Congressional Budget Controls Will Challenge Next Administration; understand

Congressional Budget Controls Will Challenge Next Administration;  understand

In the presidential race, Luiz Inácio Lula da Silva (PT) does not miss an opportunity to complain about the increased influence of Congress on the Union Budget. “We’ll have to discuss it,” he said earlier in the month. “Who manages the Budget is the government.”

The source of the discomfort lies in the agreement made by President Jair Bolsonaro (PL) with the centrão in the second year of his term, when he ceded control over billions of reais reserved for amendments to the electoral bases of parliamentarians to the congressional leadership.

The deal was the solution found by Bolsonaro to get rid of the risk of impeachment and gain support in Congress, but it emptied the Executive’s power in political bargains. Changing this will depend on the outcome of the elections and on a new correlation of forces between the parties.

This is the second in a series of three texts that seek to explain how democratic institutions functioned in the Bolsonaro government.

Can Congress change the Union Budget? Yup. According to the Constitution, it is up to the government to present a bill each year with its proposed budget and it is up to Congress to examine it. The President of the Republic can veto the changes, but parliamentarians have the final word if they override the vetoes.

In addition to making corrections and technical adjustments, deputies and senators can allocate funds to works and programs in their electoral bases. Changes made to the Constitution and rules governing the budget process have broadened the scope of these amendments in recent years.

This system began to work with the promulgation of the 1988 Constitution. During the military dictatorship (1964-1985), the Legislature could not do any of this. With redemocratization, he recovered prerogatives that the dictatorship had abolished and gained new attributions.

What instruments do parliamentarians have to influence the use of money? In the discussion of this year’s Budget, each of the 513 deputies and 81 senators had the right to present 25 individual amendments, in the total amount of R$ 17.6 million per congressman. Half of this money should be destined for health, by constitutional determination.

The other half can be allocated through special transfers. Nicknamed Pix amendments by politicians, they allow accelerating the transfer of funds to states and municipalities, without any link to specific projects, which makes inspection by control bodies difficult.

State benches and standing committees can also introduce amendments. In this year’s budget, R$ 213 million were foreseen for each of the 27 benches. Each congressional committee can present eight amendments, restricted to its area of ​​expertise.

In addition, the budget rapporteur in Congress has broad powers to reallocate expenditures. Part of his amendments, classified with the code RP9, have been used to meet the nominations of allies at the top of Congress and the government without the limits imposed on the other amendments.

Is the government obligated to carry out these expenses? Majority. Changes made to the Constitution in 2015 made individual amendments binding, forcing the government to implement them. He can only contingency the separate resources for the amendments, deferring their payment, if he insures other expenses in the same proportion.

In 2019, new changes to the Constitution also made the bench amendments mandatory and established the execution of budget programs as a duty, which obliges the government to present justifications if it does not comply with the budget.

In practice, this makes paying the rapporteur’s amendments almost unavoidable as well. But in this case, the government can still hold the money and postpone its release until the last months of the year, or leave the actual disbursement of funds for the following year.

At the beginning of July, two thirds of the amount foreseen for the amendments in this year’s Budget had already been paid by the government, including the discharge of the remaining payables from other years. Half of the amount reserved for the rapporteur’s amendments has already been committed to payment.

During the discussion of the new Budget Guidelines Law, which defines parameters for the 2023 Budget, Senator Marcos do Val (Podes-ES) proposed to make the rapporteur’s amendments mandatory, but there was no consensus on the change and it was discarded for now. .

Is the release of money used for bargaining in exchange for political support? Yup. It is the basis of the agreement made by Bolsonaro with the center. With Arthur Lira (PP-AL) in the presidency of the Chamber and Rodrigo Pacheco (PSD-MG) in the Senate, the agreement made impeachment requests of the president unfeasible and guaranteed support for projects of interest to the government.

In charge of the two Houses of Congress, Lira and Pacheco have control over the budget process, the negotiation of nominations for the rapporteur’s amendments and the distribution of resources, which has favored parliamentarians aligned with the government and parties linked to the centrão.

“The Legislature took care of budget execution, reducing the Executive’s discretion in handling funds and the dependence that parliamentarians had on the government to access them”, says Rodrigo Oliveira de Faria, a former advisor to the Federal Budget Secretariat.

The amendments were always used for political settlements, rewarding parliamentarians aligned with the Planalto Palace. Previous governments had more strength in negotiations because their control over the release of resources was greater, when the amendments were not binding.

How did parliamentarians manage to increase their power so much? The changes were made gradually, first through laws and internal rules that regulate the budget process in Congress, then with changes in the constitutional text. Changing the Constitution requires the support of at least three-fifths of congressmen.

Bolsonaro vetoed legal provisions that made the execution of the rapporteur’s amendments mandatory, but he ceded significant portions of the Budget for distribution to parliamentarians and handed over to the center the control of bodies responsible for carrying out the expenses.

“In dealing with presidents who were threatened with losing office, first Dilma Rousseff (PT) and now Bolsonaro, Congress took the opportunity to gain ground,” says political scientist Carlos Pereira, from Fundação Getúlio Vargas (FGV) in Rio. “It is unlikely that he will give up the powers he has gained.”

Do these amendments represent a relevant part of the Budget? The amendments have consumed an increasing share of the resources available for discretionary expenditures, which reduces the government’s room for maneuver in managing the Budget and executing its policies if there is no coordination with the top of Congress.

Most federal funds are used to pay pensions, pensions, civil servants’ salaries and other mandatory expenses. Only 8% of the budget is set aside for discretionary spending this year, and a quarter of that money is earmarked for parliamentarians.

Are there deviations in the use of amendments? Reports published by the newspaper O Estado de S. Paulo, by the Sheet and by other vehicles pointed out signs of overpricing and other irregularities in paving works, purchases of tractors, construction of schools and acquisition of robotics kits for students.

In June, the Federal Police preventively arrested former Education Minister Milton Ribeiro amid an investigation into suspected corruption and influence peddling in the release of funds from the FNDE, a fund managed by the centrão and fed with amendments.

A few weeks later, the PF launched an operation against a company suspected of having participated in fraud at Codevasf, a state-owned company that was also delivered to the center and transfers funds from the amendments to purchase machines and paving works in several states.

Has the Federal Supreme Court done anything to impose greater discipline on the amendments? Last year, when analyzing actions presented by three parties to the court, Minister Rosa Weber ordered the execution of the rapporteur’s amendments to be suspended and only released them again after the Senate committed to measures that would make the mechanism more transparent.

A system was created to disclose the names of those responsible for the indications accepted by the rapporteur’s amendments and other details, but it is imperfect. Many lawmakers left requests for information from the Senate unanswered, or provided incomplete data.

The lack of transparency makes it difficult for politicians involved with the amendments to be held accountable when there is evidence of deviations. But it helps the top of Congress to manage the demands of parliamentarians, favoring those who align with their interests.

andO Did the Federal Court of Auditors do anything to control the use of these resources? When approving the Bolsonaro government’s accounts from last year, the control body warned of risks created by the lack of criteria in the use of amendments and by the detachment between these expenses and government planning, but did not take steps to strengthen inspection.

“The parliamentarians gained power to allocate resources without being responsible for the damage that these expenses cause to the economy”, says economist Marcos Mendes, columnist for Sheet. “They don’t have any brakes to spend, because the onus remains only with the Executive.”

What can the next government do to deal with this? It will depend on the outcome of the presidential elections and the new composition of the benches in Congress. Even Bolsonaro, if he is re-elected, could negotiate another arrangement if he wants to regain control over the Budget and there is a new correlation of forces between the parties.

There are proposals to reduce the weight of the rapporteur’s amendments, create criteria for the distribution of money and increase the participation of the benches. The new LDO provides that priorities will be defined together with the chairman of the Joint Budget Committee, not only by the rapporteur.

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