Renta Ciudadana: the five government ideas to finance the program that did not come out of paper

After that, Renda Brasil spent months off the government’s agenda. Until returning to the discussion in June of this year, in the midst of the search by the Ministry of Economy for an alternative to expand social assistance in the post-pandemic.

Since then, Renda Brasil has changed its name to Renda Cidadã, and there have already been at least five “test balloons” of proposals to finance it, but none went ahead.

Economists estimate that this lack of definition brings uncertainties from a fiscal point of view and for the lives of people who will lose income with the end of emergency aid, without the pandemic having ended and economic activity returning to normal.

Let us remember the five government proposals to finance Citizen Income and why they were rejected by public opinion or by the president himself.

1.Unification of social programs

Renda Brazil returned to the agenda for the first time, in the middle of the pandemic, in June of this year. On the occasion, the Minister of Economy, Paulo Guedes, told federal deputies that Bolsa Família would be reformed “shortly after the end of the new coronavirus pandemic,” with a new name and unifying existing social programs.

Among the programs quoted for this unification were wage subsidy, closed insurance (paid to fishermen at the time of species breeding, when fishing is not allowed) and family salary (paid to formal workers with low wages and children up to 14 years). ).

The proposal did not survive the month of August. “I cannot take from the poor to give to the poor. We cannot do that there,” Bolsonaro said at the end of that month, adding that discussions on the new program were suspended.

In July, Guilherme Afif Domingos, special advisor to the Ministry of Economy, raised a new hypothesis to finance Renda Brasil: allocate part of the income obtained with a new “digital tax” planned by the government for this purpose.

Considered by tax experts as a “new CPMF” (Provisional Contribution to Financial Transactions, tax on financial transactions extinguished in 2007), the tax was severely criticized for causing distortions in the economy, since it affects the economy, in addition to increase tax inequality, weighing more for the poorest.

However, Afif Domingos’ proposal ran into a practical problem. The spending cap froze public spending, which has now only been corrected for inflation from the previous year. Therefore, even if income increases with the creation of a new tax, this new resource could not be used for a new expense.

Under the cap rule, the only way to create a new expense is to cut another.

Otherwise, it would be necessary to go through the ceiling, which is also a possibility, but could create a collapse in the economy, if done clumsily, by altering market expectations about the government’s ability to control public debt.

After Bolsonaro’s ban, Renda Brasil returned to the debate again in mid-September, through a “bombastic” interview by the special secretary of Finance of the Ministry of Economy, Waldery Rodrigues, on the G1 portal.

In the interview, Rodrigues said that the government’s economic area was studying that retirements and pensions be separated from the minimum wage and frozen for two years. The savings generated would be used to finance Renda Brasil.

This time, Bolsonaro’s reaction was almost immediate. “Freezing pensions, cutting aid for the elderly and the poor with disabilities, a dream of someone disconnected from reality,” the president published on social networks.

“Until 2022, in my government, it is forbidden to speak the word Renda Brasil. We will continue with Bolsa Família, period,” he added, in a video posted on his Facebook profile.

Bolsonaro’s last point would not last long. At the end of that same September, the president would announce the creation of Renta Ciudadana.

The program, according to Senator Márcio Bittar (MDB-AC), rapporteur of the PEC (Proposal for Amendment to the Constitution) of the Federative Pact, would have two sources of financing: resources for the payment of court orders – public debt titles recognized later of a final decision of Justice. – and part of Fundeb (Fund for the Maintenance and Development of Basic Education and the Valorisation of Education Professionals), the main source of financing for education.

The market reaction was immediate, with the stock market falling more than 2% on the day of the announcement.

Parliamentarians and economists came to the public light to say that the government’s intention to stop paying the debts recognized by the courts to use these resources for another purpose was a “default.”

In addition, the use of Fundeb resources was seen as a way to circumvent the spending ceiling, since the fund’s resources are not subject to the constitutional spending limit, unlike Bolsa Família.

Two days after Bolsonaro’s announcement, Paulo Guedes said the government would not use the precautions to finance the expansion of social assistance.

The government’s most recent “test balloon” to finance Citizen Income came out this week through the press. According to CNN, Guedes was defending himself behind the scenes to fund the program with resources from the so-called budget bank amendments.

According to the report, by 2021, the bank amendments are expected to add up to approximately R $ 7 billion, an insufficient amount to finance Citizen Income, whose annual estimate is an expense of R $ 50 billion, of which R $ 34 billion could come from the budget planned for Bolsa Família.

Although it is not official, analysts are skeptical of the new possibility.

“The amendment weighs little in the total budget, but it weighs a lot for the deputies,” says Fabio Klein, public accounts analyst at Trends Consultoria. “The idea of ​​removing the amendment to the deputies, which has important political purposes, does not seem sustainable so that the deputies can allocate resources to their regions and support bases. Politically it seems difficult.”

Another point contrary to the proposal is that this would not be a permanent source of funds. “The ideal, when creating a permanent expense, is also to have a permanent source of financing.”

According to economists, there are two problems caused by these government comings and goings and the uncertainty about the future of social assistance in 2021. The first is the lack of clarity about the future of public accounts and the second, the uncertainty for families of scarce resources.

“The problem is that there is no clear economic policy,” says Klein. “In the pre-pandemic, there was a policy of fiscal consolidation to resolve the mismatch in public accounts. This policy was based on a diagnosis that the problem lay in spending, which needed to be reduced ”.

With the pandemic, this had to be set aside and the government increased spending to fund emergency aid and provide cheap credit to businesses. With the closure of aid, there is social and political pressure from a president with the intention of running for re-election in 2022, to expand social assistance next year.

“Creating the Citizen Income, without cutting other expenses, would create a brutal imbalance”, considers the economist.

For Lauro González, coordinator of the Center for the Study of Microfinance and Financial Inclusion of the Fundação Getúlio Vargas (FGV), social insecurity is the most serious problem.

According to the economist, a first point is that it is not yet known what the strength of this second wave of the pandemic will be and if it will lead to the need for new restrictions on economic activity, at a time when there will be no more aid from emergency.

A second point is that the aid brought to light the so-called “invisibles”, some 38 million people who received the aid, but who are not part of the government’s Single Registry of Social Assistance and, therefore, will not have the right to Family Bag. when emergency help runs out.

It is also estimated that another 15 million to 20 million Brazilians have not even applied for help, despite living in households with incomes below the minimum wage and not receiving a Family Allowance or Continuous Benefit (BPC), intended for individuals. disabled and low-income elderly.

Finally, González points out that the economy is not yet in full recovery and that, even before the pandemic, activity had been slipping, with GDP (Gross Domestic Product) growth of around 1% between 2017 and 2019.

“With the end of emergency aid, with nothing to replace it, there will be a very large number of people who may experience a very complicated situation from the point of view of quality of life, especially in the face of the continuation of the pandemic “.

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