Understand the main points of the Spending PEC and how the Budget looks

The Chamber of Deputies approved, in the first round, the basic text of the PEC (proposed amendment to the Constitution) of Gastança, which opens space in the Budget for more expenses and fulfillment of promises of the president-elect, Luiz Inácio Lula da Silva (PT) . The proposal was dehydrated by parliamentarians.

Voting still needs to be completed in the second round, which is scheduled for this Wednesday (21).
What is the purpose of the PEC?

Lula needs an authorization to increase spending in 2023 and, with that, be able to fulfill campaign promises, such as the real increase (above inflation) of the minimum wage, the maintenance of the Bolsa Família at R$ 600 and the additional R$ 150 per child up to six years old in the social program.

Why does Lula need the PEC?

The 2023 Budget project, sent by President Jair Bolsonaro (PL), uses all the space in the spending ceiling. Even so, the expenses foreseen in the project only pay R$ 405 per month per family of Auxílio Brasil (which will once again be called Bolsa Família). In addition, to fit the Budget proposal within the spending ceiling, it was necessary to suggest cuts of up to 90% in some social programs, such as Minha Casa, Minha Vida, as well as cuts in Farmácia Popular and in resources for health and works public.

What is the impact of the PEC?

The text extends the spending ceiling by R$ 145 billion next year. The PEC also authorizes another BRL 23 billion in investments outside the expenditure limit – this measure does not have an expiry date. Therefore, the total impact is BRL 168 billion in 2023.

Who will decide where the money goes?

The Chamber gave a message to the president-elect and removed the power of the transitional government to present suggestions on how the budget can be applied. Lula’s allies can still negotiate informally with Congress. But Congress has already outlined plans for these resources.

How will the money be spent?

Congress intends to meet Lula’s main demands. Thus, R$ 75 billion should reinforce the Bolsa Família budget to fulfill the PT’s campaign promises. Approximately R$6.8 billion should be set aside for the real increase in the minimum wage. But, with the rest, parliamentarians want to prioritize some ministries, such as Health (R$ 22.7 billion), Regional Development (R$ 18.8 billion) and Infrastructure (R$ 12.2 billion).

What is the political balance of the PEC?

PT managed to move forward with the PEC, but victory has a bitter taste. The version approved by the deputies predicts that the billionaire increase in spending will only be valid in 2023. The PT wanted it to last at least for the first two years of the new government or even for the entire Lula term (four years). The party had to give in to pressure from the centrão, who did not want to lose their bargaining power in the new Lula administration.

And what about the license to spend R$168 billion next year?

The initial version of the PEC could authorize an expenditure of up to BRL 198 billion outside the spending ceiling. The PT’s retreat in this aspect, therefore, was smaller than in the period of validity of the authorization to increase expenses.

What else does the PEC provide for?

The text extends the DRU (Union Revenue Untying) until the end of 2024. The proposal also allows the use of forgotten PIS/Pasep resources for public investments.

How will the Budget look after the end of the rapporteur’s amendments?

The PEC also provides for the redistribution of this amount, estimated at R$ 19.4 billion for 2023. Half will be transformed into an individual amendment (the one that every deputy and senator is entitled to). The other half will be transferred to the budget of Lula’s ministries, but Congress –in particular, the centrão- wants to decide where that money will go, that is, to apply the resource to works and projects of interest to parliamentarians.

What changes in individual splices?

Currently, the Budget project foresees R$ 11.7 billion for individual amendments. This represents BRL 19.7 million for each congressman — deputies and senators receive the same amount. With the increase in individual amendments provided for in the agreement, the Budget must have R$ 21.2 billion for individual amendments, which now have different amounts for deputies (R$ 32 million each) and senators (R$ 59 million).