The lower house of the Brazilian Congress approved a constitutional amendment to cap spending on social welfare until 2037 Tuesday, an unprecedented move that will institutionalize neoliberalism across the board and force all future governments to limit expenditures in health, education, social welfare and public services for the next two decades.
The constitutional amendment, or PEC 241, would limit the growth of public spending to the rate of inflation of the previous 12 months for up to 20 years, including any potential future Workers’ Party government that may want to adopt progressive policies.
It passed by 359 to 116 votes, receiving seven votes less than it did in a first-round vote. The house has yet to vote on six suggested changes to the text before it can send the amendment to the Senate for approval.
The smaller margin that Brazil's coup president won the vote—it required 308 votes to be passed—pointed to the backlash coup-imposed president Temer is facing in implementing his neoliberal economic agenda.
The spending ceiling can be revised after 10 years.
According to a poll by Ibope in 2014 commissioned by the National Industry Confederation, the issues Brazilians believe should be addressed by the federal government are public order, health, public safety and education, in that order.
However, PEC 241 is aimed at significantly reducing health and education programs in Brazil, from hospitals to disease prevention campaigns, as well as funding for schools and student loans for some of the poorest sectors of society. The austerity legislation stands in stark contrast to the policies of impeached President Dilma Rousseff and her progressive economic agenda, which focused primarily on social aid for Brazil’s working class.
The argument, according to Temer's government, is that PEC 241 will limit the amount of federal spending based on the rate of inflation. The bill states the budget for public spending each year will be defined by the growth of inflation in the country during the previous year, and no longer dictated by GDP revenue growth. This will reduce the nation's public debt and “stabilize” the country, according to the coup administration.
Brazil’s public debt in 2015 represented 66.2 percent of the country's GDP, according to Brazil's Central Bank. The Temer government promotes the idea that these are unsafe levels of debt, not only in the region but worldwide since in the same year Argentina had a public debt of 56 percent of its GDP and Chile had a debt of 17 percent.