President Temer continues to push for pension reform
Despite all pessimistic assessments, even among its closest allies, the government might try to begin discussions on pension reform in the House this week, just 10 days before the year-end recess.
President Temer is trying to convince leaders of his coalition parties that, when it comes to the October 2018 elections, not passing the reform would hurt lawmakers more than approving it. Without a reform, all of the government’s economic accomplishments would be severely damaged and could not be used as assets to attract voters.
The government believes the watered-down version of the pension reform proposal has been assimilated by voters, since it preserves the minimum age of retirement for men and women at 55 and 53 years of age, respectively. Only after a 20-year transition, in 2038, would the rule come into force, governing the minimum retirement ages of 65 (for men) and 62 (for women).
Beyond this disputable electoral favorability reasoning, Temer is also increasing the size of the budget each legislator is given to spend on social projects in their districts in exchange for votes in favor of the reform. Thus far, R$ 43 billion have already been committed to such projects, which may worsen the budget deficit next year.
Temer says that he will only proceed to the vote when he is sure to have the 308 yeas required by the Constitution to pass a constitutional amendment such as this. Most analysts think that he is presently supported by around 265 lawmakers.
Markets are also pushing heavily for the pension overhaul: the chief sovereign rating officer at S&P said in an interview with the daily newspaper “Valor” that failure to approve a reform would likely cause the agency to review Brazil’s sovereign rating.
Even if Temer succeeds in getting approval for social security overhaul in two consecutive House votes, its fate would still depend on the Senate, which must also approve it by a three-fifths majority in each of two votes.
In October, 2018, two-thirds of the Senate will be at stake in the polls and most candidates for a seat there may have a problem voting for a bill rejected by 60% of Brazilians a mere eight months before Election Day.
In any case, President Temer, against all odds, continues to push forcefully for this bill because of its symbolic importance to his program and to the economic agents that have strongly supported him.
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