Bolsonaro Drops ‘Brazil Income’ Plan; Threatens to “Red Card” Economy Team

RIO DE JANEIRO, BRAZIL – President Jair Bolsonaro, in another chapter of public criticism of Paulo Guedes, the last “super-minister” still in his cabiner, summarily dismissed the creation of Renda Brasil (Brazil Income), a program studied by the economic team to be a substitute for the Bolsa Família when the payment of the emergency aid to those affected by the Covid-19 pandemic ends.

In a video released on social media on Tuesday, September 15th, the President stated that those who propose to suspend the retirement plan reform to enable the project “have no heart”, implying that the concept – published on Tuesday by several newspapers – has been leaked by someone in Guedes’ economic team without the President’s approval.

“In my Government, speaking the word Renda Brasil is forbidden until 2022. We will maintain the Bolsa Família and that’s it,” said Bolsonaro, after reading a succession of headlines in Brazilian newspapers that linked the creation of the program to the freezing of the retirement adjustment and the review of benefits for the elderly and people with disabilities in low-income families. “We will never freeze the salaries of pensioners, nor will we ever reduce assistance to the elderly and the poor with disabilities for anything whatsoever.”

Although Bolsonaro ordered Paulo Guedes to enable a program to leave as a mark of his Government – erasing a legacy strongly linked to the PT (Workers’ Party) administrations-, the alternatives presented by the economic team did not please the President, who has not been concealing his dissatisfaction with Guedes.

More recently, the proposal would be to freeze retirement and pensions for two years, as well as to untie the obligatory minimum wage readjustment for small government pensions and tighten the rules for granting the Continuous Cash Benefit (BPC). Bolsonaro has not denied that this was considered by the economic team but reiterated that it failed to pass his scrutiny.

“Freeze pensions, cut aid for the elderly and the poor with disabilities, a daydream of someone who is disconnected from reality. As I said, I would never take money from the poor to give to the very poor.”
– Jair M. Bolsonaro (@jairbolsonaro) September 15th, 2020

In August, still trying to meet the President’s wish to extinguish the Bolsa Família and create the Renda Brasil at an amount higher than the existing pandemic aid program, Guedes considered ending the salary bonus for those receiving up to two minimum wages, extinguishing the Farmácia Popular (improving access to medicines, offering subsidized prices) program and recreating a new tax on financial transactions (similar to the CPMF), as a means to avoid breaching the budget spending ceiling. At the time, Bolsonaro refused to put the proposal to Congress and, repeating a sentence he used again this Tuesday, he said he would not “take money from the poor to give to the very poor.”

“Anyone who proposes such a measure, I can only hand a red card [soccer penalty of expulsion from the game] to them. These are people who have no heart, no understanding of how pensioners live in Brazil,” added the President.

Publicly, Guedes tried to deny the attrition. “The red card was not meant for me,” said the Minister, and added that in his opinion “the President’s reaction was political, accurate”. However, his team is still under fire, particularly Special Secretary Waldery Rodrigues, who in recent days publicly advocated concepts such as freezing the minimum wage as a means of making room in the budget for Renda Brasil.

Balance

Hours before the video was released on social media, the Minister of Economy was called by Bolsonaro in an emergency and was forced to defer his participation in an event initially scheduled for 9 AM, according to Reuters. Neither the Planalto nor the Ministry of Economy have disclosed the subject of the meeting, but once it was over, Bolsonaro recorded the video in his office.

Paulo Guedes is trying to find balance in his position while Brazil is experiencing an unprecedented economic turmoil, which requires the ultraliberal team to make proposals that increase the state’s hands on the economy. The study of Renda Brasil occurred in parallel with the assessment of how to maintain the emergency aid (extended until December in the monthly amount of R$300). The payment of the benefit is one of the pillars that sustains Bolsonaro’s popularity during the turbulent management of the Covid-19 crisis, which has killed over 132,000 people in the country.

The government’s plan was to introduce Renda Brasil in January 2021, when there are no longer any plans to pay aid to those affected by the pandemic. However, the federal government does not have the resources to finance Renda Brasil without violating the spending ceiling rule, which has pushed Guedes to the center of a hazy political and economic chess.

Even the announcement of maintaining the emergency aid until December (of R$300, compared to R$600 in the past months) was unsuccessful in halting the collapse of Brazil’s GDP, with a record decline in the second quarter that placed Brazil facing a recession. In addition, over three million Brazilians have lost their jobs between March and August as a result of the pandemic, and thousands of businesses have closed their doors with no trace of the aid promised to small businesses – which increases the pressure on the Minister and his administration.

Even with Guedes holding on to his post, bets are rising backstage that he should be replaced by the Minister of Social Development, Rogério Marinho, who fathered the labor reform bills during the Michel Temer government and enjoys the backing of many legislators.

Source: El País