Lula tries to resume Dilma’s economic model and is contained by Centrão

The quick and firm response of party leaders against the recent proposal by the Ministry of Labor to revive the union tax reinforced the perspective that the economic agenda proposed by the Luiz Inácio Lula da Silva (PT) government, full of setbacks, was definitely shelved by Congress thanks to the resistance of the absolute majority of parliamentarians, particularly members of Centrão.

“The union tax was abolished. We will not retroact on what has already been approved”, warned the mayor, Arthur Lira (PP-AL). He and the president of the Senate, Rodrigo Pacheco (PSD-MG), had already been warning the Planalto over the last few months about the impracticability of initiatives in the opposite direction of modernizing advances, such as retreating in the independence of the Central Bank, undoing the privatization of the Eletrobras and propose revisions to the new sanitation framework and the labor and social security reforms.

After provoking deep and traumatic turmoil in social and political circles, measures adopted during the Dilma Rousseff administration (2011-2016), such as the control of fuel and electricity prices and the execution of infrastructure projects without transparency, were once again taken to the legislature and even the judiciary. But all were blocked entirely or managed to advance only marginally.

In the background, Lula tried to put the country back on the path of the so-called New Economic Matrix, a model tested during his second term and applied during both Dilma’s terms, under the inspiration of the National Development Plan (PND) from the military period. The ex-president’s state interventionism has dragged the country into uncontrolled inflation, deep recession and billionaire corruption scandals.

Despite the tragic results of this developmentalist wave, which culminated in the impeachment of Dilma Rousseff, followed by governments engaged in sanitizing and structuring the economy, Lula showed his difficulty in assimilating these facts. The first point that he challenged and seeks to transcend concerns mechanisms for fiscal discipline, as PT governments precede the spending ceiling.

For analysts and politicians consulted by the People’s GazetteLula’s anxiety to use resources from the Treasury and from public banks in works, step on the accelerator of public machine spending, including opening vacancies and salary adjustments for civil servants and nationalizing whatever is possible succumbed once and for all to market resistance finance and Congress, which today has a predominantly center-right profile.

For opposition leader, government insists on repeating past mistakes

Almost eight months after Lula 3, the president’s desire to provoke economic expansion in an artificial and unsustainable way continues to be contained. “The PT government is repeating the mistakes it made in 13 years, with the retrograde agenda it has always had: instrumentalization of Petrobras, political use of Eletrobras and BNDES, equipping multilateral organizations such as Banco dos Brics to finance infrastructure in countries with affinity ideology, non-compliance with fiscal targets, among other barbarities”, said senator Rogério Marinho (PL-RN).

For the opposition leader in the Senate, the few advances made in the economy this year are precisely due to reforms implemented by the governments of Michel Temer (MDB) and Jair Bolsonaro (PL), of which he was Minister of Regional Integration. According to him, the recent reduction in the basic interest rate was possible thanks to the successes of the monetary authority, which became independent in recent years and under the command of Roberto Campos Neto, under strong pressure from Lula since he returned to power, with the support of left-wing allies. .

Marinho recalled that the current Administration commits serious mistakes even before the inauguration of the President of the Republic, when the approval, in December 2022, of the constitutional amendment named PEC Fura-Teto, which added almost R$ 200 billion in expenses to this year’s Budget , increasing the public debt to 75% of the Gross Domestic Product (GDP).

“It is the same method used before by Lula and Dilma: to increase spending excessively and with no prospect of revenue, generating in the medium term inflation, unemployment, unfinished works, stagnation and loss of confidence”, summarized the senator. Rapporteur of the labor reform in the Chamber, approved in 2017, Marinho classified the idea of ​​reintroducing the union tax with a tripled impact of “absolute regression” and “resurrection of the Peguismo”.

BNDES changes governance and stops returning resources to the Treasury

A feared shift in favor of returning to the New Economic Matrix after Lula’s election was directly related to the governance of the National Bank for Economic and Social Development (BNDES). Used to transfer subsidized Treasury resources directly to countries ideologically aligned with the PT and to large economic groups chosen at discretion, the so-called national champions, the financial institution had been recovering since 2016. But the handover of its command to PT economist Aloizio Mercadante, guaranteed by a legal challenge, began a process of dismantling this reconfiguration.

The BNDES’ accounting profit in the first half was R$ 9.5 billion, a 61% drop compared to the same period in 2022. In addition, last year the bank returned R$ 72 billion to the Union’s cash in advance . “We are trying to reduce transfers to the Treasury”, said Mercadante in the presentation of the results in August. He intends to pay the government only 25% of profits in dividends, focusing on disbursements. “Most development banks don’t pay,” he explained. The first announcement of infrastructure financing by the Brazilian government this year was precisely a gas pipeline project in Argentina.

The biggest showcase of the PT’s economic policy, the Growth Acceleration Program (PAC) also returned, launched in August, after postponements. With expressive numbers, the varied and ambitious portfolio of investments still does not have its financing guaranteed, amidst the lack of definitions regarding the Federal Budget in the coming years. The first two editions of the PAC left 4,500 works unfinished. The government’s promise to invest BRL 1.7 trillion through the program depends on private appetite, as only BRL 371 billion (21.82%) will come from the Budget.

PAC 3 depends on the interest of private capital to take off

While admirers of Chinese state capitalism, such as the recently sworn-in president of the Brazilian Institute of Geography and Statistics (IBGE), Márcio Pochmann, see state interventionism as a path to progress, their critics point to risks with uncontrolled spending on the balance of public accounts , in addition to disorganizing markets. For Ismar Becker, a business consultant and speaker, after the Dilma administration, the country created “antibodies for populist attacks”. “The world and Brazil have changed. We will walk sideways until 2026, but without setbacks”, he amended.

The Planalto even sought ways to intervene, filing lawsuits to change regulatory agencies, tax laws, and state governance. The civil service readjustments, the end of public servants’ performance control mechanisms and the resistance against the administrative reform suggest damage to the downsizing of the public machine in the previous administration. The government rescued the rhetoric that “spending is life” and that expenses with education and health “are investments and not expenses”. The approach hides the absence of monitoring the results of these high expenses.

Even private companies, such as Vale, were the target of interventionist greed by Lula 3, who wants to nominate former Finance Minister Guido Mantega as president. On the other hand, its proposal for a new fiscal framework, approved by the Chamber this Tuesday (22), is still tied to expectations of revenue gains without solid guarantees.