Opinion: Between pedaling and snowballing: fiscal irresponsibility in court orders

A PEC (proposed amendment to the Constitution) was approved in the first round in the Chamber of Deputies to change the system of payment of court orders, which are court orders arising from processes that have been processed for decades by the Judiciary against errors committed by the federal government throughout the time.

The intention is to pedal the payment of something that is, in the legal sphere, the safest thing there is: final and unappealable decisions.

The impacts will be enormous, in several areas.

There will immediately be a strong reaction involving the country’s financial credibility. After all, how to justify that orders issued by the Judiciary Power against the Union will not be paid, and public bonds issued daily by the same government to roll over its debt will be paid? The difference in treatment between legal and securities debt is something that the market will hardly understand, especially the foreign one.

Another impact will be on the credibility of the Judiciary, as its decisions will be worth less than a paper issued by the government. In addition, court orders already issued in the amount of R$89 billion cannot be governed by the new rule, as it will violate res judicata, among other rules. Will the STF watch it idly?

The creditors of these court orders, who have waited years on end to receive such amounts, will see their liquid and certain right postponed indefinitely, because, if the debtor pedaled now, for what reason will he not pedal later?

Another aspect concerns the spending ceiling, created by the Temer government to be in effect for 20 years, with an assessment in the middle of the period. The basic idea was that of fiscal responsibility, now thrown to the ground.

In addition, the solution adopted by the Chamber was to create a kind of ceiling for the payment of court orders, postponing part of the debt to the following year and so on. It turns out that there is a difference between a ceiling on expenses, which can be limited, and a ceiling on debt, which will snowball and will bring down the finances in the very near future.

Will all this be fiscally responsible? And for what? The reasons are re-election. It is enough to see that Fundeb’s precatories could be removed from the spending ceiling, considered as one of the constitutional exceptions, but the fractioning of their payment aims to allocate less money to creditor states, governed by opposition politicians.

It can be argued that, without such a project, there would be no way to pay R$ 400.00 in aid to the needy, but this is false, as there is money for this, even paying the precatório, all under the expenditure ceiling. It would be enough to remove from the list of expenses the rapporteur’s amendments, an institute created by the current federal government, with little transparency, and which serves to help the reelection campaign of the parliamentary base that supports the government.

All of this is a mistake, which makes us return to the Budget Midgets scandal, which took place in the 1990s, of no regrets at all. After constitutional reforms to prevent this kind of re-election spending, we relive the same mistakes of the past.

It’s not just for the precatories. It is the country’s fiscal credibility that is at stake. The counterpart will be the increase in taxes, included in the tax reform projects presented. Legal security on the way down the drain.

There is hope in the Senate, where the majority will not have their mandate in dispute, although there are electoral interests on the agenda. Let’s observe.