Brazil’s Congress approved legislation that raises government expenditures on retirement benefits, setting up a showdown with President Dilma Rousseff’s administration that opposes spending increases.
Senators on Wednesday voted in favor of the proposal that lifts retirement payouts every year by the same formula used to calculate minimum-wage hikes. The lower house last month introduced the measure as an amendment to a bill that increases the minimum wage. The minimum-wage bill and measure on pension payments now go to Rousseff, who is expected to issue a veto.
That would be her second veto this year of a bill that increases government expenditures. Last month she vetoed legislation that allowed Brazilians to receive a higher pension at a younger age, replacing it with stricter requirements for collecting retirement benefits.
Rousseff and her economic team are trying to convince lawmakers to curtail government spending and raise revenue to shrink the budget deficit and stave off a credit downgrade. Yet her record-low approval rating and disagreements in the ruling coalition are making it difficult for the administration to win approval of its fiscal-austerity agenda.
“The defeat in today’s voting once again demonstrates the weakness of the government,” David Fleischer, an emeritus professor of political science at the University of Brasilia, said Wednesday. “This shows the government lacks strength in both the lower house and Senate. Dilma is in a bad way.”
Delcidio do Amaral, the government’s leader in the Senate, said Wednesday the president probably will veto only the part of the legislation that raises spending on retirement benefits.
Wednesday’s vote comes as the administration tries to win approval in the Senate of another bill to raise taxes on company sales revenue that already passed in the lower house.
The tax proposal is the final piece of legislation in Finance Minister Joaquim Levy’s austerity package, which he says is designed to protect Brazil’s investment-grade rating. The other bills in his package, which lifted taxes on imports and cut worker benefits, passed through both houses of Congress in May with some modifications.
Rousseff said in an interview with Folha de Sao Paulo newspaper published this week that the government may introduce new austerity measures, without providing details.
Many lawmakers, including some from the ruling coalition, have been reluctant to endorse Levy’s belt-tightening policies as Brazil enters its first recession in six years and unemployment rises. Eighty lower-house deputies from Rousseff’s base of allies voted in favor of the amendment on pension payments last month, including two from her party.
The dissent in Congress comes as Rousseff’s popularity sinks to the lowest of any president since the 1990s.