Guedes now defends going over spending cap to pay for social program
President Jair Bolsonaro ordered that families included in a new cash-transfer program have a support of at least R$400, Economy Minister Paulo Guedes said in an event of the real estate development industry. To make the extra spending possible, the minister plans to ask for a "waiver" of R$30 billion or bring forward the revision of the spending cap, scheduled for 2026.The waiver would be like asking to leave R$30 billion outside the spending cap to spend on the transitional part of the benefit. It would be, Mr. Guedes explained, an "authorization to spend this temporary layer of protection for the most fragile" to "mitigate the socioeconomic impact of the pandemic," he added, without elaborating.Another possibility, he said, would be to match expenses adjusted by an inflation index with the spending cap, which is adjusted by another index. He did not elaborate on that either, but said that with this there would be an "expansion" of available funds. "It would be like bringing forward the 2026 spending cap review," he said.The spending cap is adjusted by the Extended Consumer Price Index (IPCA), which amounts to 10.25% in the 12 months to September. A large set of expenses, including social security, continuous cash benefit (BPC, a pension for poor elders and disabled people), salary allowance and unemployment insurance, are adjusted by the National Consumer Price Index (INPC), which stands at 10.78% in the 12 months to September.Mr. Guedes said the government wants to be "reformist and popular, not populist." In addition, the minister said he is still studying the final model for the cash-transfer program Auxílio Brasil to pay on average R$400 for 17 million families. Bolsa Família, the social program in place now, includes 14 million families. "Whatever the solution is, it is a political decision."According to Mr. Guedes, the R$400 benefit will be temporary because senators have not passed the Income Tax overhaul bill, which would give a permanent source for the social program."Without the Income Tax [overhaul], we have no source to create a permanent program," he said. "So we have to create a transitional one." This would last until December 2022, an election year, and President Bolsonaro will run for reelection.The minister explained that there was an equation involving a constitutional amendment proposal (PEC) to make room under the spending cap for the new program, while the income tax overhaul proposed by the economic team would...
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