The period between 1985-1988 was characterized by a democratic transition, which stressed the importance of the Welfare State in Brazil, a more democratic and redistributive, universal and equal state. This tendency was... [ view full abstract ]
The period between 1985-1988 was characterized by a democratic transition, which stressed the importance of the Welfare State in Brazil, a more democratic and redistributive, universal and equal state. This tendency was strengthened through the National Constituent Assembly, which ensured these social rights in the 1988 Constitution (CR / 88). Aiming to offer these social services, the federation’s entities took action by issuing coins, which worsened the inflation faced by Brazil since the 80s. The high interest rates of the early years of the Real and without reducing public spending, the country headed towards a dangerous fiscal imbalance. In this context, the Congress approved the federal government proposal which established standards for the management of resources and limits on public spending at all levels of government. Complementary Law 101/2000, known as the Fiscal Responsibility Law (FRL), also sought transparency in public administration, forcing governing authorities to disclose reports and statements of expenditures. The FRL sets limits to the indebtedness of the Union, states and municipalities and obliges governments to set annual fiscal targets and to indicate the source of revenue for each permanent expense propose. From the LRF, mayors and state governors were prevented from creating expenses for a period exceeding two years without stating from where the money would come.
Facing the growing demands for social services by the society to the State and the limitation imposed by the LRF of the public indebtedness, the supply and expansion of social services stipulated by CR / 88 depends on the growth of primary revenue from various Brazilian states. The increase in Brazilian tax burden occurred more significantly between 1996 and 2002, from 26.14% to 32.30% was used to finance these policies, and in the period 2002-2011 the country experienced a strong economic growth, which allowed the continuation and expansion of social services without increasing taxes. However, by failing to present a vigorous economic growth since 2011, the provision of social services was threatened, as its financing turned more and more difficult. Given the difficulty in raising funds for the expansion and maintenance of services, governments resorted to deficits to finance public policies, that is, had to contract debts, reaching 66.2% of GDP in 2015, and in 2011 this value it reached 51.3% of GDP. With this, the Brazilian government reaches a maximum limit of its debt forcing it to propose the Proposal for Constitutional Amendment – PEC 241/2015 –, which limits the growth of primary spending to previous year’s inflation, undermining the provision of social services, and ensuring the payment of debts, regardless of its variation.
Thus, this article aims to discuss the construction of the Social Welfare State in Brazil and the difficulty of its maintenance and expansion, depending on economic growth or taxation, and, at the same time, guaranteeing the payment of the public debt, putting it, by times, as a priority over the provision of social services.
