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The great reckoning

Any relaxation should be conditional on a plan to control expenses, as intended by the government. It has aired the possibility of freezing the pay of civil servants and opened the possibility set forth in the Constitution of reducing the working life and salaries of public employees. The cost of the adjustment cannot fall only on the executive branch. Time limits and prohibition of more relaxation in the future need to be established to avoid generating leniency with the fiscal crisis, much less authorization to make more concessions to special interest groups.

It would also be important to reinforce the incentives from the golden rule for execution of the fiscal adjustment. The proposal of this article is to extend the responsibility for compliance with the golden rule to the heads of the judicial and legislative branches, not only the executive. In the current design, not only do these two branches not have any incentive to contribute to the fiscal adjustment — both have often created obligations for the federal government, which is solely responsible for failing to comply with the constitutional rule.

The branches have made decisions without considering the fiscal implications.

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This is a mistake. Decisions by the judiciary have hampered the fiscal adjustment, such as the injunction issued by Justice Ricardo Lewandowski of the Supreme Court suspending the delay of the pay raise of civil servants and increase of their social security contribution, and the injunction issued by Justice Luiz Fux authorizing housing support for judges. Further burdens have been placed on the federal government, such as injunctions issued in in favor of state governments that questioned the calculation of their debts.

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The presidential mandate will be threatened if Congress does not approve the necessary reforms to achieve fiscal balance. The responsibility of complying with the golden rule needs to be shared, creating incentives for fiscally responsible stances of all branches and levels of government.

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If this were the case, the pension reform might have been approved already. The current model weakens the public accounts and democracy.

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Zeina Latif is the chief-economist for Grupo XP. She has lectured at Mackenzie and Ibmec.

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Views Read Edit View history. By using this site, you agree to the Terms of Use and Privacy Policy. Country rock , folk-rock , rock. Go to Heaven Reckoning Dead Set Robert Christgau. Elizabeth Cotten. Bill Browning.

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