Chamber approves base text of the Gastança PEC after proposal dehydration

The Chamber approved this Tuesday (20), by 331 votes to 168, the basic text of the PEC (proposed amendment to the Constitution) of Gastança, which opens space in the Budget for expenses and promises of the president-elect, Luiz Inácio Lula da Silva. Silva (PT).

Without a solid base in the House, the PT had to retreat and accepted the dehydration of the PEC. The version advancing in the House increases the spending ceiling by R$ 145 billion next year – and not for two years, as predicted in the text approved by the Senate at the beginning of the month.

The PEC also authorizes another BRL 23 billion in investments outside the expenditure limit. This measure has no expiry date.

The plenary of the Chamber will still analyze the highlights, which may change parts of the approved text, and carry out the second round of voting before enacting the proposal.

To approve the PEC, at least 308 votes are required in the Chamber, in two rounds. The PT wants to try to close the polls this Tuesday night. In the first round, only the PL, the Republicans and the Novo were against the proposal.

If approved in the second round, the part of the text that authorizes spending outside the spending ceiling will go straight to enactment because it has already been analyzed by the Senate.

An excerpt from the PEC, however, will return for analysis by senators this Wednesday (21), which distributes the R$ 19.5 billion of the rapporteur’s amendments -which were declared unconstitutional by the STF (Federal Supreme Court). Under the agreement reached by most of the parties in Congress, half of these amendments remain under the control of Congress and the other return to government control.

Redistribution was one of the keys, together with the reduction of the deadline, so that there was understanding among the deputies for the appreciation of the proposal. Still, the basic text opens a loophole for Congress to maintain power over part of the reallocated value.

The PEC is the main bet of the president-elect to fulfill campaign promises, such as maintaining Bolsa Família at R$ 600 and an additional R$ 150 per child up to six years old. The amount reserved for the program without the PEC is only enough to pay R$ 405 per family.

With the total space of R$ 168 billion to be opened in the 2023 Budget, Lula hopes to recompose programs such as Popular Pharmacy and Minha Casa, Minha Vida, and readjust the minimum wage above inflation.

Despite the trend towards approval of the PEC in the Chamber, the result represents a defeat for the PT, which initially wanted a permanent authorization to raise federal expenses by approximately R$ 200 billion.

Faced with resistance from parties such as the PL, PP, Republicans and União Brasil, Lula’s allies tried to reduce the period to four years and then to two years. The value of the license to spend also fell from almost R$200 billion to R$168 billion.

The text of the PEC allows funds that have been sitting in PIS/Pasep accounts for at least 20 years to be appropriated by the Treasury, and used to finance investments outside the fiscal rule that limits the growth of expenses.

In August, Caixa Econômica Federal reported that there are R$ 24.6 billion in PIS/Pasep quotas.

Another provision provides that the Executive will submit a new proposal for a fiscal rule by August 31, 2023. When this new rule is approved (by complementary bill), the current ceiling will be revoked from the Constitution.

The approval of a supplementary bill is easier (needs fewer votes) than a PEC. This device, however, must be contested by highlights. Even among petistas, there is an assessment that the elected government may suffer a defeat on this point.

In agreement with Congressional leaders and the PT, the PEC left a gap so that space can be opened in the 2022 Budget.

The section that allows for additional investments when there are extraordinary revenues, up to a limit of R$ 23 billion, may come into effect as soon as it is enacted.

With that, there is room for the Bolsonaro government to release parliamentary amendments that are blocked because of the fiscal tightening. The articulation to use Lula’s PEC to unlock the amendments of the president’s allies was revealed by Sheet in November.

The PEC also removes from the spending ceiling expenses of federal educational institutions funded by their own revenues, donations or agreements entered into with other entities of the Federation or private entities.

The measure should also apply to all research institutions and to Embrapa and Fiocruz (Oswaldo Cruz Foundation). Donations made to environmental funds are also excluded from the ceiling.

The extra spending deepens the negative result in the public accounts expected for 2023, if there is no increase in revenue or cut in expenses sufficiently. The budget project sent by the Ministry of Economy officially foresees a deficit of R$ 63.5 billion, but the current government has updated this estimate to a lower number, although still negative at R$ 40.4 billion.

The existence of public deficits indicates that the government is financing expenditures by issuing a larger volume of Brazilian debt. The cost is close to the economy’s basic interest rate, the Selic, currently at 13.75% per year.

“Considering that the Federal Supreme Court has already understood that the resources for Auxílio Brasil and Bolsa Família are already guaranteed, this PEC loses its meaning. It would be, as people are saying, the PEC of Gastança”, stated deputy Lafayette de Andrada (Republicanos-MG), during the debate on the topic.

“Minister Gilmar Mendes’ decision releases only the additional BRL 400 to BRL 600, does not release the BRL 150 for children under six years of age and also does not resolve the budget for education, health and complementary policies”, he said. Reginaldo Lopes (PT-MG), party leader in the Chamber.

LULA’S CAMPAIGN PROMISES THAT DEPEND ON THE PEC

🇧🇷 Maintenance of the minimum benefit of BRL 600 to handbag Family🇧🇷

– extra benefit in BRL 150 per child from to six years in Bolsa Familia

– actual increase (above inflation) minimum wage

– Enlargement From public investments

*The 2023 Budget project, sent by Bolsonaro, has resources that pay only R$ 405 of benefit per family

WHAT ELSE DOES THE PEC PROVIDE

🇧🇷 that the spending cap increase will be valid only in 2023

🇧🇷 Allows the government to set a new fiscal anchor per supplementary billeasier to approve than a PEC

🇧🇷 Change the indexer of the total amount of precatories to be paid. Currently, the value is corrected by the ceiling correction. In order to prevent the increase in the ceiling from being partially consumed by precatories, the index of the limit of precatories to the IPCA was changed

🇧🇷 extends to DRU until the end of 2024🇧🇷 The Delinking of Federal Revenues allows the government to freely use 20% of federal taxes linked by law to funds or expenses, giving the government more flexibility to define the allocation of resources

🇧🇷 Allows the use of forgotten PIS/Pasep resources for public investments

PEC ALSO CHANGES THE RULES OF THE AMENDMENTS

🇧🇷 Agreement between Congress and PT uses the text to divide the sum of the rapporteur’s amendmentsdeclared unconstitutional by the Supreme Court

🇧🇷 PEC raises the value of individual spliceswhose ceiling is provided for in the constitution

BRL 19.7 million

is the current value of the individual amendment (which each deputy and senator is entitled to)

BRL 16.3 million

is the extra value of the individual amendment after the agreement