Good winds at the outset of a new term of office, find out more about the Growth Acceleration Program and the voting at the Chamber of Deputies and the Senate. Read more


Good winds at the outset of a new term of office
Voting at the Chamber of Deputies and the Senate

Good winds at the outset of a new term of office

The announcement of the Growth Acceleration Program (PAC), followed, a few days later, by the election of Workers’ Party representative Arlindo Chinaglia as president of the Chamber of Deputies, marked positively the beginning of Lula’s second term at the Republic’s presidential office. The upcoming challenges are the implementation of the PAC (including its legislative passage), the composition of the second term’s ministerial cabinet, the setting off of a sweeping popular campaign for democratic reforms and the holding of the III Congress of the Workers’ Party.

The Growth Acceleration Program (read the entire program) establishes tax cuts and investments totaling $ 503.9 billion (approx. US$ 240) until 2010 —if we add together funds from the federal government, state-owned companies as Petrobras and the Social and Economic National Development Bank (BNDES), and the private sector —, with infrastructure as the top priority. The program encompasses a range of measures designed to ease the tax burden on, and stimulate, business, scale up public investments and perfect the fiscal policy. The measures were divided into five blocks: investment in infrastructure (including housing, sanitation and mass transit); credit and financing incentives; measures targeting institutional development; tax relief measures; and long-term fiscal measures.

The Growth Acceleration Program delivers the commitments made during the 2006 electoral campaign among which are included boosting development with income distribution, recognizing the importance of adequate State intervention and pursuing a steady reduction of interest rates. The PAC had tremendous political and ideological impact. Many neoliberalism-linked columnists attacked the plan for its “statism” and, above all, for not addressing what they regard as the Gordian knot of Brazil’s problems: the social security and labor law reforms.

The greatest importance of the PAC springs from its potential, direct and indirect, social effects in terms of, for instance, employment. For that, the government and its power base must stand up to and defeat a few obstacles.

Beforehand it must be noted that the pro-growth orientation contained in the Program depends to a great extent on the monetary policy. The moment and the conditions are ripe for a more accelerated reduction of interest rates. There is strong criticism against the conservatism of the most recent decision by the Central Bank’s Committee for Monetary Policy (Copom).

The 25-percentage-point reduction of the economy’s benchmark interest rate to 13% per annum, established by the Copom in late January after a prolonged period of 50-percentage-point cuts, was too timid.

The Copom’s interpretation of the investments set out in the PAC is that they represent an increase in public spending, which will increase the demand, and thus push prices up, generating inflation. To avert inflation, the Central Bank raises interest rates. That is: in the view of the majority inside the Copom, Brazil cannot grow, particularly if growth entails public investing.

In order to fund the PAC the government will raise its investments by redirecting money that would be used to service the country’s debt. The PAC does indeed reduce the use of taxes collected to settle interest on the public debt’s principal, taxes used to attain a target known as the primary surplus. The reduction of the primary surplus will be guided by the Pilot Project for Investments (PPI), which had existed since 2005 but was hardly used because the Ministry of Finance pursued interest rate levels that allowed controlling the size of the debt and thus make it fall.

A second obstacle to the PAC is the actual capacity to execute the projects in that they might be challenged by budgetary constraints or managerial inability. A third obstacle is represented by political pressure, especially from governors and sectors of Congress who may be tempted to introduce amendments not aligned with the Program.

The allies and governors’ main complaint is the fact that there was no previous negotiation of the package with the states, despite the fact that these will be affected by some of the Program’s outcomes. The Union waived the right to tax money that is shared with governors and elected priority works in the states without consulting them. To the governor of Bahia, Jaques Wagner (PT), the loss of state revenue, mentioned by some governors, will be offset if the PAC and the economy perform as expected. In this case, the federal government would increase its revenues, including that are shared with the states. “We may have a growth and then everybody benefits”, he pondered.

President Lula himself refuted, in a presidential address, the governors’ arguments: “My intention today is to stimulate every sector of the nation to take part in this effort toward growth acceleration, for a task like this cannot be the isolated attitude of a government, but of the whole of the Brazilian society”.

It must also be considered that in the name of the “growth” rhetoric, sectors of the opposition and of big capital will keep on defending more of the same, though now in the name of “fiscal adjustment”: the reduction of the share of workers’ income in the nation’s overall wealth.

The announcement of the Growth Acceleration Program represents a significant change within the Brazilian economic environment. This is the opinion of economists like Ricardo Carneiro, of the State University of Campinas (Unicamp), and João Sicsú, of the Federal University of Rio de Janeiro (UFRJ). In an interview to Carta Maior news agency, Carneiro stated that “[this] reinvigorated role of the State is taking place in the planning, in the definition of priorities and in bringing together the public and private sectors”, says Carneiro. According to his colleague from Rio de Janeiro, the orthodox view claims that when the State intervenes in the economy, the private sector resents it. “The plan has a different matrix. It is the idea that the public sector attracts, rather than inhibits, private investments”.

By earmarking R$ 287 billion (approx. US$ 137 billion) over the next four years for public investment, the government expects such amount will stimulate the private sector. According to the PAC, private business should pour another R$ 216.9 billion (US$ 103 billion) into the economy by 2010. “Business seeks profit and that happens when the State provides security through stimuli that increase the demand for goods and services”, reckons João Sicsú. Both professionals agree that the State assumes a central role, although this is not a nationalization-driven program.

Lula’s second term should not be a mere continuation of the first administration. Learning from the rights and wrongs of the period just recently ended, and building on the extraordinary breakthroughs of the first four years, the second term has great challenges ahead: the need to promote a robust growth process, with the continued expansion of employment and income distribution, quality education and the deepening of the country’s democratization, apart from the necessary political and institutional reform.

Over the next period, the PT should guide its actions by two principles: mobilizing society toward supporting the application of the government’s action plan and keeping the Party’s autonomy in relation to this same government. The Party shall seek to be the liaison between society –the social movements in particular– and the government.

The new government composition has not been announced yet, but is expected to reflect the political and social forces that were at its origin and their commitment to the Program that was ratified by the ballots. More than being concerned with “quotas” in the government, it is crucial to stay the course.

The eight years of the Lula administration must be seen in the strategic perspective of broad and long-lasting economic, social, political and cultural transformations. The changes it will introduce in our society and the political system must not just be a progressive parenthesis in a conservative history, but the unleashing of a long cycle of transformations, led by a worker, the PT and by a coalition of leftist parties and its democratic allies.

Another expectation still with regard to the organization of Lula’s second administration is the setting up of an economic team attuned with the objectives defended during the electoral campaign, particularly in the second round. The next four years, as President Lula himself has advocated, must be marked by strong growth (not lower than 5% a year) and by proceeding with the expansion of employment, the recovery of the working classes’ income and the social inclusion of millions of Brazilians who still live below the poverty line.

This means that the ministries of Finance, Planning, Industry and Commerce Development, and Agriculture, plus the Central Bank and all public banks, be harmoniously attuned with this expansive policy, which shall be achieved by maintaining low inflation rates and respect for a fiscal equilibrium compatible with the country’s economic and social challenges. To accomplish such objective it is necessary that teams harmonized with the objectives of change constitute the core of the economic area.

The social areas of the new cabinet must be steered by people and teams capable of deepening the current income-transfer programs. Especially important is the conduction of the Social Development Ministry and the areas of health and education, the last one standing out as one of the axes of last October’s victorious Government Platform.

For its importance in jumpstarting development and for the social ripple effects it produces, the ministries in charge of infrastructure ­–Cities, Regional Integration, Mining and Energy, and Transportation­–, as well as their corresponding state-owned companies, must be occupied by staff and teams in line with the imperatives of growth with income distribution and with the preparation of the country for a new and prolonged cycle of development.

Particular importance is awarded to the Ministry of Communications not only for its strategic place within the scope of a scientific and technologic innovation policy, but also for the relationship it has with the big information monopolies. This area of the government posted a considerable deficit in the first term as demonstrated by the relationship maintained with community radios and the dependence upon the big media.

The communications policy of the first term underwent positive transformations over the most recent period, but lacked coherence and was unable to offset the massive offensive of the conservative media against the government ­–an offensive that reached its peak during the presidential campaign.

Apart from the federal government, state and municipal governments ran by the PT also proved weak in their communication policies: no institutional breakthrough in the regulatory framework, in autonomous communication led by social movements and leftist parties, in the ongoing crackdown on community stations, refusal to grant licenses to the movements’ petitions, thinly-spread union media (except for Repercut, and Revista do Brasil) and incorrect publicity criteria.

The debate on communication is of fundamental importance to Brazil. The democratization of the country presupposes the democratization of communication. Today some sectors stigmatize this idea as equated with advocating censorship, when what there is today is precisely private censorship. Measures must be taken to stand up against the private monopoly.

The affirmation of national sovereignty calls for the building of a strong telecommunications apparatus, as demonstrated by the experience of the world’s main nations. Moreover, this is a rather important economic segment, inextricably connected with the PAC.

As it is a national theme, the government is being pressured to undertake a national conference for communication, bringing together all the segments involved for a debate on a national strategic project for social communication, a global communications policy, encompassing all the aspects of the question: the Internet and the Internet Steering Committee; communication via radio and TV; the press (papers , magazines); the roles of the public and private sectors; the role of state-sponsored publicity; the movie industry; the communication/culture/education relations; the role of Anatel (the regulatory agency for the sector); the role of the Ministry of Communications; Radiobrás; community radios; the license-awarding policy.

The theme urges responses and involves the following short- and medium-term actions:
a) to set up a national public TV and radio broadcasting system;
b) to stimulate the progressive private media;
c) to improve content production;
d) to alter the communications’ institutional framework in favor of social organizations;
e) to build quality mass partisan communication.

The crux of the matter is the building of a national public TV and radio broadcasting system and, though altering the licensing criteria does not constitute a central goal, we should work for licenses to be granted to other sectors.

Another shortcoming subject to discussion within the PT, and which must be corrected in the second term, is associated with the Ministry of Defense. Within the ministry there still persists a juxtaposition of the three Forces, with no integration of Army, Navy and Air Force and lacking definitions conducive to a modern defense project, one in line with the new South-American and global context. The Ministry of Defense has relevant functions to perform, but in the field of industrial, scientific and technological development, besides serving as an important vector of our foreign policy.

The press, as well as sectors of the opposition, argues that the discussion over Lula’s new ministerial cabinet will now have a new ingredient: the election of the president of the Chamber of Deputies. To some, this will broaden the presence of the PT in the government. To others, it will bring about the opposite outcome.

Voting at the Chamber of Deputies and the Senate

On February 1 were held the voting sessions for the presidencies of the Chamber of Deputies and the Senate. In both legislative houses President Lula is to rely on the stewardship of allies: Arlindo Chinaglia (PT-SP) was elected to preside over the Chamber and Renan Calheiros (PMDB-AL), to the presidency of the Senate.

In the Senate, Renan was reelected by defeating the opposition candidate, José Agripino Maia (PFL-RN), with 51 votes against 28. In the Chamber, the contest was much tougher. Chinaglia beat a coalition peer, former Speaker of the Chamber Aldo Rebelo (PCdoB), in a run-off vote, with 261 votes against 243. Support from the two largest delegations in the lower house –the PMDB and the PT– and the votes of the opposition in the second round, especially from the Party of the Brazilian Social Democracy (PSDB), gave Chinaglia the victory. In the first round, Gustavo Fruet (PSDB) received 98 votes, confirming his full party’s support. Fruet belongs to the same party of ex-president Fernando Henrique Cardoso and Geraldo Alckmin, the conservative runner-up in the last presidential elections.

The importance of the government’s power base in the Chamber of Deputies stems mainly from the fact that the house’s speaker is the third in the line of succession to the presidency. It is him/her who takes over the command of the country in the president’s and the vice-president’s absences. Additionally, the Speaker will control alone, in 2007, a budget of R$ 3.87 billion (approx. US$ 1.84 billion). The Speaker also recognizes or not a member of the house to make a motion for an impeachment process of the President of the Republic; defines the voting flow; dismisses a request by a committee to set up a Parliamentary Inquest Committee (CPI); and is the swing vote in the Chamber’s presiding committee.

The election of Arlindo Chinaglia and Renan Calheiros express, on the contrary, a respect for the dynamics and correlation of forces existent in Congress. The challenge now is to guarantee that the contest in the Chamber will not generate divergences in the coalition that sustained Lula’s candidacy, in the first and second rounds.

The fraying of the PT/PSB/PCdoB relations would be very negative and would have as a side effect the strengthening of the opposition, as well as of those more conservative sectors within the coalition. But we must not deceive ourselves: if the PT gets weaker, the entire left will get weaker.

No doubt the Workers’ Party has politically and technically qualified members to occupy any office in the second term of Lula’s government. Of course, on the other hand, that this is not a Petista government. This is a coalition government –at least in its intention, though far from being what is known from the European political parties’ tradition, for example– whose meaning needs to be better studied and determined by the Party. In this sense, it is important to underscore the role of the Political Council of presidents of the coalition parties. At any rate, presence in the ministerial cabinet is neither the only, nor necessarily the main, political platform of the Workers’ Party for the next four years.

For instance, it is incumbent upon the Party to mobilize society and enter into the political-ideological debate which is to escalate in the years to come. An example of this is the necessary mobilization in favor of the agrarian reform and against the brutal weight of the financial sector in the national economy. Another example is the political reform, which will only be accomplished if there is outside pressure on Congress. Another example is the democratization of the means of communication. A fourth example is the PAC itself, which needs social support if we expect it to become a reality and to be followed by measures to reduce inequality and scale up social policies.

Therefore, above and beyond government and Party actions, we must engage society, particularly the social movement, to defend the PAC’s original concept: development with distribution of income and wealth. A Project associated with our broader view of Brazil and socialism, both of which shall be key themes at the Party’s III Congress called for July 6–8, 2007. For more information, log on to www.pt.org.br. Check too the Tribuna de Debate (Debate Tribune) on the Perseu Abramo Foundation website.