Minister Paulo Guedes has pledged what he cannot accomplish and still adopts reprehensible tactics from previous administrations in driving the economy. Photo: Edu Andrade / Ascom ME
The speaker promised to turn the federal accounts back to blue after the first year in office. The minister must end the government with a 4-year deficit. Besides, it happened exactly as I wrote in 2018 – or rather: as any serious economist wrote in 2018, under the curses of those who get caught up in the lectures.
Today, the speaker devalues any concern for public accounts. He is a strong supporter of austerity. To applause, he guarantees that he respects the spending limit. It does not mention, for obvious reasons, what really happened to the ceiling during the minister’s tenure.
After all, it should be explained that the ceiling was not reached until 2019, the year for which the budget was prepared by the Temer government. The minister, on taking office, made a famous misstep: he did not know that the one-year budget had been drawn up by the previous government. The speaker guaranteed in-depth knowledge of Brazilian public policies.
In 2020, the spending limit was lifted. It was a necessary step in the midst of the pandemic. Not satisfied, the minister decided to exploit a historic dossier of parliamentary amendments. The speaker, it is well known, is a convinced liberal and critic of Brazilian patrimonialism, a man of ideas who will never submit to the baseness of Brasilia.
In the 2021 budget, the minister transformed the blunder into political practice: the budget was sanctioned on April 23, almost 4 months after the start of the fiscal year. The content was generally gloomy: compulsory expenditure underestimated without any explanation. Everything so that the government, carried away by the Olympic spirit, renews the Brazilian record of parliamentary amendments.
Ribamar Oliveira, the first journalist to denounce fiscal pedaling, called the 2021 budget a “game of fiction”. Most economists agreed. The speaker took the opportunity to highlight the strength of Brazilian institutions. He welcomes the democratic dialogue of parliamentarians.
In recent weeks, the speaker has continued in the same tone: all is well and inflation is not a concern, as the spending limit will continue to be respected. The speaker is very different from his predecessors. The minister, on the other hand, wants to copy Guido Mantega to reach the ceiling in 2022.
The minister’s idea is to remove court decisions from the list of expenses subject to the spending limit. Also in Lula’s government, Mantega also met the primary surplus target, the tightest fiscal rule at the time. However, he only complied because he excluded investments from the calculation, as the minister intends to do with court orders.
The speaker is an indisputable technician, “dotô” from Chicago and has read Keynes several times in the original version. After his doctorate he went to operate in the financial market, not even focusing on macroeconomic analysis and discussing public policy only in heavily ideological newspaper articles. By becoming a minister, he sells Pix taxation as the embodiment of modernity – with the support of businessmen who fear deeper reform.
The speaker prioritizes the modernization of the tax system to encourage entrepreneurship. The minister praises the ICMS tax war and wants to keep this state tax, certainly one of the worst in the world. The speaker thinks his audience is a sucker. The minister is sure of it.