Brazil Under the Workers' Party

Continuity and Change from Lula to Dilma

Kenneth A. Loparo, K. Koonings, M. Wiesebron, Kenneth A. Loparo, K. Koonings, M. Wiesebron, Fabio De Castro, K. Koonings, M. Wiesebron

• Publisher: Palgrave Macmillan
• Year: 2014
• ISBN:
  9781137273819
• Topic: Politics & International Relations
• Subtopic: Political Campaigns & Elections
• Index: Politics & International Relations

This edited collection interprets and assesses the transformation of Brazil under the Workers' Party. It addresses the extent of the changes the Workers' Party has brought about and examines how successful these have been, as well as how continuity and social change in Brazil have affected key domains of economy, society, and politics.

1

Continuity in a Changing Brazil: The Transition from Lula to Dilma

Timothy J. Power

Just before 4:00 p.m. on 1 January 2011, Luiz Inácio Lula da Silva removed the presidential sash that had been bestowed upon him by Fernando Henrique Cardoso (FHC) exactly eight years earlier. As Lula draped the sash over the shoulders of his successor, Dilma Rousseff, the symbolism of constancy could hardly be more evident. This was only the second time in Brazilian history that a democratically elected president had transferred the office to another democratically elected president from the same party (the previous occasion had been 60 years earlier, when Lula was five years old and Dilma was three).¹ But Dilma was much more than an ordinary co-partisan from the Workers’ Party (PT): she had been Lula’s chief of staff for the past five years, and the leading architect of his second term in office. Dilma had been Lula’s personal choice to succeed him in the presidency, and in 2010 Lula became the first Brazilian president to serve two consecutive terms in office and then ‘elect his successor’ – a goal that had eluded his predecessor Cardoso in 2002. The transition from Lula to Dilma thus occurred in a context of unprecedented continuity. Thus, fairly or unfairly, virtually all of the outcomes of the Dilma government – achievements as well as failures – are likely to be judged against the benchmark of the Lula years (2003–10).

This chapter explores the significance of this transition by examining the circumstances under which Dilma came to inherit the presidency from her mentor. The chapter proceeds in five main sections. In the first section, I examine the macropolitical context of the 2010 general election. I argue that the election of Dilma must be understood not only in the context of an intra-PT succession, but rather in the context of 16 years of an emerging social democratic consensus in Brazil that began with the Plano Real² in 1994. I explore several points of this consensus that was engineered jointly (though not always smoothly) by the Cardoso and Lula administrations. The next section of the text looks at how Brazilian political elites view this consensus, and illustrates some potential fault lines within the very broad, heterogeneous Lula–Dilma coalition. In the third section, I revisit the course of the electoral process in 2010 and the principal results. In a fourth section of the chapter, I discuss several ‘lessons of the Lula years’ that are likely to imprint upon Dilma and her coalition government from 2011 onward. These lessons point to new lines of cleavage in Brazilian politics, some of which apparently favor the PT and its allies in the medium run. Finally, I review the first two years of the Dilma government against the backdrop of the unifying theme of this volume: the legacy of Lula.

From crisis to consensus? The reshaping of Brazilian democracy

After 21 years of military dictatorship, Brazil became a political democracy in 1985. As the country now approaches three decades of uninterrupted democratic experience, evaluations of the regime have become noticeably more laudatory. In the late 1980s or early 1990s, Brazil was often described as a precarious democracy, with dysfunctional institutions, poor leadership, and an aversion to necessary reforms (for example, Hagopian and Mainwaring, 1987; Power, 1991; Lamounier, 1996). But from the perspective of 2013, these alarmist descriptions seem dated. After the Plano Real in 1994 ended hyperinflation and ushered in a new era of stability, Brazilian democracy made significant advances in macroeconomic performance, social welfare, executive-legislative relations, and global activism. Moreover, with the passage of time Brazilian democracy has come to be seen relatively favorably in regional perspective, having managed to avoid some of the more spectacular ills that have afflicted several neighboring countries, for example, financial default, party system collapse, populism, secessionism, curtailment of liberal freedoms, and replacement of presidents by dubious constitutional means. Today, Brazil is more likely to be cited with respect to significant economic growth, improving social indicators, stable presidential leadership, and a healthy accrual of ‘soft power’ on the international stage. It was in this newly optimistic context that the elections of 2010 took place.

The eventual victor in 2010, Dilma Rousseff, was and is the beneficiary of these positive trends. Dilma owes much to her two predecessors in the Palácio do Planalto, Fernando Henrique Cardoso (Partido da Social Democracia Brasileira, PSDB, 1995–2002) and Luiz Inácio Lula da Silva (PT, 2003–10). After the protracted hyperinflationary crisis of 1987–93, a period in which many of the pessimistic views of Brazil understandably gained traction, the Plano Real and the election of Cardoso ‘rebooted’ Brazilian democracy in the mid-1990s. This led to a new phase in which major reforms were first instituted by the PSDB and allies and later expanded and consolidated by the PT and allies. In the wake of these important policy convergences, it became possible to identify an implicit cross-party consensus that emerged around several key issues of democratic governance in the Cardoso–Lula era. Here I stress the word ‘implicit’, because the consensus that has emerged is far from being a formal political pact, but is rather a shared understanding about the basic objectives of policy and best practices for implementation. Furthermore, the use of the term ‘consensus’ should not be taken to imply that the Cardoso and Lula governments were identical in their policy outputs. They were not. The differing emphases and styles of these two administrations show the emerging consensus to be somewhat elastic, preserving some space for innovation, experimentation, and credit-claiming within a broadly defined social democratic policy space. The five central points of consensus in the Cardoso–Lula period revolved around macroeconomic policy, social policy, a new federal equilibrium, coalitional governance, and renewed activism on the global stage.³

The fundamentals of macroeconomic policy date from Cardoso’s experience as finance minister in 1993–94 under Itamar Franco, yet they were not endorsed by the PT until almost a decade later. Cardoso’s initial objectives were a fiscal adjustment combined with the introduction of a new currency, the real (BRL). The real was to be aggressively defended by a Central Bank that was granted de facto (though not de jure) independence. In Cardoso’s first term as president, the reform program was accelerated by conventional initiatives of privatization, state reform, and market liberalization, most of which required constitutional amendments. In this period, Lula’s PT led the minority left bloc in Congress that energetically opposed all of the major Cardoso reforms. However, during his fourth run for the presidency, in 2002, Lula released the Carta ao Povo Brasileiro that soberly laid out a rationale for leaving most reforms intact and maintaining the basic lines of macroeconomic policy (Spanakos and Rennó, 2006). Recognizing that Brazil’s hands were tied by the ‘turbulence of financial markets’, Lula agreed to continue inflation targeting and to maintain a healthy primary surplus equivalent to 4.25 percent of GDP. By the end of Lula’s first year in office, financial markets, domestic capitalists, and Wall Street seemed largely convinced of the new PT-led government’s commitment to responsible economic policies. The honeymoon was protracted: from 2004 to 2008, Brazilian GDP growth averaged nearly 5 percent annually, and the real appreciated more than 50 percent against the dollar. In this period, an interparty consensus formed around the ideas of continued inflation targeting, fiscal responsibility with a primary surplus, monetary policy in defense of the real, an improved tax take, and no reversals of the 1990s privatizations. Lula decisively followed the Cardoso-era model of keeping the ‘economic team’ almost completely insulated from day-to-day politics – a practice personally overseen by Dilma in her gatekeeping role as Lula’s presidential chief of staff.

Social policy is another area benefiting from broad cross-party consensus. As Marcus Melo (2008) has argued, progress in social assistance derives from a genuinely interactive process in which both the PSDB and PT have innovated, emulated, and expanded signature programs over the past 15 years. The result has been improving quality of policy, especially in conditional cash transfer programs. In the mid-1990s, PSDB and PT governments in Campinas and Brasília, respectively, innovated basic income programs as well as conditional cash transfer schemes (CCTs) that required regular school attendance (Bolsa Escola). After Bolsa Escola showed promise, Cardoso implemented a federalized version. In return, when in 2003 the Lula government merged Bolsa Escola with several smaller CCTs to create the renowned Bolsa Família program (Hall, 2006; see Wiesebron this volume), the political opposition was reciprocally supportive. The result is a social safety net that now provides a guaranteed income to over 12 million families covering nearly a quarter of the national population. The two substantive points here are basic incomes for the poor and aggressive investment in the educational system to improve human capital. Combined with the equally consensual policy of providing annual minimum wage increases above the rate of inflation, these policies reduced poverty and inequality in the Cardoso–Lula era, with the indicators improving most rapidly during Lula’s second term in office (Neri, 2012; this volume).

Post-1995 Brazil also saw important changes in the prospects for governability, both subnationally and nationally. Samuels and Abrucio (2000) observe that the bottom-up sequencing of the Brazilian transition to democracy empowered pro-decentralization governors and municipalista mayors during the constitutional assembly of 1987–88. Rapid fiscal decentralization in this period led to perverse outcomes, creating revenue shortfalls for the central government while encouraging subnational executives to embark on a long spending spree in the late 1980s and early 1990s (Rodden, 2003). To consolidate the fiscal adjustment required by the Plano Real in 1994, the federal government began an aggressive recentralization program that continued throughout the Cardoso years. In 2000, the landmark Lei de Responsabilidade Fiscal (LRF) locked in limitations on subnational public employment while simultaneously imposing hard budget constraints on the states. The reconstructed federal pact thus curtailed the blackmail potential of subnational governments, increasing the breathing room for the president during the Lula years. In effect, Cardoso spared Lula the federal headaches that he himself had endured in the 1990s.

Meanwhile, in Brasília, Cardoso improved coordination in executive-legislative relations by adopting explicit power-sharing arrangements with allied parties via a system that has come to be known as presidencialismo de coalizão (coalitional presidentialism).⁴ In transferring ministerial portfolios and generous allocations of public spending to his coalition partners, Cardoso wrote a sort of ‘user’s manual’ for power-sharing, and Lula read it carefully. One of Cardoso’s more controversial initiatives was to establish heterogeneous alliances with no requirement of ideological consistency. This pragmatic tactic was initially ridiculed by the PT: prior to 2002, Lula had never advocated a coalition that reached outside the ‘family’ of traditionally left-wing parties. Yet in breaking with this tradition in 2002, and in accepting a vice-presidential candidate from the conservative and clientelistic Partido Liberal (PL), the PT won the presidency for the first time. In power, the PT’s coalitional strategy was strikingly similar to that of the PSDB in the 1990s. Both parties successfully created interparty support coalitions ranging from 65 to 70 percent of the seats in Congress, allowing both Cardoso and Lula to dominate marginalized oppositions. Dilma has preserved the basic model of oversized, ideologically diverse coalitions.

Finally, the Cardoso–Lula era was marked by a renewal of Brazil’s international projection (see Visentini, this volume). This trend was visible not only in key global forums (the UN, the WTO) and in regional integration schemes (Mercosul, Unasul, and CELAC (Community of Latin American and Caribbean States)), but also in areas far removed from Brazil’s traditional domains of policy (for example, the commercial outreach to China, or the joint mediation with Turkey of Iran’s nuclear ambitions). The new activism was also combined with a dramatic upgrade in the personal engagement of chief executives in the foreign policy-making process (‘presidential diplomacy’). In describing this activism as a point of consensus, I am referring not to the content of specific foreign policies (which, as I show below, differed substantially from the PSDB years to the PT years) but rather to a widely shared principle that Brazil should be visible and dynamic in global affairs. Cardoso, for example, gave more attention to developed countries, especially the United States and Europe, where he was already well known as an intellectual. Lula, on the other hand, emphasized South-South relations and used presidential diplomacy to reach out to engage with new partners in Asia, Africa, and the Middle East. Lula became the public face of Brazil in the past decade: he was the only chief of state invited to address both the World Economic Forum in Davos and the World Social Forum in Porto Alegre (Scolese and Nossa, 2006, pp. 74–7), and played a key role in winning the 2016 Olympic Games for Rio de Janeiro. From 2011, Dilma faced the difficult prospect of living up to the international reputation of two well-travelled predecessors who in many ways had served as their own foreign ministers.

What does all of this convergence portend for the presidency of Dilma Rousseff? Macroeconomic policy, social policy, a revised federal pact, coalitional presidentialism, and renewed international projection are elements of a broad political consensus in Brazil and have become familiar emblems of the post-real regime. Thus, while it is correct to say that Dilma emerges from the popular Lula administration and from the plebiscitary election of 2010, that is only part of a larger story. Dilma is also a product of a revamped Brazilian democracy, one that is characterized by a bi-coalitional architecture and several important points of policy consensus.

Elite views of post-1995 Brazil

Since 1994, the bi-coalitional logic has dominated Brazilian presidential politics, with only the PT and the PSDB producing nationally viable candidates (although results for congressional and gubernatorial posts remain highly fragmented). In each of the past five presidential elections, the share of the first-round vote won jointly by the PSDB and PT has ranged anywhere from 70 to 90 percent.⁵ Given this established pattern and given 16 years of Cardoso and Lula, it was natural that the presidential election of 2010 – fought essentially between their respective political heirs, José Serra (PSDB) and Dilma Rousseff (PT) – would be characterized by frequent comparisons of the policy legacies of the two main parties. One year earlier, I participated in an elite survey that anticipated this debate and asked a representative sample of 139 federal legislators to rate the degree of continuity or change between the administrations of FHC and Lula.⁶ In Figure 1.1, the response items are ordered from top to bottom according to the degree of continuity attributed by legislators, and the overall congressional mean is indicated by the solid grey circle. On average, political elites see the degree of continuity from FHC to Lula as being highest in the areas of monetary policy and coalitional presidentialism – two of the main points of implicit consensus discussed above. Looking back on the Lula years, it is interesting to note that these two items correspond directly to the main substantive policy output (the maintenance of orthodox macroeconomic policy) as well as to the main aspect of political process (the management of a heterogeneous support coalition in Congre...

Table of contents

• Cover
• Title
• Copyright
• Contents
• List of Figures and Tables
• Acknowledgments
• Notes on the Contributors
• Introduction: Brazil under the Workers’ Party
• Chapter: 1 Continuity in a Changing Brazil: The Transition from Lula to Dilma
• Chapter: 2 Changing Repertoires of State-Society Interaction under Lula
• Chapter: 3 Brazil: From ‘Sleeping Giant’ to Emerging Power
• Chapter: 4 Trade-offs and Choices of Economic Policy in Brazil: The Lula Years and the New Directions toward Development after 2010
• Chapter: 5 Poverty Reduction and Well-Being: Lula’s Real
• Chapter: 6 Social Policies during the Lula Administration: The Conditional Cash Transfer Program Bolsa Família
• Chapter: 7 Violence, Crime, and Insecurity since 2000: Local Dynamics and the Limitations of Federal Response
• Chapter: 8 Urban and Housing Policy from Lula to Dilma: Social Inclusion with Territorial Segregation
• Chapter: 9 Social Inclusion in Rural Brazil under Lula
• Chapter: 10 Environmental Policies in the Lula Era: Accomplishments and Contradictions
• Index