On Wednesday, Brazil’s Chamber of Deputies passed its second austerity bill in a week, just hours before approving an amendment that changed the bill’s direction and increased federal spending for retirees. If passed by the Senate, the amended bill faces a possible presidential veto and represents a roadblock to the government’s strategy for increasing revenues.
The initial bill, which passed by 277 votes to 178, limited sick leave and restricted access to social security pensions for relatives of deceased employees in an attempt to save an estimated 7.5 billion reais ($2.47 billion) in public funds. The measure was a key component of the government’s strategy to balance fiscal accounts and avoid an impending credit downgrade, and its initial passage represented a win for President Dilma Rousseff’s current fiscal agenda.
However, amid backlash from the country’s largest labor union, the Central Única dos Trabalhadores (Unified Workers’ Central—CUT) and members of the president’s Partido dos Trabalhadores (Workers’ Party—PT), the lower house passed the amendment with a vote of 232 to 210. Nine PT members approved the changes to the bill, while five did not attend the vote. O Globo reports that the bill would not have been changed had all PT members in the lower house voted against the amendment.
Bloomberg called the amendment to the austerity measure the “first major setback” for Finance Minister Joaquim Levy, who has pushed an austerity agenda in order to reduce a growing federal deficit. Levy called last week’s approval of a bill reducing social-security benefits a “victory for all of society.”
Rousseff has threatened to veto the second bill after Wednesday night’s amendment passed, and is negotiating with labor unions and lawmakers to avoid a congressional override of the veto.
Seven more amendments to the bill were scheduled for a vote on Thursday.