Merry Christmas!

“Package of Goodies”: Lula Brings Christmas Forward with Maduro’s Copyright, Governs by Decree and Turns Brazil into Confetti

Merry Christmas!
Lula Brings Christmas Forward and Governs by Decree
By Dr. Nelson Jorge Mosco Castellano

Picture the scene: October has barely begun. Leaves are falling in the Northern Hemisphere, but in Brazil temperatures are rising with the heat of the election season, and Luiz Inácio Lula da Silva has already torn the classic red star from his chest and slipped into a sweaty velvet Santa Claus suit.
He runs through the streets of Brasília handing out banknotes as if they were candy from a runaway piñata.
But credit where credit is due: generous royalties and copyright fees should immediately be sent to Nicolás Maduro, the galactic genius who first patented the brilliant idea of declaring Christmas in October so the people might forget their troubles to the rhythm of bonuses and Bolivarian cheer.
With that populist manual under his arm, and blithely brushing aside any notion of budgeting, fiscal responsibility laws or boring parliamentary procedures, Lula has unleashed the infamous “package of goodies”: a hallucinatory spending spree already approaching the staggering figure of 405 billion reais in measures rolled out at full speed in the electoral race.

Santa has arrived: miracles without money and laws without Parliament

Since governing with somebody else’s checkbook is an Olympic sport, this early Christmas package comes loaded with promises so delirious they would make a bargain-basement magician blush.
Let us look at some of the crown jewels in this repertoire of fiscal fantasy.

Debt forgiveness by divine decree

With the blink of an eye, Lula signed off on the mass forgiveness of accumulated tax debts for millions of individuals.
In the parallel universe of campaigning, bank and tax debts are not paid: they are nationalized or simply vanish into thin air thanks to patriotic faith, leaving banks and the Treasury to lick their wounds.

The BNDES truckload of cash (Brazil Sovereign Plan 2.0)

No money? The state is broke? Never mind: the floodgates of public banking are opened to pour out tens of billions of reais in soft loans, diesel and gasoline subsidies, and even vehicle-purchase programs (Move Brasil) for taxi drivers and app-based drivers.
The Central Bank’s printing press throws sparks, belches black smoke and applies for political asylum, but the show must go on.

Free public transport financed by… faith and parliamentary funds

Promising free buses on weekends sounds wonderful, but since money is scarce, the plan is magically sustained by “crumbs from parliamentary amendments” and invisible cuts to budget lines nobody knows where they come from or who audits them.
A genuine magic trick: you ride the bus for free while the future taxpayer gets the bill.

The great tax daydream

Expanding the income-tax exemption for those earning up to 5,000 reais and granting partial relief up to 7,350 reais is soothing to the soul. The problem is that the state insists all this is “fiscally neutral.”
Of course, garoto, garota: hospitals, schools, roads and public-sector salaries will remain open and gleaming thanks to the generosity of the Holy Spirit and tax revenue sprouting from trees.

The magicians’ club: from Lula to illusionist Pedro Sánchez

This masterstroke is nothing more than the South American branch of a universal classic.
If we cross the Atlantic Ocean on a skateboard, we run straight into his identical twin in the art of fiscal magic: socialist Pedro Sánchez.
Spain’s prime minister is the undisputed world champion of pulling rabbits out of a hat and christening them “bonuses.”
He has a bonus for every second of your life: the cultural bonus, the motorcycle bonus, the breathing bonus and the infallible “vote for me, please, and I’ll even give you your neighbor’s house” bonus.
Both Lula and Sánchez operate under the same law of progressive physics: public money belongs to no one; therefore, spending it by the handful before an election creates neither inflation nor debt, but rather an angelic aura of political and poetic justice.
While traditional economists tear out the few hairs they have left as they watch the fiscal hole soar toward astronomical figures, our leaders hand out plastic smiles and state debit cards with the euphoria of a child in somebody else’s toy store.

From Brazil’s “package” to Southern magical realism

Fernando Pereira, “El Pacha,” drums, cymbals and the VAT monster.
But step down from the Brazilian float for a moment and look south toward the Río de la Plata, where magical realism becomes a carnival troupe rehearsed with surgical precision.
Picture the scene: the comparsas parade, drums and cymbals thunder, and there stand Fernando Pereira and “El Pacha” Sánchez leading the statistical celebration with ear-to-ear smiles.
They proclaim to the four winds, with drums and fanfare, that —hallelujah, miracle of social engineering!— 90,000 people have escaped poverty thanks to the divine providence of public transfers, reaching the opulent and stratospheric income of 27,000 pesos.
“We defeated misery by decree, subsidies and creative statistics so we could celebrate!” Fernando Pereira shouts triumphantly, while “El Pacha” shakes the rattles and uncorks boxed wine on the official stage.
There is, however, one small and amusing detail the triumphant epic of the boys always leaves out of the fine print.
At the precise moment when the happy family walks through the supermarket door with its shiny twenty-seven thousand pesos in its pocket, the most implacable monster in the Republic lies in wait behind the shelves: the terrifying 22% VAT.
Wham! The voracious state appears from nowhere with a giant vacuum cleaner and, in one stroke, sucks away almost a quarter of their fortune on every basic product, every tomato and even the toilet paper.
The plan is a masterpiece of black humor: they hand you alms with the left hand so you can go dance with the drums beside Pereira and El Pacha, while the right hand delivers a monumental stab through indirect and regressive taxation to finance the party decorations.

Merry Christmas in October to all — and let Credisol pay!

At the end of the day, Lula’s fake Christmas flavored with Maduro, Sánchez’s magic bonuses and the drum-and-cymbal celebrations of Fernando Pereira and El Pacha all end exactly the same way in every caricature: with the most violent economic hangover in history, the inflation thermometer exploding through the roof and taxpayers dressed as clowns trying to guess where they will find the money to pay the bill.
Meanwhile, put on the Phrygian cap, enjoy the feast and keep applauding to the rhythm of the murga, because tomorrow’s debt interest… well, surely by then they will have invented a new bonus to fix it!

Electoral fiscal populism
Pre-election public spending
Taxes and transfers

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