Economy Minister Paulo Guedes could lose more than the Special Secretariat for Social Security and Labor in the ministerial reform promoted by President Jair Bolsonaro, which will include Senator Ciro Nogueira (PP-PI) in the Civil Chamber. It could also lose the structure in charge of the former Ministry of Budget, Planning and Management (MPOG), which could fall into the hands of the Centrão. Another possibility is that the changes on the Esplanade represent an anti-liberal shift in Guedes’ economic policy.
As explained previously by an interlocutor from the Planalto Palace in Gazeta do Povo, the government expects greater “control and supervision” for Guedes, so that the economic team has a more pragmatic and less liberal vision, focusing on the elections. of 2022. From this deepening alignment between Bolsonaro and Centrão, Guedes is aware that he will have to adapt.
The hardest blow Guedes has to take is the loss of the budget structure, since the old MPOG has to be recreated to accommodate a senator, according to Planalto interlocutors in the report. The name of Senator Eduardo Gomes (MDB-TO), head of government in Congress, is the most popular – although Brazil’s national executive and executive have vowed to fight back against any member who takes a cabinet.
Another possibility would be to hand over the Planning to the PSD. The party’s national president, Gilberto Kassab, has indicated that the party may leave the allied base in Bolsonaro. And he even plans to launch a presidential candidate in 2022. Handing over the Plan to the PSD would be a way to contain this movement.
What are the risks of rupture between Bolsonaro and Guedes
The shift from a more liberal economic policy to a more pragmatic economic policy, however, may not be a problem. Guedes said behind the scenes he would adjust to political seams, including the possibility of revisiting Income Tax (IR) and Contribution on Goods and Services (CBS) reforms – which unify the PIS and the Cofins.
The more pragmatic policy that the government has decided to pursue does not suggest a split between Bolsonaro and Guedes. In Planalto, the speech is that the President of the Republic still has the Minister. At the Ministry of the Economy, the watchword is “adaptation”.
Guedes’ interlocutors underline that there has always been a “filter” stipulated by the Planalto of the “limit” that the economic team could reach in the proposals presented. The difference is that now the minister will adapt more to the political moment.
“There has always been a filter, but now it will be more refined because we are entering an electoral process for everyone, not only for the president, but also for the base which supports him”, entrusts an interlocutor of the economic team to report.
The technicians of the ministry say that it is a question of “fine-tuning” the setting and that nothing prevents Guedes from adapting at the time of a more pragmatic policy. “It is about adaptation, and that is what the minister will do. Today, we must be conditioned to the political process, as it has been until now”, explains an adviser, defending that on other occasions, Bolsonaro himself has vetoed the ministry’s proposals. “Many did not come out because of the positions of the president himself.”
How far Guedes is ready to give in in the political composition
The idea of giving up the structures of the Ministry of the Economy was never well accepted by Guedes. But, given the current political circumstances, the minister accepted – although resigned – the recreation of the former Ministry of Labor and Employment to accommodate the still chief minister of the General Secretariat.
The recreation of the MPOG to hand over to a senator – or someone named in the Senate “quota” – is still not well digested by the minister, who, in April, refused to hand over the portfolio, currently under the aegis of the Special Secretariat of the Farm.
For this reason, the political parties report a “gentlemen’s agreement” with Guedes, that the Minister of Regional Development, Rogério Marinho, does not assume the portfolio of the MPOG, as it was thought in April. Marinho and Guedes have become enemies during the pandemic.
It is understood within the government that Guedes would not create greater difficulties in ceding the Planning and Budget structure if Marinho did not occupy the portfolio. In addition, as a sign of “good faith” towards the Centrão, the minister reports handing the “prize” to the “head” of his secretary for economic policy, Adolfo Sachsida.
In a live promoted by the newspaper Valor Econômico last week, Sachsida spoke of “putting the knife through Sistema S” to help low-income youth. The speech had bad repercussions on the economic team and, according to the Gazeta do Povo, the secretary could be removed from his post as a result of the ministerial reform.
“There have to be people in tune with the new times. Sachsida can’t say something like that, he did political ‘shit’. It was a mess, that’s the kind of thing. which annoys “, maintains an interlocutor of the economic team, confirming that Guedes can change not only its economic policy. “He will have to do fine tuning taking into account the concept of politics,” the source adds.
For 2022, however, Guedes is expected to negotiate with Centrão one of his candidates for the new Ministry of Labor and Employment. He warned that Lorenzoni would only stay eight months, as he must announce his candidacy for the government of Rio Grande do Sul and will not be compatible until March, and that the ministry must respond quickly to the demands of the labor market in view of the economic response.
How Guedes’s economic policy in political repositioning
Guedes’ liberal economic policy will undergo ad hoc adjustments due to the political repositioning of the government. It will not switch to an expansionist policy, but neither will it have room for a broad policy of contraction, to reduce public spending. Even though this is a pre-election year, the minister knows that he will be asked to increase spending and reduce budgetary resources.
The solutions for the reform proposal of Bolsa Família will also have to pass through the political and pragmatic examination of the Planalto. Aware of the new political moment, Guedes positively signaled compositions with the Centrão for behind-the-scenes economic programs.
The minister wishes to reach an agreement for the construction of new texts of tax reform to be discussed jointly between the rapporteurs of the reform of the IR, the deputy Celso Sabino (PSDB-PA), and CBS, Luiz Carlos Motta (PL-SP), according to information published by the newspaper Folha de S. Paulo and confirmed by Gazeta do Povo.
The business team admits that by using the “loopholes” in the system, many people do not pay taxes in Brazil. The speech was delivered to businessmen and MPs. The idea of a progressive tax rate on the taxation of dividends on companies registered in Simples Nacional, for example, is buried.
” The rapporteur [Sabino] he already has an agreement with Guedes to withdraw it “, said an interlocutor of the economic team. The rapporteur for the reform of the IR confirmed the information to Valor Econômico. The article led Bolsonaro to criticize the” exaggerations “from the Ministry of the Economy.
Guedes defended himself behind the scenes that the income tax reform was built by Federal Revenue Secretary José Barroso Tostes Neto – with whom he fell out – and not by his direct team. “This reform was not made with political refinement, it was a reform made by the tax authorities”, maintains an interlocutor.
What the Centrão expects from the pragmatism of the head of the economic team
The promise of a more pragmatic Guedes is viewed with suspicion by the Centrão. For the leaders heard by the report, the minister has never shown the profile of a negotiator. For this reason, parliamentarians find it difficult to see how the minister is going to behave now.
“The big problem is he never knew how to work with Congress,” warns a congressman. The most critical of Guedes no Centrão said he did not deliver what he promised. “Neither did Social Security. Rogério did it and approved it. [Marinho]. He couldn’t get the administrative reform through, he was going to send a comprehensive tax reform and only spoke about the CPMF [proposta de imposto digital para desonerar a folha de pagamento], but sent CBS and IR text, which now are being reformulated, “complained another executive.
As previously explained by Gazeta do Povo, who had acted as political negotiator of economic reforms was the Speaker of the House, Arthur Lira (PP-AL). Some leaders even question the permanence of Guedes in the government.
Despite reservations, the ruling base promises to seek a good relationship with Guedes. The relationship may, however, be conditioned on how Guedes cedes the MPOG – whether or not he is criticized and confronted with parties – the cession of the MPOG and the construction of the 2022 budget, which is due to be delivered to Congress by May. 31.