Elected government seeks legal protection with PEC from transition to increase spending in 2023

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The approval of the so-called PEC (proposed amendment to the Constitution) of the transition is considered by technicians and a wing of parliamentarians the safest way from a legal point of view to authorize the expansion of expenses desired by the team of the president-elect, Luiz Inácio Lula da Silva (EN), in 2023.

The possibility of a plan B started to be mentioned by PT allies after members of the TCU (Union Court of Auditors) suggested waiving the PEC and expanding expenses via the edition of extraordinary credits — funds that are outside the spending ceiling and, in that In this case, they would be released by an MP (provisional measure) signed by Lula after his inauguration on January 1st.

The court of accounts sees precedents for allowing spending to be increased along this path, which would free the newly elected government from committing its political capital to a delicate negotiation to approve a constitutional change, which requires the support of 308 of the 513 deputies and 49 of the 81 senators.

However, people who participate in the discussion of the measures, heard by the Sheet on condition of anonymity, they claim that the use of extraordinary credits does not resolve all the barriers that exist today.

Extraordinary credit is outside the spending ceiling, a rule that limits the advance of expenses to inflation, but continues to be accounted for in the fiscal target and in the so-called golden rule of the Budget — which prevents the issuance of debt to cover current expenses, as is the case of social benefits.

The goal today allows for a deficit of up to R$ 65.9 billion, a gap that will be much greater with the expansion of expenses intended by the new government. It would be necessary for the Executive Branch to send a bill asking for the alteration of the fiscal target. The text would need to be approved by the CMO (Mixed Budget Committee) and then by Congress.

The golden rule could also be out of balance. To breach it, the Constitution requires the approval of a supplementary or special credit by an absolute majority of Congress. This type of credit is within the spending ceiling — not outside, as the new government would need.

In the opinion of technicians, the overlapping of fiscal rules ends up putting the transition team at a crossroads: either break the ceiling, or break the golden rule. Both are provided for in the Constitution. Therefore, the interpretation of this group is that the PEC is the most feasible way out to give legal certainty to the resolution of the Budget.

This Friday (4), the former governor of Piauí and senator-elect Wellington Dias admitted that the option of consulting the TCU on extraordinary credit is being evaluated, but said that the PEC is the safest way.

“We have this alternative of the PEC. The Federal Audit Court also has this alternative of extraordinary credit. However, we are fixed here to have a lot of security for this draft amendment, and from there the wording of this draft constitutional amendment” , said.

The negotiation of the transition PEC was agreed by Lula’s team with the rapporteur of the 2023 Budget, Senator Marcelo Castro (MDB-PI), in a meeting this Thursday (3).

The PEC is seen as necessary to avoid a social blackout next year, as the budget proposal sent in August by the Jair Bolsonaro government (PL) ensures only an average amount of R$ 405.21 in Auxílio Brasil, in addition to imposing severe cuts in housing programs and also in the Popular Pharmacy.

In addition to the addition to the national floor, the proposal will also authorize extra expenses to ensure the continuity of the minimum benefit of R$ 600 from Auxílio Brasil, pay the additional benefit of R$ 150 per child up to six years old, reduce SUS queues ( Unified Health System), expand indigenous health and school lunch actions, in addition to unlocking resources for investments.

Critics of the extraordinary credits alternative point to other obstacles behind the scenes. The Constitution says that the instruments are reserved for “unpredictable and urgent expenses, such as those resulting from war, internal commotion or public calamity”.

Although the recomposition of social spending is considered urgent by most technicians and political actors, there is a doubt about the possibility of classifying expenses such as an increase in the minimum wage and recomposition of the Popular Pharmacy program as unpredictable.

Technicians working in the area of ​​public accounts joke that expenditures are “so unpredictable” that the new government and Congress already know about them two months in advance of 2023. There is an assessment that, if the TCU approves this type of measure, will mean a further weakening of tax rules.

Even the precedent cited within the TCU has some differences. In 2016, the court of accounts allowed the opening of an extraordinary credit to pay for the expenses of the Labor Court, which suffered from a lack of resources. In that case, however, the Michel Temer government (MDB) took office in May, with the Budget already approved and in execution.

In the current context, the expenses in question are under discussion in Congress and with the budget proposal still open — which calls into question the notion of unpredictability, necessary to circumvent the traditional budget.

Defenders of the extraordinary credit path without PEC, however, argue that the elected government has not yet taken over and cannot, therefore, be held responsible for the Budget that is approved this year. This vision would pave the way for the TCU to guarantee an extraordinary credit to cover unforeseen expenses.

People who participate in the discussions warn that it is unlikely that the Executive’s technicians, who produce the documents that support the decisions of any minister and president of the Republic, will sign a note that gives the green light to an extraordinary credit in these circumstances.

This view is supported by experienced technicians who have already been part of different administrations of the federal government. The signing of the acts would be the responsibility of the new Minister of Finance, who has not yet been appointed by Lula.

Even the extraordinary credits released in the midst of the Covid-19 pandemic, such as those that paid for emergency aid, were edited only after the approval of PECs, precisely to give greater security to those who signed the measures.

The search for an alternative to the PEC has a political background. as showed the Sheetthe articulation of the proposal gives the president of the Chamber, Arthur Lira (PP-AL), a valuable bargaining power in the face of the urgency of approval of the text.

The vote until mid-December is considered fundamental for the first year of Lula’s administration, and Lira has a strong influence on the pace of analysis of the proposal. The strengthening of the president of the Chamber bothered Lula’s historical allies, such as senator Renan Calheiros (MDB-AL), who disputes with Lira for influence over his electoral stronghold, Alagoas.

Renan told the Panel column, from Sheet, that the PEC is a “barber shop”. According to him, it was not necessary to “give oneself in that way” to the center.

Another risk pointed out behind the scenes is that the PEC is used to constitutionalize the so-called rapporteur’s amendments, used as a bargaining chip in political negotiations and which are controlled by the leadership of the National Congress.

The rapporteur’s amendments are foreseen today only in the LDO (Budget Guidelines Law) and are renewed year by year. Their inclusion in the Constitution would make them permanent, and the Executive would be obliged to enforce them. The center is interested in a measure in this direction.

Senate President Rodrigo Pacheco (PSD-MG) said this Friday to Globonews that not changing the Constitution would be better, but that a PEC is possible if technicians see a need for greater legal certainty.

“There will be, on the part of the National Congress, all the good will to appreciate the PEC of the Transition and, with the technical diagnosis and without extravagance, put into practice what was promised in the campaign of the elected government”, he said in a social network.

Collaborated with Julia Chaib

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