A Lula 3 government would be very similar to Lula 2. Perhaps even with Dilma 1. This is what is left of the reading of the “Letter to Brazil of Tomorrow”, a synthetic program of government released this Thursday (27) by the candidacy of Luiz Inácio Lula da Silva (PT).
On the outside, due to the generic names and intentions described in the “Letter”, the programs are almost identical to those of the PT governments — “outside, beautiful viola”. Inside, it is not known if this is the case with moldy bread.
Several of these programs have failed or are now (even more) unsustainable. The most serious cases were subsidies for companies, the creation of national industries that would produce goods to replace imports and the performance of BNDES and Petrobras. Several of them ended in disaster.
Yes, it is possible to establish the same objectives of Lula’s “Letter” by changing methods and depending on the size and deadline in which the result is to be achieved. It is not possible to know if this will be the case. Lula’s “Letter” gives no clues as to what would be new. just suggests the old
The most urgent and difficult subject, public deficit and debt, which will decide the fate of an eventual Lula 3, is barely mentioned. The most interested readers of this “Letter” will be government creditors, among other “the market” groups. The reaction will be one of boredom and anticipation (“seriously, what are they going to do?”) or one of worry, irritation, or mockery (on the right). Who would Lula be wanting to talk to? Is it just a leftist “saludo a la bandera”? I could not understand.
Subsidy is a central word in the Lula 3 program, although it is never mentioned there.
There would be “adequate” interest for Empreende Brasil (micro, small and medium-sized companies), for innovative companies or companies committed to environmental and social causes. That is, interest rates lower than market rates (with subsidies via a state bank or direct via the National Treasury).
The Minha Casa Minha Vida (MCMV) would be resumed, which could be good, if the urban disaster that it was is fixed. But the MCMV had a lot of subsidy.
More worrying, for now, was reading that BNDES and Petrobras will have a “fundamental role in this cycle”, in Lula’s economic program.
It is possible to turn to the BNDES to encourage such and such growth guidelines, in different ways. Instead of granting cheap credit (subsidies, indirect public spending), the state development bank can encourage and guarantee operations (boost private credit).
Under Lula 1 and Dilma 2, the BNDES served many times, and largely, to lower the cost of capital for large companies, for mergers, acquisitions and the formation of oligopolies. “Developmentalism” has never been leftist.
But the idea of industrial policy is taken up again as if there had been no failures and disasters. Lula wants national companies to produce medical equipment, fertilizer, diesel, gasoline, chips, planes and oil platforms (one of Dilma 1’s most disastrous plans). Are you going to use Petrobras again as a kind of development bank?
There can be intelligent policies to encourage and direct the economy. Such a thing is done and has been done in any variant of the rich market economy. But what’s the idea? Give money to a big company to produce bad goods inefficiently, bankrolled by tax money? Again?
Furthermore, Lula proposes a New Labor Law, to be elaborated by the government, workers and companies. Very good. There still remains an aged and amputated CLT, with a graft from Michel Temer’s reform, which almost ruined the labor organization, did not put anything in place and did not deal, in this regard, with new jobs, the precarious in particular.
Lula also proposes an economic-environmental-technological plan for a green transition and a Program for the Recovery of Degraded Pastures, which can lead to a good gain in efficiency. Its goals are zero deforestation in the Amazon and zero emission of greenhouse gases in the production of electric energy (goodbye, thermoelectric plants? Monster hydroelectric plants? What will it be like?).
It proposes Desenrola Brasil, the renegotiation of debts of defaulting families, with a discount on the principal and reduction of interest. It is an idea that can be developed. But it implies subsidies (the government would finance part of the bill), which would not necessarily go to the poorest.
The Novo Bolsa Família will pay BRL 600 per month (a dramatic and priority issue for which there is no money yet) and another BRL 150 per child under 6 years of age. The minimum wage will have a real increase, above inflation, which, by table, would increase Social Security expenditure, the INSS in general.
In addition to spending so much on subsidies and increasing spending, Lula says he will give up revenue. It wants to zero the Income Tax for those who earn up to R$ 5,000 per month, billions for the small middle class. Won’t you charge more taxes? Not even rich? Are you going to finance your spending with a lot more debt (which makes more money for the rich)?
Lula says he is going to draw up an urgent plan for the resumption of stopped and priority works, with the governors. It could be, if there is a way to combine private investment with state investment; to increase federal investment little by little. For now, there are no funds in the Budget nor will there be any time soon.
It is possible to get a “license to spend” more in 2023, as long as there is a credible debt containment plan. A credible plan would work better if a major tax reform were passed — this subject deserves only half a line, as if it were a minor appendix. Public sector reform? Nothing to declare.
If Lula does all that he promises, however, the debt will jump, interest rates will go to the moon and the government will begin to sink. Worse still if there is no such “credible plan” for deficit and debt. On this subject, it is only said that there will be “multi-annual goals”, responsible and predictable, but “compatible with facing the social emergency we are experiencing and with the need to reactivate public and private investment to pull the country out of stagnation”.
It doesn’t mean anything or it means that there will be big debt growth and patience, “take it”. If true, it will only work out with the help of heaven.
Chad-98Weaver, a distinguished author at NewsBulletin247, excels in the craft of article writing. With a keen eye for detail and a penchant for storytelling, Chad delivers informative and engaging content that resonates with readers across various subjects. His contributions are a testament to his dedication and expertise in the field of journalism.
