A PEC that authorizes an increase in primary spending by more than R$ 200 billion is pending in the National Congress, at the request of the transition team. The justification is that a “fiscalist neoliberal” ideology would have imposed an “austericide” on the country, drastically reducing public spending. Without the PEC, there would be no money for anything: scholarships, medication, passports, road maintenance, civil defense, universities. All “on the bone”.
The problem is that, for this explanation to be correct, we would need to observe a drop in spending. However, in 2022, already discounting inflation, primary spending will be 7.2% higher than in 2016, the year before the adoption of the spending ceiling. And that number could still rise, as the Transition PEC authorizes more spending in 2022 as well.
Excluding 2020, a year of high spending due to Covid-19, the average annual growth in primary spending in the period 2016-2022 was 1.8% above inflation. In 2022, real spending growth will be the highest in the period: at least 3.7%.
How to explain this paradox? Simple. Choices have been made: Brutal cuts in some programs are taking place because other expenses have increased. Only complains who suffered cut. Whoever won is silent, or even asks for more.
Until 2019, parliamentary amendments to the budget were not mandatory. If resources were lacking in any public program, they could be contingencyd and resources redirected. Not anymore. In addition, they doubled in size, with the creation of rapporteur amendments. This means that, in 2023, almost R$40 billion will not be available for other public programs.
Bolsa Família, which cost BRL 33 billion in 2019, jumped to BRL 175 billion in 2023. That is, BRL 142 billion will be missing for other expenses. We could certainly afford this additional expense by discontinuing other less efficient programs. Or we could design a program aimed only at the poorest. But we prefer to give more money to more people, without taking care of the efficiency of the program.
The Union’s contribution to the Basic Education Fund (Fundeb) jumped from BRL 15 billion in 2019 to BRL 34 billion in 2022. A growth of 167% in just three years, due to the approval of Constitutional Amendment 108/2020.
This is not to question whether these were the right priorities or not. But to see that, just with the increase in these three expenditure items, R$ 202 billion are no longer available to pay for scholarships, medicines or any other equally meritorious purpose. We reached the BRL 200 billion of the PEC!
Several other expenses were created by the Executive and Legislative branches. In an article with Marcos Lisboa, published in the Brazil Journal, we list 42 legal norms adopted since 2019 that have resulted in increased expenses or waived revenue.
Last Thursday (15), the Chamber approved the PEC transferring to the Union the cost of increasing the minimum wage for nurses and Congress determined that the Union reimburse the states for losses in ICMS so that spending on health and education.
Reinforcement: I am not discussing the merits, just stating that these were the increases chosen, to the detriment of others.
The problem of the Brazilian public sector is not one of “austericide”. We try to spend more on everything, disregarding the basic notion of “opportunity cost”: the money I spend on A won’t be available to spend on B.
My colleague Felipe Schwartzman recently recalled a poem by Cecília Meireles that portrays the issue crystal clear. It is worth quoting an excerpt:
Who rises in the air does not stay on the ground,
Those who stay on the ground don’t go up in the air.
It is a great pity that you cannot
Being in both places at the same time!
Or I save the money and don’t buy the candy,
Or I buy the candy and spend the money.
Either this or that: either this or that
And I live choosing all day long!
By avoiding making choices, we are actually choosing to have poorer quality public policies, more public debt, more inflation, higher interest rates, less growth and more poverty.
It is impossible to escape the choices.
I have over 10 years of experience working in the news industry. I have worked for several different news organizations, including a large news website like News Bulletin 247. I am an expert in the field of economics and have written several books on the subject. I am a highly skilled writer and editor, and have a strong knowledge of social media. I am a highly respected member of the news industry, and my work has been featured in many major publications.
