By MARCIO ALVES DE OLIVEIRA & ROGÉRIO DE SOUZA
The package presented by Fernando Haddad at the end of November is the most recent episode of the soap opera that has been watched since the 1990s.
The neoliberal strangulation of public finances has blurred the agenda of government reforms at the federal, state and municipal levels, permanently threatening public services and employees. The spending cut package presented by Fernando Haddad at the end of November is the latest episode in the soap opera that has been going on since the 1990s.
This time it seemed like it would be different. The hipsters of Faria Lima never stop complaining: that the package took too long to come out; that the savings from the spending cuts are less than necessary; that there was no need to simultaneously announce the exemption from Income Tax (IR) for those who earn up to R$5,000 per month; that taxing the super rich will cause the wealthy to flee the country, etc. Characterized by being an economic niche associated with speculative capital, rentiers, investing in tax havens via offshore and disguised swindlers of the public budget[I], the shouting of the wealthy Faria Lima crowd resulted, on the left, in a slight enthusiasm for the federal government's economic measures.
Proposals to tax the super-rich who earn more than R$50 per month, that is, more than R$600 per year, by up to 10%; prohibition on the creation, increase or extension of tax benefits (tax exemptions), which currently total more than R$500 billion; budgetary limitations on subsidies and grants; ceiling on the growth of mandatory parliamentary amendments; etc.[ii], are welcome, but fall short of expectations and possibilities. Many super-rich have long resorted to the subterfuge of pejotização to avoid paying taxes due and, on average, pay less than 5% of the amount received. This is different from the middle class, which pays, at most, 27,5% per month. Therefore, the proposal to tax this corruption at less than two digits seems like a timid measure.[iii], made up of white and rich people, who call themselves CASE Of success.
At the same time that different sectors of the economic elite complain about federal government income transfer programs such as Bolsa Família, they are enjoying tax exemptions and various subsidies, such as the tax breaks that the leisure sector has achieved in the context of the pandemic and that now “does not want to let go of the bone”. The shady practice of the secret budget, which, as Jessé Souza argues, is a form of corruption that the mainstream media chooses not to call it, should end.[iv] The government's spending cuts package even follows international guidelines to tax those who earn more, but it does not mention a single word about auditing the public debt, a historic proposal by the Brazilian left and an action that would certainly result in savings of billions of reais. It also does not mention taxing the assets of the super-rich, especially inheritance taxes, as is already the case in several countries around the world.
However, the same tenderness is not seen when it comes to instruments for monitoring public policies aimed at vulnerable groups. Increasing the minimum wage above inflation, combined with GDP growth in the previous two years, has proven, over time, to be an essential instrument for reducing inequality in Brazil. Studies by IPEA have revealed the impact of this public policy on improving income distribution in the country.[v] However, the spending cuts package imposes a kind of brake on this growth. It lowers the ceiling to levels that are in line with the Fiscal Framework. In other words, it conditions the increase in the minimum wage to inflation, plus a limit of up to 2,5% of GDP, even if the latter shows a higher increase. A center-left government cannot ignore the idea that the working class has been advocating for decades that the minimum wage necessary to support a family of four should be, according to DIEESE, R$6.769,87 or 4,79 times the minimum wage of R$1.412,00.[vi] With the approval of the spending cuts package, the minimum wage, which in 2025 would be R$1.521,00, will go to R$1.515,00. A plunder of R$72 per year from vulnerable groups.
Another public policy that has helped reduce inequality in Brazil is the Abono Salarial, a benefit that is equivalent to a 14th salary for those who earn up to two minimum wages (currently R$2.824,00) with a formal employment contract. The federal government seems to see this practice as an “unnecessary treat” for the survival of the lower classes, and proposes to reduce, over the years, the monthly income of the contingent that will be entitled to receive the Abono Salarial to one and a half minimum wages.
With the justification of “fine-tooth combing” social programs, the federal government is falling into the trap of saying that the main problem with public accounts, that is, the obstacle to the country’s development, is the corruption of the lower classes, especially those who misappropriate the nation’s money.[vii] There is an emphasis on scrutinizing social programs such as the world-renowned Bolsa Família, which currently serves 54,37 million people, of which 25 million are children and adolescents from zero to 18 years of age, and an annual amount of 14,25 billion reais.[viii]; and the Continuous Benefit Payment, the BPC. Regarding the latter, in addition to pointing out possible fraud and distortions of a public policy that serves socially vulnerable groups – guaranteeing a minimum wage per month to the elderly aged 65 or over or to people with disabilities of any age – the government expands the notion of family, that is, non-cohabiting spouses and the income of cohabiting siblings, children and stepchildren (not just single people) now count towards access to the aid. People from the lower classes with disabilities and older people generally live with relatives in the same house or on the same land with some housing – there are daughters, grandchildren, great-granddaughters, etc. living there. Therefore, there is a serious risk that this “fine-tooth comb” in public policies for income distribution will become a justification for not granting the benefit, resembling the practice developed by the neoliberal governments of the 1990s.
The spending cuts package specifically affects privileged groups, but at least a third of them are being applied to the most socially vulnerable, and this is in a fragile social context that still requires urgent reconstruction of the social fabric torn apart in the last decade, especially after the 2016 coup and Bolsonaro's disastrous government. Furthermore, it indicates, once again, that public policies aimed at the lower classes are necessarily permeated by fraud and deceit. This same moralizing impetus is not discharged in the "fine-tooth comb" of public policies that are known to be consumed by fractions of the economic elite. The corruption case involving Americanas stores and one of the richest men in Brazil reaffirms, once again, that players of prey do not live in the outskirts, hills and slums.
As explained on the budget dispute board, the mandatory spending cut package only aims to give life to the moribund Fiscal Framework through actions that meet the wishes of those who historically appropriate public money and boycott Brazilian society.
It is necessary to broaden as much as possible, according to the possible political openings, this real dispute for a broad and structural social reform that reverses the flow of appropriation of wealth produced by the working class. In this sense, we must throw open the door opened by the correct government proposal that, via Income Tax, will transfer 30 billion a year from the richest to 30 million workers who earn between 2 and 5 minimum wages, which could quickly close in the current unfavorable neoliberal political context.
In other words, to reveal the need for a left-wing reform that prevents the draining of public resources to the so-called market, with: the restructuring of public accounts through the tax re-burdening of private companies that continue to suck on public money; the reduction of the interest rate that drains 30 billion per year for every 1 Selic point and that, according to reasonable criteria, should be 2 to 4 points lower than it is today; the dismantling of the rentier mechanisms that suck more than half of the budget through public debt; the real and increasing taxation of the rich; the audit of the Public Debt.
To this end, left-wing social movements must enhance the fruitful paths presented as the fight to end the 6X1 scale, combating the high precariousness present in the world of work and bringing the issue of the 4-day workday to the horizon of more structural changes, thus also operating politically in the necessary concrete ideological dispute against a neoliberal society that is becoming fascist.
The political struggle for social justice through income redistribution in the broadest possible sense must urgently focus on the high level of social precariousness, with the rich paying the price for the profound social imbalances that they themselves have created. Never fall into the trap of “blaming the poor for Brazil’s problems.”[ix] The deception of the predatory and selfish economic elite needs to be called out, not with tenderness, but with firmness.
*Marcio Alves de Oliveira is a professor of philosophy at the Federal Institute of São Paulo (IFSP).
*Rogério de Souza He is a professor of sociology at the Federal Institute of São Paulo (IFSP). He is the state coordinator of the National Union of Federal Employees of Basic, Professional and Technological Education (SINASEFE-SP)..
Notes
[I] SOUZA, Jesse. The Late Elite. From slavery to Lava Jato. Rio de Janeiro: Leya, 2017.
[ii] BRAZIL. Bill No. 210 of November 29, 2024. Amends Complementary Law No. 200 of August 30, 2023, which establishes a sustainable fiscal regime to ensure the country's macroeconomic stability and create adequate conditions for socioeconomic growth, and contains other provisions. Available at: https://www.camara.leg.br/proposicoesWeb/fichadetramitacao?idProposicao=2473389.
[iii] SOUZA, 2017.
[iv] Ibid.
[v] IPEA. Income inequality in Brazil: an analysis of the recent decline. Available here.
[vi] DIEESE. The cost of the basic food basket increases in all cities. Technical note. Available at: https://www.dieese.org.br/analisecestabasica/2024/202410cestabasica.pdf.
[vii] BRAZIL. PL No. 4614 of November 29, 2024. Amends Law No. 8.171 of January 17, 1991, Law No. 8.742 of December 7, 1993, Law No. 10.633 of December 27, 2002, and Law No. 14.601 of June 19, 2023, establishes provisions for public policies, and makes other provisions. Available at: https://www.camara.leg.br/proposicoesWeb/fichadetramitacao?idProposicao=2473375.
[viii] BRAZIL. 2023 is the year with the highest average number of beneficiaries, average value and federal investment in the history of Bolsa Família. Available here.
[ix] SOUZA, Jesse. The poor right-wing. The revenge of the bastards. What explains the adhesion of the resentful to the extreme right? Rio de Janeiro: Civilização Brasileira, 2024.
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