Opinion – Vinicius Torres Freire: Lula 1’s Christmas 2002 and Merry Christmas 2023

The headline of this Sheet on Christmas Eve 2002, the complete announcement of Lula’s ministry 1. The biggest issue that December was another. There was frustration and fury against Antonio Palocci’s announcement of the “toucan bis” economic policy.

Now, the criticism against the persistence of the old regime has the opposite sign, based on the suspicion that Lula 3 may be a variation of Dilma 1. No matter the sign, the conversation is still the same. The situation is much worse.

Around 2007, Lula gave up deepening the public accounts repair program and tax reform. In part, this was because Lula was being beaten by an opposition that regretted not having asked for his impeachment and was furious with the 2006 defeat.

It would have been a profound change, as was the forgotten solution to the problem of external accounts, which occurred in the Lula government, due to both competence and luck (change in the world economy, China, etc.).

Indebted in dollars, with bad deficits in foreign transactions, Brazil experienced periodic crises of hard currency shortages, at which point it had to beg the IMF. It was a historic disgrace, like those that occur in Argentina on average every three years.

We never again spoke of the external financing crisis. Instead, we dedicate ourselves to cultivating crises in our garden: excessive domestic public debt that results in high interest rates and the risk of runaway inflation.

It is possible to fix this crisis that began to take shape in 2013, made worse by bad luck and political barbarism. But the situation in 2022 is much worse than in 2002.

In 2002, the federal government spent the equivalent of 15.1% of GDP, with revenues of 17.4% (primary surplus of 2.3%). In 2022, it should spend 18.3% of GDP, with revenues of 19.2%, a mandrake surplus of 0.9%, the result of extraordinary revenues and impounded spending picks by the dark government (2019-2022).

The situation is worse because it is difficult, in political and economic terms, to increase the tax burden, although it is inevitable to do so, preferably eliminating favors for the middle class, the rich and protected companies.

It is difficult to contain expenses, although it is inevitable to do so (bis). From 2002 to 2022, spending increased by 3.2% of GDP. There was a 2.1 point increase in Social Security (INSS), 0.6 point in BPC (benefits for the elderly and poor people with disabilities), 0.9 point for Bolsa Família, etc.: “everything for the social”.

It is difficult to talk about a fiscal problem. Whoever does it is considered a sociopath, a perverse idiot of the elite or “Faria Lima” (in fact thick and perverse, but that’s another subject). Anyway, few people deal with how to accelerate economic growth.

Lula 3 and his cult talk endlessly about “including the poor in the Budget”. Lula 1 said that the “miracle of growth” would come. It wasn’t a miracle, but it came and was the main responsible for lifting so many people out of poverty, not the “Budget”. Even tripling expenses with Bolsa Família (from 0.5% of GDP in the last decade to 1.5% of GDP in 2023), there will be a lot of misery.

The GDP of 2022 will be one tic higher than that of 2014: a lost decade. Without economic flat earthism (worst from 2012 to 2014) and political barbarism (worst from 2015 to 2022), it wouldn’t have been difficult to have grown by 20% since 2014. We would be in another world, although still poor, dirty and evil.

It is possible to have different economic policies, alternatives, but not these stupidities around which we have been turning for decades, among them that of thinking that it is okay to pay indecent interest rates to the rich for a mistaken debt, out of time and without limit.

But you can still have a merry Christmas in 2023.