Senate Approves Emergency PEC in Second Round; the text goes to the Chamber | Politics

The proposal provides protocols to contain public spending and a series of measures that can be adopted in the event of non-compliance with the spending ceiling, a rule that limits the increase in Union spending to the inflation of the previous year. The text also allows the resumption of emergency aid.

At the first moment of the session, the senators approved the basic text by 62 votes to 14.

The parliamentarians rejected a highlight, a proposal to change the main text, presented by Senator Paulo Rocha (PT-PA). The highlight suggested the elimination of the tranche that stipulated a limit of R $ 44 billion for spending outside the ceiling with emergency aid.

The text is now being analyzed by the deputies. According to the president of the Chamber, Arthur Lira (PP-AL), the majority of the leaders agreed with the fast rite and the matter must be voted on directly in plenary, without going through commissions.

• Find out how each senator voted on the base text

The approved proposal does not detail the amounts, duration or conditions of the new emergency aid. The text makes fiscal rules more flexible to accommodate the resumption of the program. This is because, according to PEC, the eventual resumption of aid will not have to be subject to the limitations provided in the spending ceiling.

The proposal grants authorization for breach of the limitations only for the Union, trying to avoid a further deterioration of state and municipal accounts.

The text also determines that the expenses with the new program will be foreseen through the opening of an extraordinary loan, which will be sent by the government for analysis by Congress.

This Wednesday, in addition to the report, Senator Márcio Bittar (MDB-AC), rapporteur of the PEC, stipulates a limit for spending outside the ceiling, in the amount of R $ 44 billion, to cover the new aid.

This lock is not an estimate of how much the program will cost, but rather a limit of resources to fund it. The limit was established after parliamentarians tried to extend to Bolsa Família the possibility of extrapolating the ceiling, a proposal that, according to Arthur Lira, will not be approved by Congress.

In the following video, since the end of February, the experts analyzed the possibility of resuming the payment of emergency aid.

In a webcast last week, President Jair Bolsonaro said that emergency aid should resume in March, lasting four months, as shown in the video below.

Initially, the government’s economic team defended the amount of R $ 200, while the congressmen proposed at least R $ 300, that is, half the amount paid at the beginning of the program in 2020.

The government also wants to halve the number of beneficiaries, thus providing aid to around 32 million Brazilians.

The central objective of PEC is to create mechanisms that stabilize public accounts. Currently, this work is carried out by two devices already installed:

• the golden rule, which prohibits the government from incurring debts to pay current expenses, such as salaries, pensions, electricity bills and other costs of public machinery;
• the spending ceiling, which limits Union spending to the previous year’s inflation.

According to the Emergency PEC, when the Federal Government is about to violate the golden rule or break the ceiling, cost containment measures will be automatically adopted.

These “triggers” will be activated when expenses reach a certain level of uncontrol. If mandatory spending is achieved at the rate of 95% of total spending, the federal government will be prohibited:

• grant a salary increase to public officials;
• hire new employees;
• create bonuses.

PEC also provides exceptions. The readjustment of remuneration can occur if so determined by a final judicial decision (firm and unappealable) or if it is planned before the PEC enters into force, for example.

According to the text, new hires will only be made to replace vacancies and senior positions, for example, as long as they do not mean an increase in expenses. The Union shall be obliged to take such measures.

Survey of the Independent Fiscal Institution (IFI) of the Senate says that, with these criteria, the triggers would only be activated in 2025, in the case of the Union. For states, Federal District and municipalities, the adoption of the measures is optional.

PEC also states that:

• If the expenses represent 95% of the income, the state and municipal governments will be able to choose the measures, but the triggers will be adopted separately by the Executive, Judicial and Legislative powers. If the entities do not implement the package of restrictions to contain the expenses, they will suffer sanctions;
• The Union cannot serve as a loan guarantor for a state that refuses to activate austerity triggers;
• For the Union, the triggers will also be activated in the event of a public decree of calamity;
• In the event of a calamity, states and municipalities can trigger the triggers. If they do not take the measures, they will face sanctions, such as a ban on taking out loans with the Union as guarantor.

The text says that, within six months after the entry into force of the PEC, the Executive will present to Congress a plan for the gradual reduction of federal tax incentives and benefits.

According to the proposal, incentives for free zones, philanthropic institutions, constitutional funds, basic food baskets and scholarships for higher education students will not be included in this plan.

The proposal also gives five more years for states and municipalities to pay the so-called precautions. Precautions are public debt securities recognized by the courts. When someone wins a lawsuit against a public entity for debt, they receive a caution and enter the payment queue.

Initially, the rapporteur proposed the end of the constitutional floors for spending on health and education. Faced with the negative repercussions and, when he realized that the text would not pass in the Senate, Márcio Bittar ended up removing the part of the proposal.

In addition to removing the section, Bittar made other changes to the report.

Currently, the Constitution establishes that, of the funds collected through PIS / Pasep contributions, 28% must be allocated to initiatives that receive incentives from the National Bank for Economic and Social Development (BNDES).

PIS and Pasep are programs that aim to finance unemployment insurance and benefits. They feed on contributions from private companies and public organizations.

Initially, Bittar proposed to exclude that point from the Constitution. In this case, BNDES would stop receiving the percentage. In the final version of the opinion, the rapporteur went back and kept the transfer to the bank. According to the parliamentarian, the issue could “create an obstacle” and hinder the progress of the vote.