Coronavirus-Hit Brazil Considers Major Public Funds For Poor And Unemployed
Since he was laid off from a São Paulo auto repair shop in March, mechanic Edson Santana has struggled to find a job. His fiancée, Jessica Fernandes de Andrade, has been unable to work for weeks because of lingering fatigue and shortness of breath after a case of COVID-19.
But they're pulling through with each receiving a pandemic emergency stipend of $109 per month. "We've been able to manage, and I have been able to take care of her," Santana, 38, says.
He says they have Brazilian President Jair Bolsonaro to thank: "He's helping the neediest people. It's the right thing to do."
Pressured by civil society, the government launched the benefits in April as pandemic shutdowns were battering the nation's already shaky economy. As of July, they reached more than 30 million households — home to half the population of the largest country in Latin America — with an average monthly benefit of $163 per home. Now the relief is also providing an unlikely popularity boost for Bolsonaro, a far-right president who has insulted welfare recipients and who protested measures to prevent what became one of the world's largest coronavirus outbreaks.
Approval for Bolsonaro rose to 37% in August from 32% in June, according to pollster Datafolha, his highest rating since taking office in January 2019. Datafolha found that much of his increased popularity came from the demographic eligible for the new stipend.
Now, with the emergency stipend set to expire in September, Bolsonaro says his administration is planning a "Brazil Income" — an expansion of cash transfers to the poor that have been traditionally associated with the country's left.
Brazil is renowned for its massive, nearly 2-decade-old cash-transfer program for the poor, Bolsa Família (often translated as "family allowance"). As of March, it reached 13.8 million families, paying an average of $34 per month. (The national minimum wage is about $190 per month.)
The emergency stipend greatly expanded the payment, raising meager incomes for many and replacing lost earnings for others.
Luis Carlos Aranha, 34, a day laborer in a small town in São Paulo state who received Bolsa Família before the pandemic, says what changed for him with the larger stipend was becoming able to "buy food like fruit and ham for our daughters, instead of just rice and beans."
But the stipend was meant to be temporary. Legislators from different parties are now pushing the Bolsonaro administration to launch broad, long-term income support for the poor.
Whither the Chicago school
While implementing a basic income could lift Bolsonaro's popularity, it could also bring him to a crossroads regarding an election promise to keep a tight budget.
His economy minister, Paulo Guedes, trained at the University of Chicago with thinkers who helped direct the economic "shock treatment" of Chile's Augusto Pinochet dictatorship. That unleashed a spree of harsh government spending cuts and privatization to stem chronic inflation in Chile. Bolsonaro's pledges to dramatically slim down Brazil's government won praise from investors.
Government economists predict the nation's debt will reach about 95% of gross domestic product with this year's emergency budget. But in 2021, the government risks exceeding a spending limit imposed after President Dilma Rousseff of the Workers' Party was impeached over fiscal issues in 2016.
Guedes and business leaders have repeatedly warned that generous government spending should be kept in check to keep the economy stable and maintain investor confidence.
If Bolsonaro "cedes to the populist temptation of irresponsible spending and breaks the rule of the ceiling, it could bring the country to a crisis like the one that we lived through in the Dilma [Rousseff] government," Fernando Schüler, a professor at business school Insper, wrote in an op-ed last week.
Bolsonaro's economic team floated a "Brazil Income" proposal that would set the average Bolsa Família payment at around $46 per family, but Bolsonaro rejected it as too low.
Many lawmakers want a higher transfer amount to be available to a wider range of Brazilians after the pandemic assistance expires.
With a larger cash transfer, says congressman Felipe Rigoni, "we can avoid millions of people falling into extreme poverty while also establishing security so they could train for better jobs." Rigoni, of the Brazilian Socialist Party, is a coordinator of a congressional bloc for basic income that formed last month with members from 23 of the 24 parties in Congress.
Rigoni says a robust basic income could stay within budget by cutting costs elsewhere. Leandro Ferreira of the Brazilian Basic Income Network, a research group that's advising the congressional bloc, says a guaranteed income for more than 30% of Brazilians could be financed through measures such as closing tax loopholes for the rich.
Bolsonaro has displayed a new friendliness to social spending, including recent visits to inaugurate public works in Brazil's poor northeast, much in the style of his political nemesis, the Workers' Party.
Gleicyelen Silva, a 25-year-old saleswoman in the northeastern state of Maranhão who voted for Bolsonaro, says she is not bothered by his apparent economic shift, adding that "he is still very different from the Workers' Party in that he stands for conservative Christian values."
There's another group untroubled by Bolsonaro's shift: the military, a major pillar of his support. In a pension reform and budget cuts last year, military benefits remained largely untouched.
Bolsonaro's economic legacy may thus end up looking less like Pinochet's pro-market regime in Chile and more like a period during Brazil's own military regime in which the government spent heavily.
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