Brazil to change constitution to enshrine neoliberal policies until 2037

Brazilian president Michel Temer's government is set to pass a constitutional change that will ensure that neoliberal policies will endure until 2037. The bill will limit spending on health, education social welfare, and public services for two decades.

PEC 241 as the bill is called, has been approved by the lower house by a vote of 23 to 7 in favor. It now goes to the Senate. A sixty percent approval is required on each vote to amend the constitution. The bill's defenders claim that the measure will ensure that Brazil's large debt will be controlled. However a 2014 poll by the National Industry Confederation shows that the main concerns of Brazilians are public order, health, public safety and education in that order.
PEC 241 will significantly reduce health and education programs. Cuts will be made in hospital spending and disease prevention programs. Funding for schools and universities will be reduced, as well as university loans. These austerity programs stand in contrast to those of former president Rousseff and her attempt to focus on aid for Brazil's working class.
A revised version of the bill exempts health and education costs starting in 2018 according to Finance Minister Henrique Meirelles. The proposed index could be changed but only after ten years. After that future administrations could make changes. The exemption of health and education until 2018 probably shows that the government recognizes Brazil at present needs more spending on health and education.
Spending will be linked to the rate of inflation the previous year and will not be linked to revenue growth. The argument is that this will reduce the national debt and "stabilize" the country. It may actually cause social unrest and further depression in the economy.
The Temer government points out that Chile has a public debt of 17 percent of GDP while in 2015 Brazil was 66.2 percent of GDP. The most recent data shows Brazil at 66.2 percent still but United States is 104. The EU area is 93 and Japan is an astronomical 226. Brazil is hardly in a debt crisis situation.
However, the Temer government argues that public spending grew much too quickly under the government of Dilma Rousseff and the Workers Party (PT). The moves increased interest rates and lowered consumer confidence according to critics. The Finance Minister Meirelles and Temer have promoted PEC 241 to business interests including the Brazil Chambers of Commerce as well as foreign investors and wealthy business people, arguing the changes would stabilize the economy, that is in depression, and lead to profitable investments.
There have been demonstrations by students and activists against the bill. Alessandro Molon of an opposition party said: "The government says this will help the war on unemployment, but this is war on the unemployed because their health services will decline and there will be less money for education." The former president Dilma Rousseff said she would fight for the rights of Brazil's most enfranchised after she was impeached on the 31st of August for breaking budgetary laws. While Rousseff was quite popular during earlier periods of her rule, she suffered from scandals including that involving the state oil company Petrobas. No direct evidence has come forth that Rousseff was connected to the scandal but it along with a declining economy created conditions under which the popularity of Rousseff and her government declined drastically. However, the new president Temer is also under investigation on corruption charges.
Telesur notes that within months of taking office "the social policies of Temer's government have proven to resemble the interests of international monetary institutions such as the World Bank and International Monetary Fund than the interests of Brazil's disadvantaged peoples." However, the austerity policies of the Temer government go counter even to many economists who are staunch defenders of capitalism such as Paul Krugman. These economists argue that when there is a depression then the government needs to spend more to stimulate the economy. Brazil will probably experience the same type of negative results that one sees in Greece, worse economic conditions, with reduced services for those negatively affected by the downturn. There could be social unrest as well. Nevertheless, the Brazil stock market, Ibovespa moved up to a two-year high at the prospect of the bill passing.


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