Brazilians Protest Over Spending Cap Approval

EghtesadOnline: Brazil's senate has approved a 20-year public spending cap in a win for President Michel Temer's austerity reforms. The move sparked large protests with critics saying the unpopular cuts will hurt Brazil's poor.

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17 December 2016

Authorities in Brazil are bracing for more protests after the Senate passed a 20-year government spending ceiling proposed by President Michel Temer, DW reported.

The spending freeze has been billed as the centerpiece of austerity reforms which seek to control a ballooning budget deficit and revive Brazil's stalled economy.

The upper house voted 53 to 16 to pass the cap, although leftist opponents sought to delay the vote. The measure limits the growth of federal government spending to the rate of inflation for two decades with a presidential review in 10 years. The measure required two votes in the Senate and already passed the first voting round in late November.

Temer's government has already sent Congress a proposal to reform Brazil's costly pension system, which some economists say is needed to restore fiscal balance. They say the spending cap alone will not fix it.

Pension reform is expected to face fierce opposition next year as unemployment rises and the country's worst slump since the 1930s threatens to stretch into a third year.

Historic Mistake

Following the vote, an estimated 2,000 people protested the cuts in the capital Brasilia which saw clashes outside the National Congress. A bus was burned during the demonstration, and police fired tear gas to disperse the crowd.

In Sao Paulo, left wing protesters marched on the headquarters of FIESP, the country's main industrial association, before being driven back by security forces. Windows were smashed and flares fired at the building.

“There is nothing to say. You can’t just throw away or freeze the future of millions of Brazilians for 20 years. Today the senators approved a great step backwards for the whole country,” said Jose Rocha, a young protester in Sao Paulo.

Labor unions and left wing groups fiercely oppose the cuts which they say will undermine education and health services as well as harming Brazil's poor.

A Datafolha poll published by the Folha de S. Paulo newspaper on Tuesday showed that 60% of Brazilians were against the cap, Financial Tribune reported.

Rich Must Pay More

“The poor have woken up,” Leonardo Sakamoto, a popular commentator, wrote on his blog on Tuesday. “They have realized that they will have to pay someone else’s bill for the economic crisis with the gradual reduction in quality of public services, which they are dependent on.”

Marcelo Freixo, a deputy in the Rio de Janeiro state assembly for the Socialism and Freedom party, said the rich should pay more of the bill for Brazil’s economic crisis.

“We defend the taxing of great fortunes; taxing of inheritance; debt collection of big tax dodgers and the end of tax breaks for bankers,” Freixo tweeted. Despite huge gaps between rich and poor, Brazil’s highest rate of income tax is just 27.5%.

Last week, the United Nations poverty and human rights rapporteur, Philip Alston, strongly criticized the 20-year spending cap as a "historic mistake." The austerity measures put "an entire generation at risk of social protection standards well below those currently in place," he said.

Temer's Uphill Battle

Temer's economic team says the spending cap is necessary to put government accounts back in order as well as to recover business confidence in the troubled Latin American giant. Even barring the reforms Temer faces fierce public opposition.

The latest Datafolha poll shows 63% of Brazilians want Temer to resign and allow early elections. Only 10% of those polled said they thought his government was doing a good job.

Temer's government has already sent Congress an equally unpopular proposal to reform Brazil's pension system, as some economists say the spending cap alone will not restore fiscal balance.