiz Inácio Lula da Silva’s (PT) decision to prioritize Senate nominations in the ministerial composition of his government.

“The government is late in building the base, but there was the carnival and the acts of the ‘coup plot’ on January 8, which took a lot of breath and attention [do Planalto e Congresso]. But I believe that, starting this week, we are going to focus on the formation of commissions and then the year starts for good”, says Nelto.

The feeling that the end of Carnival makes it possible to advance negotiations between the Chamber and the government is highlighted by political scientist Enrico Ribeiro when pondering the chances of processing and approving the new fiscal anchor. “The government left the political component [de discussão da matéria] for Congress. It is a way of negotiating and trying to get approval, of course with more costs and with greater uncertainty about what will be approved”, he comments.

The political analyst disagrees, however, with the view that the government does not have a majority to approve the new fiscal anchor, since, as it is a complementary bill, an absolute majority is required in both Houses, that is, 257 deputies and 41 senators. Ribeiro understands that the government has this in the House and Senate.

“It’s too early to say that he doesn’t have support, votes, or that he’s only going to send [o texto] when it has a majority”, he evaluates. In the calculations of Consillium Soluções Institucionais e Governmentamentais, the government has a potential base of 364 deputies and 51 senators.

The calculation takes into account the sum of what the consultancy classifies as the consistent support base, the parliamentarians who vote with the government regardless of anything, and the conditioned support base, which includes congressmen who vote according to the agenda or by agreements and negotiations.