Lula’s projects will have to cross “minefield” in Congress

After 100 days in office, President Luiz Inácio Lula da Silva (PT) will leave this Tuesday (10th) towards the long journey to China, leaving government initiatives still dependent on the moods of parliamentarians to advance. Still having difficulty in conquering a solid parliamentary base and moved by the obsession with obtaining extra resources from the federal budget to carry out public works, the PT finds a “political minefield” in Congress, with more obstacles than openings to approve priority matters, such as the reform tax and regulatory changes.

The first and most complicated part of this “political minefield” in Parliament comes from the PP and PL opposition parties. They make explicit divergences especially about the government’s economic agenda.

Against Lula’s wishes, the rapporteurship of the Joint Budget Commission (CMO) in Congress went to deputy Luiz Motta (PL-SP). This could make approval of Planalto proposals more difficult.

The rapporteur for the new fiscal framework, replacing the spending ceiling, is, in turn, with deputy Claudio Cajado (PP-BA) and the tax reform is, for now, with Agnaldo Ribeiro (PP-PB), in the special commission. Both agendas may or may not guarantee the “political survival” of Lula’s government.

To overcome their challenges, government organizers will have to work extra hours and try to guarantee the confirmation of the proposal presented by the Minister of Finance, Fernando Haddad, to create a new mechanism for controlling expenses.

The mayor, Arthur Lira (PP-AL), has already stated that the project requires “adjustments and negotiations”. “It would be contradictory for the opposition to vote against the fiscal anchor”, challenged the leader of the government in Congress, Senator Randolfe Rodrigues (Rede-AP) this Monday (10) to Novabrasil FM.

Parliament resists Lula’s attacks on the State-Owned Companies Law and the Sanitation Framework

The government still faces legislative reactions against its actions to relax the State-owned Law (which makes it difficult to sponsor positions and corruption in public companies), disfigure the Marco do Saneamento (which prevented state-owned companies from operating without bidding) and toughen legislation on ownership and carrying weapons. Not to mention Lula’s impeachment requests that keep coming to Lira’s table.

In the negotiations of Lula’s agendas of interest, Congress demanded speed from the government to transfer budget resources directly to city halls. The political negotiation predicts that this transfer will take place through the so-called “Pix amendments”, created by the Transition PEC and which could reach R$ 10 billion this year. Planalto is under pressure to disburse these amounts, but has not set the schedule.

Minister Alexandre Padilha (Institutional Relations) demanded that each municipality inform the public policy in which the “Pix” budget fits, aiming at “broad transparency”. However, this does not change a fundamental characteristic of this type of transfer: it occurs without the Executive’s control.

Lula walks through “political minefield” to get approval of fiscal framework

Approving the new fiscal framework in Congress will be an important test of governance for Lula. First because time plays against it. If it is not approved this year, the 2024 budget will continue to be governed by the fiscal rules still in effect. But, the approval will require a lot of political articulation and the offer of positions in ministries, state and autarchies and federal funds.

The government is betting that, if the initiatives move forward, its accounts will come out of the red in 2025 and the debt will stabilize in 2026.

The opposition leader in the Senate, Rogério Marinho (PP-PI), stated that he will support all government proposals that are in the interest of citizens, but without giving up convictions. “The macroeconomic and regulatory reforms approved by Parliament in 2016 saved the country from insolvency, modernized the State and gave Brazilians prospects for prosperity. So we have an obligation to resist setbacks,” he said.

Arthur Wittenberg, public policy professor at Ibmec-DF, believes that, despite the proposal for a new fiscal framework having been initially well received by Congress and the market, it is still necessary to better understand its details and observe how it will be changed in voting in Congress. “The economy continues to slow down and the next steps taken by Congress will be essential to define its direction this year”, he said.

Government economic team tries to show optimism

The Minister of Finance, Fernando Haddad, has said that he is optimistic with the progress of the reforms proposed by the government in Congress. During his presentation at the BTG Pactual CEO conference in São Paulo, on the 15th, he cited as positive the reception of parliamentarians to Provisional Measure (MP) 1160/23, which allows the National Treasury to tie votes in favor of the Union within the scope of Administrative Board of Tax Appeals (Carf), court that judges appeals from taxpayers against tax assessments before the cases go to court.

This measure, however, suffers explicit resistance from deputies and senators and should be modified. In 2020, Congress approved the end of this so-called “quality vote”, which the MP edited by Lula rescued. Carf’s MP is on the list of four MPs that will be voted on by the Chamber and the Senate, after an agreement signed by the government, even without a definitive agreement on the rite of processing them in Congress. The MP for Bolsa Família, Minha Casa, Minha Vida and the restructuring of Ministries will still be considered in mixed commissions.

To effect the return of joint commissions in the regular processing of MPs, the government admitted some arrangements to enable the approval of seven of the 13 initiatives that it has made since January. “Some provisional measures will be urgent bills and others may become amendments to the other original ones. Example: the new gas allowance may be an amendment to the Bolsa Família provisional measure,” said Minister Padilha on April 4.

In this effort, the government also ended up initially giving space to the Chamber in matters that affect the reorganization of the Federal Administration and control mechanisms. Rapporteurs appointed by the parties may propose changes to the texts of the MPs. In this sense, rural deputies are already moving to reverse Lula’s changes in the Ministry of Agriculture, such as the transfer of the National Supply Company (Conab) and the Rural Environmental Registry (CAR) to other ministries.

CPIs are also elements of the “minefield”

In addition to the government’s priority projects that Congress will have to analyze, there are also critical issues to be addressed with senators and deputies, such as the imminent installation of parliamentary inquiry commissions (CPIs) and the confirmation of future appointees to replace ministers of the Federal Supreme Court. (STF).

At least on the question of vacancies in the Supreme Court, party leaders believe that Lula will have no difficulties in presenting Cristiano Zanin, his lawyer in the Lava Jato Operation processes, as the first of the two nominations he will make this year. The opposition promises to be firm in the Senate’s sabbath, but has no votes to bar it.

As part of the negotiations around governance, the Planalto closely follows Arthur Lira’s articulations to form a new party bloc in the Chamber which, if confirmed, will have the 173 deputies of União Brasil, PSB, PDT and PP. The movement seeks to face the newly created bloc with MDB, PSD, Republicans and Podemos, in a total of 142 parliamentarians. In both attacks, the PL, Jair Bolsonaro’s party and former PP ally, is isolated with its bench of 99 members.

The parties negotiating the alliance with the PP sought by Lira control seven ministries and could benefit the Planalto. The formation of the blocks aims to guarantee leadership in important projects and strengthen parties in exchanges with the government.

CPIs and public hearings create additional embarrassments

The “political minefield” also includes calls for ministers to attend public hearings in the Chamber and Senate. In all, 25 of Lula’s 37 ministers were invited. Their explanations to parliamentarians can generate new noise in the negotiation of projects of interest to the government.

There is no set date for most of the invitations, which deal with the search for information about the holders’ plans for their respective folders. The expectation is that, in agreement with government leaders in the House, most guests will attend.

In this minefield of difficulties for the government, the opposition is seeking the approval of two Joint Parliamentary Commissions of Inquiry (CPMIs). The first will deal with the acts of January 8 in Brasilia. The other aims to investigate recent events involving criminal organizations in Brazil, including the attacks in Rio Grande do Norte, with the collection of signatures to make it possible progressing since last week. Senator Eduardo Girão (Novo-CE) pointed out that “by presenting requests to investigate the truth of these two specific facts, Congress responds to a clamor from the population”.

To make it difficult for Lula’s forces to move through the “minefield” in Congress, there is still the friendly fire of the Workers’ Party. Federal deputy Lindbergh Farias (PT-RJ) not only criticizes the independence of the Central Bank (BC) in conducting monetary policy, but also opposes Haddad’s proposal for a new fiscal framework. He claims that it can inhibit government action and deepen the economic crisis.