The Michel Temer government adopts a policy of economic austerity that is leading the country to disaster. The very high fiscal deficit planned by the Temer government in the Union budget of R$ 159 billion in 2017 and also in 2018, R$ 139 billion in 2019 and R$ 65 billion in 2020 demonstrates not only the failure of neoliberal economic policy, but , above all, the purpose of the Michel Temer government to maintain that policy in the coming years that will lead Brazil to the status of "scorched earth". A fiscal target of successive deficits from 2017 to 2020 will further increase the government's gigantic debt.

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VERY HIGH FISCAL DEFICIT IN PUBLIC ACCOUNTS TAKES
BANKRUPTCY TO THE BRAZILIAN ECONOMY
Fernando Alcoforado *
Every economic analyst knows that the fall in public revenue that is currently occurring
in Brazil is fundamentally due to the reduction in economic activity and not the fall in
inflation in recent months, as Finance Minister Henrique Meirelles said. Economic
activity is measured by GDP (Gross Domestic Product), which is the sum of household
consumption, private and public enterprise investment, government spending, and the
trade balance (export revenue less import expenditure). GDP growth mainly depends on
increased consumption, investment, public spending and export revenue. During the
Michel Temer administration, there was a sharp fall in household consumption due to
the increase in unemployment and the fall in the investment of companies that
contributed to the downturn in the country's economic activity.
The fall in economic activity in Brazil resulted not only from the disastrous Dilma
Rousseff government but also from the action of the Michel Temer government which,
with its recessionary economic policy, contributed to deepen the recession which
resulted in widespread corporate failure and mass unemployment of 26 million
unemployed, according to the PNAD. In order to reactivate economic activity, the
federal government should promote a reduction of the exorbitant interest rates practiced
by the financial system to encourage private investment, reduce the high tax burden
with a drastic decrease in public spending and a reduction in the cost of existing
infrastructure in Brazil with the attraction of private investors to enable its expansion
and reduce the cost of its logistics.
In addition to these measures, the federal government should increase public collection
and, on the other, reduce drastically costing. The federal government could promote the
increase of the public collection with: 1) taxation of large fortunes with assets over R$ 1
billion that could yield approximately R$ 100 billion per year; And, 2) raising the tax on
banks. On the other hand, the reduction of costing expenses would be obtained by: 1) a
drastic reduction in the number of ministries and public agencies and expenditures at all
levels of government; And, 2) drastic reduction of the economy's basic interest rates to
reduce the size of the public debt and the burden of its amortization. This would be the
condition for the federal government to have the resources to carry out the public
investments necessary for the reactivation of the Brazilian economy.
Instead of adopting the measures described above, the Michel Temer government
preferred to implement the policy of economic austerity that is leading the country to
disaster. The high fiscal deficit in public accounts planned by the Temer government in
the Union budget of R$ 159 billion in 2017 and also in 2018, R$ 139 billion in 2019 and
R$ 65 billion in 2020 demonstrates not only the failure of neoliberal economic policy,
but, above all, the purpose of the Michel Temer government to maintain that policy in
the coming years that will lead Brazil to the status of "scorched earth". A fiscal goal of
successive deficits from 2017 to 2020 will further increase the government's gigantic
debt, which will need to borrow to fund spending.
The government did not say what the impact of the increase in the fiscal deficit will be
on the public debt whose payment burden corresponds to 45% of the Union's budget. To
reduce these costs with the payment of public debt, it is imperative that the federal
government renegotiate with its creditors the lengthening of this payment so that it can

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have resources for investment. Regrettably, the Temer government does not adopt this
measure that would make it possible to avoid cutting social benefits with the adoption
of labor and social security reforms and the increase in taxes that will inevitably happen
with the government's economic policy put into practice.
The strategies adopted by the Temer government to increase revenue and reduce public
spending are all incapable of solving the serious economic crisis in which Brazil is
debated as shown below. The Temer government's strategy to increase revenue consists
of taxing exclusive funds that will lead to fewer resources for investment and higher
federal contributions from 11% to 14% for salaries above R$ 5,300 which will reduce
household consumption. In the short term, the proposal that will generate more revenue
will come from the postponement of salary adjustments foreseen for 2018 of the servers
of the Federal Executive that will imply in the reduction of the consumption of the
families. The Temer government's strategy to reduce public spending has been to close
60,000 vacancies that are open, to reviewing benefits such as reducing housing
allowance and freezing salaries of commissioners that will have a negative impact on
household consumption. The Temer government wants to enforce the salary ceiling of
R$ 33.7 thousand from the civil service. In addition, it announced a restructuring of
public service careers, which will lead to a reduction of the initial salary of workers
entering the government who, too, will impact negatively on household consumption.
The maintenance of this economic policy by the Michel Temer government means
continuing the economic "bleeding" that leads Brazilian companies to bankruptcy and
the suffering of the immense majority of the Brazilian population with mass
unemployment. This situation will only come to an end with the departure of Michel
Temer and his ruling group from the presidency of the Republic with the installation of
a national salvation government made up of personalities with proven competence and
unblemished morality to convene a new Constituent Assembly to correct the distortions
of the 1988 Constitution and make it possible to establish new directions for Brazil, not
only in economic, political and social terms, but also in ethical and moral plans. After
the Constituent Assembly, with the political sanitation of Brazil, general elections
would be called.
* Fernando Alcoforado, 77, member of the Bahian Academy of Education and the Brazilian Academy of
Letters - Bahia Section, engineer and doctor in Territorial Planning and Regional Development by the
University of Barcelona, university professor and consultant in the areas of strategic planning, business
planning, regional planning and planning of energy systems, is the author of the books Globalização
(Editora Nobel, São Paulo, 1997), De Collor a FHC (Editora Nobel, São Paulo, 1998), Um Projeto para
o Brasil (Editora Nobel, São Paulo, 2000), Os Condicionantes de Desenvolvimento do Estado da Bahia
(PhD Thesis, University of Barcelona, http: //www.tesisenred.net/handle/10803/1944, 2003),
Globalização e Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento da Bahia do
Século XVI ao Século XX e Objetivos Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The
Necessary Conditions of the Economic and Social Development- The Case of the State of Bahia (VDM
Verlag Dr. Müller Aktiengesellschaft & Co. KG, Saarbrücken, Germany, 2010), Aquecimento Global e
Catástrofe Planetária (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2010), Amazônia
Sustentável- Para o progresso do Brasil e combate ao aquecimento global (Viena- Editora e Gráfica,
Santa Cruz do Rio Pardo, São Paulo, 2011), Os Fatores Condicionantes do Desenvolvimento Econômico
e Social (Editora CRV, Curitiba, 2012), Energia no Mundo e no Brasil- Energia e Mudança Climática
Catastrófica no Século XXI (Editora CRV, Curitiba, 2015), As Grandes Revoluções Científicas,
Econômicas e Sociais que Mudaram o Mundo (Editora CRV, Curitiba, 2016) e A Invenção de um novo
Brasil (Editora CRV, Curitiba, 2017). Possui blog na Internet (http://fernando.alcoforado.zip.net). E-
mail: falcoforado@uol.com.br.