Without informing what will be the value of the new benefit and the total cost of the program, the government of Jair Bolsonaro announced on Monday (09/28) the intention to create the Citizen Income as a substitute for Bolsa Família and the emergency aid that ends in December.
The little-detailed announcement came after months of anticipation surrounding the creation of a new cash transfer program, seen within the government as an important asset to maintain the president’s gain in popularity obtained after adopting emergency aid to protect Brazilians more the impact of the coronavirus pandemic on the economy.
The delay in creating the new benefit – which originally would be called the Renda Brasil – stems from the difficulty of guaranteeing resources for a high-cost program at a time of fiscal crisis and expenses limited by the Ceiling of Expenses (rule that restricts the growth of expenses to inflation) ).
“We are looking for resources with fiscal responsibility and respecting the law of the ceiling. We want to show society, the investor, that Brazil is a reliable country,” stated Bolsonaro, after meeting with the Minister of Economy, Paulo Guedes, government leaders in Congress and other parliamentarians to discuss the new program.
Despite the president’s speech, shortly after the announcement there were criticisms among economists about the government’s proposal to withdraw funds from Fundeb (Fund for the Maintenance and Development of Basic Education and the Valorization of Education Professionals) and the payment of precatorios (values that the Federal Government must pay by court order) to finance the Citizen Income.
Along with Bolsonaro, Senator Marcio Bittar (MDB-AC) explained that the government’s proposal is the Citizen Income to incorporate the R $ 34.8 billion foreseen for Bolsa Família in 2021. In addition, the idea is to use up to 5% the increase in Fundeb’s resources, recently approved in Congress, for the new program.
The third source of funds will come from the creation of an annual limit for spending on precatories equivalent to 2% of the Federal Current Net Revenue, which would release part of the R $ 55 billion foreseen for this expenditure in the government’s Budget proposal for 2021.
Bittar is the rapporteur for the PEC Emergencial, a proposal to amend the Constitution that seeks to create triggers for reducing Union expenses, including cutting wages for civil servants. The government’s intention is to create Renda Brasil also through this PEC.
Dribbling on the ceiling and default of the precatories?
After the announcement, economists used Twitter to criticize the government’s proposal, calling the postponement of precatories “default” and the use of Fundeb resources as a way to circumvent the spending ceiling.
Despite much criticism, mainly from the left, the spending ceiling was approved by Congress in 2016, including a vote by then deputy Jair Bolsonaro, with the aim of forcing the government to cut expenses whenever it wanted to create new spending, in an attempt to reverse the successive billionaire blows in the federal accounts registered since 2014.
The proposal announced by the government for the Citizen Income, however, does not establish spending cuts, since it foresees to postpone the payment of judicial debts (precatory) and use Fundeb resources, which are outside the Ceiling.
“Limiting payment of court orders is an understatement to say that a significant portion of these (mandatory) expenses will be pushed with the belly. One cent of spending has not been canceled. As for using 5% of Fundeb, it is worrying, as it may represent bypass (dribbling). on the spending ceiling, “said Felipe Salto, director of the Independent Tax Institution (IFI).
Economist Roberto Ellery Júnior, a professor at the University of Brasilia, said that “not paying installments to finance increased spending is very similar to default” and “using Fundeb to pay for Bolsa Família under another name is to circumvent the ceiling (of spending ) “.
The proposal for the Citizen Income should face resistance in Congress. In July, when the new Fundeb rules were still under negotiation, Paulo Guedes tried to get parliamentarians to approve the use of up to R $ 8 billion of the fund for the payment of a R $ 250 voucher for poor families to pay private daycare, a benefit which would be incorporated into Renda Brasil (now renamed to Citizen Income).
Without giving details of the new proposal, Senator Marcio Bittar said that the use of Fundeb resources would serve “to help these families that will be in the program to keep their children in school”. Bolsa Família, however, already works in this direction, since it is a condition for receiving the benefit to have all the children of the family enrolled in school.
Fundeb is a fund that serves to transfer resources to States and municipalities, with the objective of increasing spending on Education and reducing educational inequalities between regions that have a greater or lesser budget of their own. The proposal for the 2021 Budget provides for an investment of R $ 19.6 billion from the Federal Government to the fund.
Why does the government face so much difficulty to replace Bolsa Família?
Bolsa Família, recognized worldwide as a cheap and effective program to combat poverty, serves families living in extreme poverty, with a per capita income of up to R $ 89 monthly, and poverty, with an income between R $ 89.01 and R $ 178 per person per month.
With 14 million families served and an average benefit paid to each family of approximately R $ 189, the program budget for this year is approximately R $ 30 billion.
The Bolsa Família, therefore, has a much lower cost than the emergency aid created due to the pandemic, whose value was R $ 600 until August and increased to R $ 300 from September to December. As the number of benefits paid was also higher (more than 60 million), the total expenditure of the program reached R $ 322 billion.
Due to the difficulty of maintaining indefinitely a program that costs so much more than Bolsa Família, Bolsonaro wants an intermediate benefit. If nothing new is created after the end of the emergency aid, leaving millions of Brazilians without income, there would be a risk that the approval gain achieved in recent months will be reversed.
“The one who started (for the creation of Renda Cidadã) was the President of the Republic, who said: ‘we have about 10 million Brazilians there (among those served by emergency aid) who, if we don’t create a program, from of January have nothing to survive, we need to resolve this matter ‘, “said Senator Marcio Bittar, in his speech alongside Bolsonaro.
The difficulty of raising funds for the program has generated wear and tear between the president and Paulo Guedes. To pay for the plan, the economic team even proposed that other social benefits be cut or reduced, such as salary bonuses and unemployment insurance, or that pensions and pensions be frozen.
“Whoever comes to propose to me a measure like this, I can only give a red card to that person. They are people who do not have the minimum heart, the minimum understanding (about) how retirees live in Brazil”, reacted Bolsonaro , two weeks ago.
Limited money vs. most hungry
While spending remains limited by the spending ceiling, the government faces the challenge of ensuring a minimum income for an increasing number of poor and hungry people. According to data released this month by the IBGE, more than 10 million Brazilians (including children) live in a situation of severe food insecurity, that is, they go hungry.
The survey, which refers to the years 2017 and 2018, also points out that the total number of people with sufficient and satisfactory food in Brazil is the lowest in the last 15 years. The total number of Brazilians who are hungry has grown, according to the agency, by 3 million people in five years.
The data call even more attention when put in perspective: in 2014, four years before the collection of the data now released, Brazil officially left the United Nations Hunger Map, in a conquest applauded by the whole world.
It was precisely the emergency aid that prevented this situation from worsening further with the strong economic crisis caused by the coronavirus pandemic. A FGV survey released in July showed that the range of the population living in extreme poverty fell from 4.2% to 3.3%, the lowest rate in the last 40 years in Brazil.
“It is sad to say that, but Brazil has an average income of R $ 480. Suddenly, when 65 million people received R $ 600 in their account, Brazil decreased incredibly, during this period of emergency resources, the number of people below the poverty line, “says Daniel Balaban, from the UN World Food Program Center for Excellence against Hunger.
Extreme poverty refers to those who live on less than US $ 1.90 per day, or R $ 154 per month. The result, however, is no reason to celebrate.
“If we already had more than 80 million Brazilians before in some degree of food insecurity, be it mild, moderate or severe, this number will certainly increase, and we estimate that it will exceed the 100 million, which would be the largest number of the history of Brazil “, estimates Kiko Afonso, executive director of Ação da Cidadania, founded by sociologist Betinho (Herbert de Souza) in 1993 to fight hunger and misery in the country.
“The recession and the crisis are not going to be resolved in the short term, either in Brazil or anywhere in the world, unemployment is already almost a record, and we see that emergency aid is unsustainable in the current model created by the government in recent years that practically tied any investment “, he says.
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