Opinion – Vinicius Torres Freire: Would you change your vote for a R$1 discount on a liter of gasoline?

Despair is great among politicians allied with Jair Bolsonaro. The rulers of the government, the prime ministers of this deranged semi-parliamentaryism, now want to pass a decree of calamity, a legal instrument that would free up government spending almost in general, with the notable exception of readjustments for civil servants.

The regents are the leaders of the center, Arthur Lira (PP-AL), president of the Chamber, and Ciro Nogueira (PP-PI), licensed senator and minister of the Civil House. The desperate measure is still unlikely and could end up in court. Paulo Guedes, Minister of Economy, is against it, but he has already had to swallow decisions of the regents of the center.

One goal of the spending release and the hole in the spending ceiling would be to get money to pay part of the price of fuel — to subsidize diesel and maybe gasoline. But the sky is the limit.

The federal government has been practically in the hands of the regents since the final quarter of last year. They and the gang were more confident in Bolsonaro’s victory, with Auxílio Brasil, lower inflation and some economic growth in addition to the misery we’ve seen since 2017. For various reasons, it didn’t work out.

The rise of Lula da Silva (PT) in the polls made these people more nervous and irritated (there have been screams and “ultimatums” in conversations between regents and certain government groups).

As they are very crude, ignorant and, to use a euphemism, irresponsible, they have no scruples about taking any economically crazy measure. The question now is how much power these people have to break the government even more shamelessly than usual in order to win some votes, which are otherwise uncertain. Would you change your vote if the price of gasoline or diesel dropped by R$1 (one real) per liter?

If passed, the decree on the stampede of misdirected spending would scatter enough shrapnel to guarantee higher inflation later on and an even more miserable start to government for whoever is elected in October.

Despite being crazy, a shameless political blow to public accounts and decency, the plan of the calamity decree started to be admitted even in public, as in an interview by Nogueira to CNN Brasil. Other attempts to lower the price of fuel or electricity bills are still stalled.

Among the most important: 1) the implementation of the new rule for charging ICMS on diesel, the object of dispute between the government and the states; 2) the bill that reduces ICMS on fuels in general, electricity, telecommunications and transport; 3) the plan to collect more tax from the oil companies in order to pay for some type of subsidy (either through compensation for the lower ICMS or some kind of gambiarra). That plan lasted less than a week and is almost dead; 4) Change Petrobras’ direction, put it on the halter and/or change the company’s bylaws in order to contain new readjustments.

Even if some of these tricks or measures are implemented and, on top of that, work (that prices fall for the final consumer), they should not take effect before July.

As crazy as they are, they will hardly lower the price of gasoline or diesel by, say, more than R$1 (one real) per liter. This would require a subsidy of around BRL 100 billion in a year (Auxílio Brasil costs BRL 89 billion per year).

Apart from economists and a few other usual suspects, few people are paying attention to the threats of a fiscal coup by the regents of the center (which could count on a large majority of the votes in the Chamber). But for a long time we have lived not in the time of imagination in power, but of the unimaginable.