VZCZCXRO3209
RR RUEHRG
DE RUEHSO #0038/01 0281839
ZNR UUUUU ZZH
R 281839Z JAN 08
FM AMCONSUL SAO PAULO
TO RUEHC/SECSTATE WASHDC 7849
INFO RUEHBR/AMEMBASSY BRASILIA 9003
RUEHBU/AMEMBASSY BUENOS AIRES 3038
RUEHAC/AMEMBASSY ASUNCION 3286
RUEHCV/AMEMBASSY CARACAS 0655
RUEHMN/AMEMBASSY MONTEVIDEO 2592
RUEHLP/AMEMBASSY LA PAZ 3696
RUEHSG/AMEMBASSY SANTIAGO 2289
RUEHRI/AMCONSUL RIO DE JANEIRO 8554
RUEHRG/AMCONSUL RECIFE 3974
RHEHNSC/NSC WASHDC
RHMFISS/CDR USSOUTHCOM MIAMI FL
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC 3013
RUEHC/DEPT OF LABOR WASHDC
UNCLAS SECTION 01 OF 03 SAO PAULO 000038
SIPDIS
SIPDIS
STATE FOR WHA/BSC, EEB/IFD/ODF, INR/IAA, INR/R/AA
STATE PASS USTR FOR KATE DUCKWORTH
NSC FOR TOMASULO
TREASURY FOR JHOEK
USDOC FOR 4332/ITA/MAC/WH/OLAC
USDOC ALSO FOR 3134/USFCS/OIO
DOL FOR ILAB
SOUTHCOM ALSO FOR POLAD
USAID FOR LAC/AA
E.O. 12958: N/A
TAGS: PGOV SOCI EAID EFIN ECON BR
SUBJECT: GOVERNMENT EXPANSION OF "BOLSA FAMILIA" BENEFITS DRAWS
CRITICISM
REF: (A) 07 SAO PAULO 10; (B) 07 SAO PAULO 1005
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SUMMARY
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1. On the last working day of 2007, President Lula expanded the
scope of Bolsa Familia, the federal monthly stipend benefiting some
11 million poor families, to include an additional payment for each
child aged 16 and 17. Opposition politicians called the action
unethical and possibly in violation of electoral law, which frowns
upon new or increased public benefits in an election year, but they
will not mount a legal challenge against it. None of their
candidates wants to go on record - or on the campaign trail -
opposing so popular a program. In October, Brazilians voters will
elect the Mayors and City Councils of the country's 5564
municipalities. End Summary.
2. The Bolsa Familia program ("BF"; ref A) provides 58 Reals per
month (about USD 33) to families with a per capita monthly income
under 60 Reals (about USD 34). Families with a per capita monthly
income between 60 and 120 Reals are eligible for partial benefits
based on family size and other factors. In addition, each head of
household is entitled to 18 Reals (about USD 10) per child up to the
age of 15, but children must attend school and be vaccinated, and
pregnant women must comply with pre-natal care requirements.
However, the extent to which the government monitors and enforces
compliance is the subject of some controversy.
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JUST UNDER THE WIRE
-------------------
3. Bolsa Familia, the government's flagship anti-poverty program,
already covers about 45 million Brazilians or just under one-fourth
of the population, about double the numbers when Lula took office in
2003, and thanks to effective government communication and outreach
the public strongly identifies the BF with President Lula personally
and with his Workers' Party (PT). In October 2007, the
administration sent to Congress draft legislation to extend the
program to cover children 16-17 years old with a proposed monthly
stipend of 30 Reals (about USD 17) for such beneficiaries. When
Congress, consumed by the battle to renew the CPMF financial
transactions tax (ref B), failed to vote on the bill, Lula on
December 28 signed a "Provisional Measure" with the same language as
the draft legislation, which took effect the next day.
4. Marco Aurelio Mello, President of the Superior Electoral
Tribunal (TSE), opined that the timing and manner whereby the
administration expanded the program were legally problematic. He
cited a 2006 electoral law that prohibits the government from
distributing goods, values, or benefits to voters during an election
year. By acting at the last possible moment before the beginning of
2008 - a year in which municipal elections are scheduled to take
place in October - to create a new benefit for a large number of
voters, the government appeared to be trying to skirt the law, in
his view.
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CHASING THE YOUTH VOTE
----------------------
5. Observers were quick to note that voting is mandatory in Brazil
and 16 is the minimum voting age. Gaudencio Torquato, a prominent
Sao Paulo political analyst and commentator, told poloff that the
measure was clearly designed to attract first-time voters to the PT.
The Ministry of Social Development and the Fight Against Hunger,
SAO PAULO 00000038 002 OF 003
which administers the program, estimated that the measure will
create an additional 1.7 million new beneficiaries, but this is
considered a rough estimate and the actual figure could be higher.
6. Minister of Justice Tarso Genro, for his part, asserted that the
action was legal and said it was intended to highlight the
government's determination to protect the Bolsa Familia program in
the face of possible budget cuts required by Congress's failure to
renew the CPMF. In a December conversation, Minister of
Development, Industry, and Foreign Trade Miguel Jorge told the
Ambassador that the "graduation" of some BF beneficiary families to
higher incomes had freed up funds to enable the government to raise
the age of eligibility from 15 to 17. However, the program's
expenditures continue to grow: its budget increased from 7.5 billion
Reals in 2006 to 8.7 billion in 2007, and is projected at 10.4
billion Reals (USD 5.95 billion) in 2008, an increase of about 20
percent.
7. Several members of the two main opposition parties, the Social
Democracy Party of Brazil (PSDB) and the Democrats Party (DEM),
shared Minister Mello's view that the action was potentially
illegal. Federal Deputy Antonio Carlos Pannunzio, PSDB leader in
the Chamber of Deputies, complained of the government's growing use
of Provisional Measures for legislation it is unable to convince
Congress to pass, while Senator Jose Agripino Maia, the DEM leader
in the Senate, questioned the legality of the government's action,
but neither party has challenged the provisional measure in court.
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COMMENT
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8. From a political and electoral perspective, a legal challenge is
probably a non-starter. Families with children about to turn 16 who
were facing the loss of the 18-Real monthly stipend will now instead
see it rise by 67 percent to 30 Reals. If the opposition were to
succeed in blocking the measure, their reward would be to have
stopped the government from giving money to poor families, offering
a propaganda victory to the government and ruling party. According
to media reports, President Lula anticipated the opposition's
dilemma and reaction. He was quoted saying that the opposition
would know better than to shoot themselves in the foot.
9. Bolsa Familia remains a controversial program in Brazil. Even
its fiercest critics acknowledge that it provides a lifeline to
Brazilians living in dire poverty. The government cites it as a
major contributor to poverty reduction and alleviation and, citing
its school attendance and vaccination provisions, stresses its
potential to break the cycle of poverty by ensuring better education
and health care for poor children. The opposition PSDB complains
frequently that the Lula administration merely consolidated several
assistance programs initiated by President Fernando Henrique Cardoso
into one umbrella program and then expanded it by softening the
eligibility requirements and providing lackluster enforcement,
thereby turning it into a major electoral vehicle. They also argue
that without accompanying investment to develop the economy in
impoverished areas, the program will only perpetuate dependency.
Many business representatives complain that workers turn down
employment offers to avoid losing their BF benefits, choosing
instead to work on the informal economy.
10. The government's expansion of the program so close to the
stroke of midnight - and while Lula is assuring the public in almost
the same breath that all branches of government will tighten their
belts and make sacrifices in the face of anticipated revenue
shortfalls - is open to question, but Lula is probably correct that
SAO PAULO 00000038 003 OF 003
the negative comments will soon pass, while his commitment to
Brazil's poorest citizens will be noted and remembered. End
Comment.
11. This cable was coordinated with and cleared by Embassy
Brasilia.
WHITE