From Cardoso to Lula: The Politics and Policies of Reform in Democratic Brazil

FROM CARDOSO TO LULA: THE POLITICS

AND POLICIES OF REFORM IN

DEMOCRATIC BRAZIL

MARIA HERMÍNIA TAVARES DE ALMEIDA

UNIVERSITY OF SÃO PAULO

From Cardoso to Lula: the politics and policies of reform in

democratic Brazil

Maria Hermínia Tavares de Almeida

University of São Paulo

[email protected]

Abstract

The paper discusses the basic features of economic and social policies

reforms, under Cardoso and Lula administrations. It sustains that both

presidents shared the same agenda of reforms and that moderate

reformism, instead of neoliberal radicalism, has been the rule. It

sustains, also, that moderate reformism can be explained by the

characteristics of Brazilian political institutions – especially federalism

and coalition presidentialism.

Introduction

Reforming has been the name of the game in Brazil, since

democratization. Social protection reform began with the first civilian

government, in 1985. Market oriented economic reforms came later.

Although they broke into the governmental agenda under Fernando

Collor de Mello (1990-1992) they gained momentum during the eight

years Presidency of Fernando Henrique Cardoso (1995-2002). Social

protection and economic reforms were both central to Cardoso´s policy

initiatives. In both cases, changes in public sector roles and

prerrogatives were at stake. Nevertheless, although the issues

belonged to the neoliberal reform agenda – international trade

liberalization, privatization of public firms, regulatory reform, monetary

reform, inflation target policies, tax and fiscal reforms, social security

reform, targeted cash transfer programs -- the script and the actors

were not. In Brazil, moderate reformism prevailed instead of neoliberal

fundamentalism. The ongoing administration of Luiz Inácio Lula da

Silva (2003-2006), against all odds, accepted the changes promoted by

his predecessor and continued in the same moderate reformist path.

Neither social-democratic, nor neoliberal reformist, governments, in

Brazil, have been basically pragmatic, facing the challenges of the

moment under tight economic constraints, in a complex institutional

setting, a plural and diversified polity and political elites that favored

negotiation and arrived at a certain degree of convergence.

This paper analyses the last ten years of reforms in Brazil, under

Cardoso and Lula administrations. It sustains that both presidents

shared the same agenda of reforms and that moderate reformism,

instead of neoliberal radicalism, has been the rule. It sustains, also,

that moderate reformism can be explained by the characteristics of

Brazilian political institutions – especially federalism and coalition

presidentialism.

In the first’s part, the evolution of social protection reform is presented.

In the second, the same thing is done for economic reform. In the third,

we discuss how institutions such as decentralized federalism and

coalition presidentialism defined incentives and constraints to the

reformist process.

Reforming the social protection system

Poverty and inequality reduction stood high in the agenda of

democratic opposition against military rule. The fact that high rates of

economic growth were insufficient to reduce poverty significantly —

and even increased income inequalities— during the Brazilian

“economic miracle”, under authoritarian government, was attributed to

a particular choice of economic policies and regressive social policies1.

The opposition to authoritarian rule was fought in the name of civil

liberties and democratic institutions, reshaping the federation through

decentralization and paying the “social debt”, V.G., reducing poverty

and inequalities.

Prevailing social protection system was thought to be a perverse

combination of excessive centralization at federal level, fragmentation

and overlapping of programs and policies, inefficient social

expenditures, clientelism and regressive distribution of benefit and

services.

The social protection system that came to age under the authoritarian

regime could be considered a special case of conservative welfare

regime (Esping-Andersen, 1990)2 . The criticism to it set the guidelines

of reform. It should embody decentralization, participation of the

beneficiaries, measures to shun clientelistic misuse of social programs,

rationalization and increased efficiency of social expenditures,

universalization of access and a more even distribution of benefits and

services.

At the same time, emergency policies aiming at extreme vulnerable

groups were thought necessary until sustained economic growth and a

reformed social protection system were put in place.

As usually happens when social reform is at stake, epistemic

communities (Heclo, 1974; Rimlinger, 1982; Weir, Orloff & Skocpol,

1988), gathering together university researchers, governmental

institutions researchers, policy makers and international organizations,

such as PHO, ILPES/CEPAL, IADB, were important for designing

innovative reform blueprints.

1 Major international organizations, such as UNDP and BIRD, recognized the need for development policies to include specific goals regarding poverty and inequality reduction in the 70s.2 Draibe & Aureliano prefer to call it a particularistic-meritocratic system (1989) while Werneck Vianna (1998) prefers to classify it among the liberal or residual welfare regimes. I tend to agree with Draibe & Aureliano.

Changes begun with the first civilian government3 and acquired

institutional form under the 1988 Constitution4. They pointed out

towards a social protection model granting universal access to social

security, basic health care services and basic education. Competences

and duties among federal levels were reshaped bringing to the fore a

decentralized and cooperative model with significant expansion of

municipal responsibilities and decentralization of fiscal resources.

In the 1990s, those reform guidelines were implemented through a slow

process of decentralization of responsibilities and resources and the

expansion of the provision of social benefits and health, education a

social welfare services. Two issues have been especially important to a

successful decentralization. The first was monetary stability that came

with the Real Plan, in 1994 granting predictability to the flux of

resources from national to state and municipal administrations. The

second was institutional and policy learning allowing for the definition

of a set of incentives for redistributing responsibilities, as much as for

cooperation among governmental levels in providing social services.

Around the middle of the decade, municipalization of social assistance

and basic health care was completed5 and a lot had been accomplished

regarding the first for years of education. On the other hand, access to

basic education and health care became, at last universal. Social

welfare was expanded with the creation of cash transfer programs for

elder and disable persons.

3 As discussões e primeiras iniciativas de reforma do sistema de saúde tiveram início no governo Sarney. São deste período, também, as primeiras experiências de reforma descentralizadora da educação feitas por governos estaduais. Programas emergênciais destinados aos mais pobres foram montados pelo governo federal. Entre eles, destacou-se o programa de distribuição de leite.4 Draibe (1999:10) resumiu as mudanças introduzidas pela carta constitucional em termos de: “a) ampliação e extensão de direitos sociais, b) concepção de seguridade social como forma mais abrangente de proteção, c)um certo afrouxamento do vínculo contributivo como princípio estruturante do sistema, d)universalização do acesso e expansão da cobertura, e) recuperação e redefinição dos patamares mínimos dos valores dos benefícios sociais, f) maior comprometimento do estado com o sistema, projetando um maior grau de provisão estatal pública de bens e serviços sociais”.5 Em 2001, 90% dos 5.531 municipíos brasileiros já havia assumido a gestão plena da rede de atenção básica à saúde.

During Fernando Henrique Cardoso`s first term (1995-1998), social

security reform began to tackle the distortions of a system with highly

regressive distribution of benefits. A constitutional reform was

necessary to allow for a moderate reform of private sector retirement

and pensions scheme. Nevertheless, due to fierce opposition of

powerful unions and opposition politicians, the government failed to

change the rules for the civil service employee’s.6.

Last but not least, the federal government created new and innovative

policies targeting the poor. Four conditional cash transfer programs

aiming at different vulnerable groups were established: Bolsa-escola,

Erradicação do Trabalho Infantil (PETI), Bolsa-alimentação, Auxilio-gás,

and Agente Jovem. Together with other special programs, they were

meant to create a social safety net7.

The choice for cash transfer programs, instead of expanding

governmental services, was thought to circumvent bureaucracy and

trim clientelism. Comunidade Solidária, conceived and commanded by

first lady Ruth Cardoso, searched new forms of bringing together

governmental ministries and agencies and NGOs.

In order to reduce political exchange and pork barrel, the Cardoso

administration established formulae to calculate the values to be

transferred to subnational governments in the case of grant-in-aid

programs.

The administration failed in the areas of crime and public security,

housing and sanitation, where no innovative initiative came out.

Although social safety net programs gained importance, during Cardoso

´s second term in office, universal policies – such as education and

basic health care – continued to be central to the federal government

agenda. In this sense, Cardoso´s social policies did not broke up with

6 Para uma análise da reforma da previdência ver, Melo (2002).7 The other were: previdência rural e dos programas não contributivos da assistência social?, os seguintes:, Programa de Saúde da Família, Programa de Apoio à Agricultura Familiar, além do Projeto Alvorada para os 2.361 municípios onde era maior a concentração de brasileiros situados abaixo da linha da pobreza.

prevailing conceptions of social protection aiming at achieving equity

and universalizing citizen access8.

In brief, when the PT won the national elections, in 2002, an important

part of the social reform agenda had already been implemented with

modest success in reducing poverty, improving education and health,

although it failed in diminishing income inequalities. Tables I and II

show data on some chosen social indicators.

Table I

BRAZIL – SELECTED SOCIAL INDICATORS

1991-2002

  1992 2002

Illiteracy rate (people 15 years old and more) 17,2 11,9

Infant illiteracy rate 12,4 3,8

Children 7-14 years old, in school 81,9 94,5

Mean Gap between age and level, in years (children 10-14 years) 2,1 1,1

Children 10-14 years old, in school, with more than 2 years of

educational gap(%)37,3 16,1

Mean of years in school (adults 25 years old or more) 4,9 6,1

Adults with 8 or more years of education (%) 28,6 39,5

Infant mortality (1/1000) 45,2 27,8

Unemployment rare (people 15 years old or more) 6,6 9,2

People bellow poverty line (%) 40,8 32,9

People bellow misery line (%) 19,3 13,4

Source: Pesquisa Nacional por Amostra de Domicílios (PNAD), apud IETS.  

8 Para um exemplo dessas concepções, ver o documento oficial do governo brasileiro para a Conferência Copenhagen+5, das Nações Unidas: Ministério das Relações Exteriores (2000).

Note: poverty line = R$ 125/month ( in real –september/2002 or approx. US 128 PPP)

misery line = R$ 62/month ( in real – september/2002 or approx. US 63,5 PPP)

Table II

BRAZIL – SELECTED INEQUALITY

INDICATORS

1992-2002

  1992 2002 2004

Gini Index 0,58 0,59 0,57

House income – participation of the poorest

20% (%)2,36 2,52

2,75

Illiteracy rate (white people, 15 years old or

more)10,6 7,7

7,1

Illiteracy rate (black and mulatto, 15 years

old or more)25,8 18,2

16

Mean of years of education (white people) 5,9 7,0 7,7

Mean of years of education (black and

mulatto)3,6 4,9

5,9

Unemployment rate (white people) 6,0 8,2 8,2

Unemployment rate (black and mulatto) 7,4 10,4 10,5

Unemployment rate (male) 5,5 7,4 7,1

Unemployment rate (female) 8,2 11,7 12,1

Percentage of people bellow poverty line

(North) 52,8 45,2

Percentage of people bellow poverty line

(Northeast)65,7 56,5

Percentage of people bellow poverty line

(Centerwest)33,8 23,5

Percentage of people bellow poverty line

(Southeast)27,5 21,0

Percentage of people bellow poverty line

(South)32,3 21,8

Source: Pesquisa Nacional por Amostra de Domicílios (PNAD) apud

IETS.  

Note: poverty line = R$ 125/month ( in real

–september/2002 or approx. US 128 PPP)

The PT arrived at federal government denying all previous

improvement in social conditions. Nevertheless, its actual policies did

not depart significantly from the previous government agenda.

One of Lula´s first move was to continue social security reform

attacking the benefits of civil services employees, succeeding where

Cardoso had failed. A new bill was approved, in the PT first year in

government, trimming the civil servants benefits and establishing the

same retirement scheme for both the private and the public sectors.

Although the government could justify it in the name of fighting

inequality and statutory privileges, the social security reform was also a

topic of the neoliberal agenda and was claimed to be so by PT´s left

wing and civil servant unions.

On the other hand, the rise of PT to federal government brought

poverty and hunger to the forefront of the national agenda. And in-cash

benefits programs became synonym of social policies. In his

Inauguration address, President Lula assured that at the end of his

administration every Brazilian would enjoy three meals a day, and

hunger would be banished from the national scene. The Hunger Zero

program was launched as the great innovative anti-poverty action. It

was meant to mobilize government and society in a crusade to eliminate

hunger9.

9 By the time it was put forward, specialists, based in academic research, had concluded that, due to the expansion universal policies, like health care and education among others, hunger no longer was a national problem. Malnutrition was circunscribed to some areas, most of them rural, located mostly in Northeastern Brazil (Monteiro,2003).

Hunger Zero was rather a misconceived and misguided multi-sector

policy package aiming at wrapping together structural policies, such as

agrarian reform and job creation, and target actions such as in-cash

transfers available to poor families exclusively for buying food, direct

food distribution, popular restaurants with subsidized meals, measures

against child malnutrition, financial support to family agriculture and to

construction of wells and small dams, and so forth. The new program

ignored the recent past experience in anti-poverty programs and tried

to start from scratch.

In spite of of intense government propaganda and the open support it

received from public opinion, Hunger Zero proved to be unfeasible and,

by the end of President Lula’s first year in power, was phased out. It

was replaced by the Family Grant program, which, instead of

concocting an additional in-cash grant, promoted the merge of School

Grant, Food Grant and Gas-Aid, changed some of their rules and

expanded their coverage up to 8,5 million families bye the end of

200510. Family Grant, still in the making, is meant to cover the whole

poor population in the next few years.

As of today, targeted anti-poverty policies, in government rethoric and

in government action, seemed to be kept apart from other social

policies and to have lost connection to any broader social development

proposals. The Family Grant embodies the PT conception of how to

fight and eventually eliminate poverty. Especially after the social

security reform, social protection reform is no longer in the

governmental agenda. The social Ministeries either directly continue

the previous policies or Cardoso´s era or try to improve upon them11.

10 The Grant consists of two components: the first is due to every family below the poverty line and is free from conditionalities and the second is conditioned to children school enrollment. The program size and the lack of adequate monitoring tools makes the control of school attendance an impossible goal.11 The establishment of FUNDEF, a fund to spurr municipalization of fundamental education and improve teachers salaries, has been one important innovation of Cardoso´s administration. Lula´s government is proposing to expand the fund to encompass also secondary education.

Finally, Lula´s administration also brought to the fore front affirmative

action as a way to dealing with ingrained inequalities. The federal

program PROUNI established quotas at private universities for poor

students that came from public high schools and for ethnic minorities.

Quotas are also part of government bill on Federal University System

reform that is still in Congress.

In brief, in spite of of the strong symbolic association between Lula and

the PT and the promise of social reform their government did not have

an innovative approach to the issue. Rather than change, Lula´s social

policies show significant continuity with those of previous government

and an unexpected affinity to the neoliberal agenda.

Economic reforms

The issue of economic reforms, understood as market oriented reforms,

broke into governmental agenda under Fernando Collor de Mello´s

administration, as a result of the international influences but also of

political elite’s policy learning, after almost a decade of economic crisis

and failed efforts to curb inflation. Reckoning the importance of

reforms and its relations to monetary stabilization was a process that

marched in slow pace. Previous consensus over the virtues of state-led

development and the import substitution model of growth has been

strong, extensive and therefore difficult to break12.

Under Collor, economic reforms began with efforts to liberalize trade

and with an essay in putting forward a program of privatization of

public firms. Non tariff barriers to import were reduced along with a

schedule of cut in tariffs themselves. Graph I shows the evolution of

the weighted mean tariff, from the end of Sarney´s administration to

the beginning of Cardoso´s second term. From then on no big changes

occurred. The hugest slash took place under Collor and Franco.

Graph I

Brazil – Evolution of Import tariffs (weighted mean)

12 For a discussion of factors leading to it see Tavares de Almeida (2004).

1988-1998

Source: Fundação Getúlio Vargas, apud Patri (2000)

On the other hand, during Collor´s short period in government,

privatization of public firms began for real. Law 8.031/90 created the

Programa Nacional de Desestatização (National Program of Divestiture) 13. Steel, petrochemical and fertilizer public firms were sold. After his

resignation, the program continued, albeit reluctantly, under former

vice-president, then successor Itamar Franco (1993-1994). The process

gained momentum in the following Administration, led by Fernando

Henrique Cardoso (1995-1998). The new president introduced

important institutional changes. Law 8.031 was reshaped and

constitutional reform, in 1995-96, allowed previous State monopolies in

telecommunications, electricity, coastal and domestic navigation, gas

and oil, to be included in the privatization program. Legislation creating

regulatory agencies to supervise privatized companies in

telecommunications, oil and electricity sectors was also approved by

the Congress. During Cardoso's second term in office (1999-2002)

privatization continued, although at a much more moderate pace. In a

13 The law established an initial list of firms to be privatized, put the program under the National Development Bank (BNDES) management and gave the Executive the authority to add or exclude firms from the list. Complementary legislation defined privatization currencies, allowing for the use of several kinds of Federal debt certificates acquired by the financial markets in order to buy shares of auctioned enterprises.

matter of fact, privatization of federal electricity firms came to a halt

due to political pressures and, above all, to divergent views about the

best privatization model inside Cardoso´s coalition parties14.

From 1991 to 2001, 68 enterprises owned by the Federal government

have been privatized. Among them almost all steel, chemical,

petrochemical and fertilizer public companies, Brazilian hugest Mining

Corporation, the railway system and several electricity enterprises.

From 1998 to 2001, the whole telecommunications system was

auctioned. Some important privatizations also occurred at State-level15.

As shown elsewhere (Almeida & Moya, 1997; Almeida 2004), the

Presidency took Congress' preferences into account when establishing

the list and the order of corporations to be privatized. Privatization

began in areas where an early and firm majority of legislators favored

its transfer to private hands: steel, chemical, fertilizer and

petrochemical firms. Constitutional amendment to allow for the

privatization of coastal navigation, gas, iron- ore mining,

telecommunications and electricity came after privatization policy in

general had won some degree of legitimacy. And although State

monopoly of oil was broken, Petrobrás, the hugest Brazilian company

and the icon of State-led development, was not included the

privatization program.

Under Cardoso, economic reforms such as privatization and trade

liberalization became part and parcel of the successful effort towards

monetary stability and fiscal adjustment. Those goals were pursued

through an array of policies that changed in time and included:

monetary and exchange rate policies, inflation target rules, increase in

14 On Cardoso´s policies for this sector see Goldemberg & Prado (2005)15 As of the end of 2001, the Federal program reached the US$ 37,705 billion mark, including debts transfered to the new owners. This sum goes up to US $ 68,623 billion when the telecommunications sector is added.

taxes and other compulsory contributions16, limiting rules for

expenditures of the different level of government17

Those policy initiatives demanded a significant mobilization of political

resources. Some of them required constitutional amendment and the

Congress approval. Therefore, the institutional designing and

institutional building, under Cardoso administration, was far from

trivial.

On the other hand, some issues pertaining to the international reform

agenda, although present in Brazilian public debate never were really

included in the governmental agenda. This is the case for tax reform

and labor reform. Finally, other reforms failed or acquired a limited

scope such civil service and administrative reform.

While out of government, the PT made a fierce opposition to Cardoso´s

economic and reform policies, thought to be neoliberal, subdue to the

international organizations´ agenda and contrary to national interests.

Nevertheless, Lula´s government did not brought any significant

change regarding economic policies, which have been in clear

continuity to those implemented in the four previous years: inflation

targets, high interest rates, free exchange rates, high tax burden and

compliance to international financial compromises and agreements.

Despite internal dissent and critics from its allies, continuity rather

than change has been the hallmark of PT government economic

policies18.

16 Tax as percentage of GDP grew from 19,88 % in 1988 to 35 % in 2002. On the subject see Afonso (2004), Melo (2005).17 For a good overview of economic policies, specially during Cardoso´s second term see Oliveira & Turolla (2003)18 The Finance Minister and his staff , always supported by Lula, are the garantors of continuity while critic from other important PT ministers and party leaders, supported by the Vice-President, have stressed the necessity of putting growth instead of stability in first place. The debate inside Lula government reproduces the cleavages present during the two Cardoso´s terms between the so called “neoliberals” and “developmentalists”. On this see, Sallum Filho (1999).

Although opposed to Cardoso´s privatization policy, the PT government

did not tried to reverse what have been done, but did not proceed

privatizing what was left of Brazilian public sector: the federal energy

companies and Petrobrás.

On the other hand, Lula administration got congressional approval for

a law allowing for public-private partnership in utilities and public

services sectors that was meant to attract private investment to develop

much needed Brazilian infrastructure systems.

At same time, as previous said, the PT government send to Congress

and got the approval for a moderate social security reform bill that

continued Cardoso´s effort to cope with social security increasing

deficits.

As much as Cardoso, Lula tried to formulate a blueprint for reforming

tax and fiscal systems but failed, due to the difficult of overcoming the

fragmented and opposed interest of different economic sectors,

subnational governments, either states or municipalities, and federal

ministries and agencies (Melo, 2005).

The continuity of economic policies between the two adversarial

presidencies expresses the convergence of Brazilian political elites on

the value of currency stability and on the policies adequate to sustain it.

International constraints were surely important but they would not be

effective if a new consensus had no emerged. This was not an

ideological neoliberal consensus, but rather a pragmatic convergence

molded inside a specific institutional set of decentralized federalism

and coalition presidentialism.

Reforming under coalition presidentialism

Party government never existed in democratic Brazil. The combination

of federalism, proportional representation and rules that facilitate the

organization of new parties and their participation in electoral

competition have produced a very fragmented party system and the

necessity for presidents to govern with huge multiparty coalitions.

Brazilian coalition presidentialism19 is a complex political arrangement,

similiar to parliamentarianism in the mode of government formation.

Ministries and other important positions in the Executive, such as

directories of public enterprises and governmental agencies, are

divided among parties belonging to governmental coalition in Congress.

When parties have important basis all over the country, the distribution

of ministries and first rank governmental positions must oblige its

different state level factions. Therefore, huge instead of minimum party

coalitions have been rule, especially under Cardoso and Lula.

Table IV shows the governmental party coalitions under different

Brazilian presidents.

Table IV

Governing coalitions in Brazil – 1988-2004

President

President´sparty

Parties in governmentcoalition

BeginingOf the coalition

End of thecoalition

Period % of Chamber of Representatives(in the date of its begining)

Days

Months

Sarney 1

PMDB PMDB-PFL 15/03/1985

30/09/1988

1.295

42,5

19 Sobre o tema ver Abranches (19 ), Amorim Neto ( 199 ), Figueiredo & Limongi (2000), Santos & Amorim Neto (200), Figueiredo, Limongi & Cheibub (200 )

President

President´s

Parties in governmen

Begining

End of the

Period % of Chamber of RepresentativSarney

2PMDB PMDB-PFL 06/10/19

8814/03/1990

529 17,5 64,40

Collor 1

PRN PRN-PDS-PFL

15/03/1990

31/01/1991

322 10,5 29,70

Collor 2

PRN PRN-PDS-PFL (BLOCO1)*

01/02/1991

14/04/1992

438 14,5 34,59

Collor 3

PRN PDS-PTB-PL-PFL (BLOCO2)*

15/04/1992

30/09/1992

168 5.5 43,54

Itamar 1

Non-partisan

PSDB-PTB-PMDB-PSB- PFL (BLOCO3)*

01/10/1992

30/08/1993

333 11 60,04

Itamar 2

Non-partisan

PSDB-PTB-PMDB-PPPFL (BLOCO3)*

31/08/1993

24/01/1994

146 5 55,64

Itamar 3

Non-partisan

PSDB-PP-PMDB-PFL (BLOCO4)*

25/01/1994

31/12/1994

340 11 55,27

FHC I 1 PSDB PSDB-PTB-PMDB-PFL

01/01/1995

25/04/1996

449 16 57,26

FHC I 2 PSDB PSDB-PTB-PMDB-PFL-PPB (BLOCO5)*

26/04/1996

31/12/1998

979 32 77,19

FHC II 1

PSDB PSDB-PMDB-PPB-PTB-PFL (BLOCO6)*

01/01/1999

05/03/2002

1.159 38

76,61

FHC II 2

PSDB PMDB-PSDB-PPB

06/03/2002

31/12/2002

300 10 45,22

Lula 1 PT PT-PL-PCdoB-PDT-PPS-PSB-PTB-PV

01/01/2003

22/01/2004**

35512,5

41,91

Lula 2 PT PT-PL-PCdoB-PPS-PSB-PTB-PV-PMDB-(BLOCO7)*

23/12/2004

31-12-2004

34311,5

61,21

Sources: www.planalto.gov.br; Meneguello, 1998; Legislative data base, Cebrap. Organized by Argelina Figueiredo e Fernando Limongi.

Criteria: 1end of the term and change in party composition of Ministry (exit or entry of Minister from a new party in the coalition); 2. Beginning of a legislature or of a parliamentary bloc, changing the % coalition seats in Congress.

* Composition of parliamentary blocks:

BLOCO1 = PFL, PRN, PMN, PSC e PST;

BLOCO2 = PFL, PSC, PRN e PL;

BLOCO3 = PFL, PSC e PRN;

BLOCO4 = PFL, PSC e PRS;

BLOCO5 = PPB, PL e PMDB, PMN, PSC, PSD e PSL;

BLOCO6 = PFL, PL, PMN, PSC, PSD, PSL e PST;

BLOCO 7= PL, PSL.

Number of seats of parties forming a block is considered only when the party remains in the block for the whole period of the coalition.

** The PDT left officially Lula´s government and his base in Congress on 12/12/2003. Nevertheless, the criterium used was the exit of Minister Miro Teixeira on 01/ 23/2004.

Fernando Henrique Cardoso presided to a huge center to the right

congressional coalition and Lula to an odd left to the right one. The

2002 elections excluded the possibility of a PT government or a

government supported only by leftist parties. Lula won 46, 4% of the

ballots, in the first run, and had confortable 61, 3% majority in the

second run. Nevertheless, his electoral coalition20 won only 25,3% of

the House of Representatives seats and 22,2 % of Senate. O PT

obtained 17,7% e 18,5% of the seats in the House and Senate. Even if

we add to Lula´s coalition those seats controlled by other leftist parties

the leftist block would come short of a majority with its 37, 6% of the

representatives and 35, 5 % of the senators.

Under these circunstances, the PT and its allies had three options. The

first was to build up a minority left coalition and negotiate issue by

issue the votes of the parties ate the center. This option, hazardous as it

could be, was not impossible the moment Lula administration marched

towards the center. The second possibility was building a majority

attracting the centrist PMDB to the governmental coalition. The third

was going far beyond the center including small right wing and

20 O Partido dos Trabalhadores coligou-se com Partido Liberal (PL), Partido Comunista Brasileiro (PCB), Partido Comunista do Brasil Pcdo B) e Partido Municipalista Nacional (PMN).

patronage parties. Lula and his party chose this third way and build up

a huge left-right coalition that included center-to-the right parties like

the Partido Liberal (PL), and rightist small parties such as the Partido

Trabalhista Brasileiro (PTB) and Partido Popular (PP). In a matter of

fact, this was a coalition very similar, at its right wing, to the one that

supported Cardoso, who also counted on the PTB and the PP.

Nevertheless, it was more incongruous21 and more liable to small

patronage parties.

Table IV shows that several parties participated in both governments.

Nevertheless, while Cardoso had a huge majority during his two terms,

except for his last 9 months in office, Lula lead a minority coalition in

his first year in government.

The complexity of building and keeping together a majority coalition

from a fragmented party system is not the only challenge faced by

whoever wins the federal government. Besides that , Brazil is a quite

decentralized federation, where governors can be important actors22,

although lacking of formal veto powers. Their - and not presidential -

elections are pivotal to organize electoral competition and explain

electoral results. This is so due not only to the coincidence of electoral

cycles (Shugart & Carey,1992: 207) for federal and state level

executives and legislatives, but also due to the coincidence between

states´ limits and multinominal electoral districts for Congress and

State Legislative Assemblies (Lavareda, 1991; Piquet Carneiro &

Tavares de Almeida, 2006). In brief, institutional rules account for a

decentralized political system with several potential veto points and

veto players.

On the other hand, recent research has shown that veto points can be

circumvented and veto players neutralized. The legislative powers of

21 O eixo da coalizção de Cardoso foi a aliança entre um partido de centro (PSDB) e um partido de centro-direita (PFL) que compartilhavam uma agenda de reformas econômicas liberalizantes.22 On the subject see Abrúcio,1994,1998; Abrucio & Samuels,1997; Abrucio & Costa, 1998; Santos,2001, Souza,2003, Tavares de Almeida (2005, 200.)

the Executive and Congress internal rules have guaranteed Executive´s

predominance over the Legislative and a disciplined governmental

coalition in Congress, in spite of party fragmentation produced

federalism and electoral rules and politician’s autonomy granted party

rules ( Figueiredo & Limongi, 2000).

Table V, presented by Figueiredo & Limongi (2005), shows that the

Executive has been highly successful and has exerted significant

influence on the outcomes of the legislative process, even when it

lacked a majority of seats in Congress, as has been the case under

Collor. It also shows that Cardoso and Lula had both very positive

results in circumventing their opposition.

Table V

Brazil - Legislative production in different administrations – Ordinary laws

( 1989-2004)

Administratio

n

President´s

party in

Chamber of

Representatives

(% of seats)

Governmental

coalition in

Chamber of

Representatives

(% of seats)

Executive

success **

(%)

Executive´s

dominance

***

(%)

Subtotal 24,3 77,1 29,5 38,5

Sarney 36,8 64,4 71,3 77,9

Collor 8,0 34,8 65,0 76,5

Franco 0,0 58,7 66,0 91,0

Cardoso I 15,3 73,4 73,0 84,6

Cardoso II 18,5 72,8 70,4 84,4

Lula 17,5 50,4 79,8 95,6

Subtotal 14,7 59,1 70,7 85,6

Apud Figueiredo & Limongi (2005)

Source: Legislative data base, Cebrap.** Percentage of the Executive´s projects presented and approved during the same term.*** Percentage laws of all approved that resulted from Eexecutive´s initiative.

Nevertheless, these results rely significant on the President itself and

on the government´s congressional leadership capacities for

negotiating and making room for different interests. Although the

President controls important resources and can distribute an array of

benefits to his allies in order to get compliance, it is also true that he

must be open to negotiate his positions and must take into account

what he can and what cannot sensibly expect to approve, before

sending a proposition to Congress. In a matter of fact, succesfull

proposals must be accepted by the median representative of the

governmental coalition (Velasco, 2005), depending, therefore, on the

distribution of preferences regarding each issue at stake.

In other words, Brazilian institutional arrangements as long as it

stimulates broad multiparty coalitions, do not favor radical strategies of

change. Given the voters preferences, the governmental coalitions must

include the political center, therefore favoring negotiated policies and

moderate reforms. The prevailing institutional set gives powerful

incentives to moderation and continuity of governmental policies.

Under Cardoso´s administration it benefited the moderate reformers

against neoliberal radicals. Under Lula, it has strengtened the position

of the moderate and pragmatic group that already controlled the PT

machine.

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