This article aims to demonstrate that the Lula government is faced with two major challenges in its effort to promote Brazil's economic and social development. The first challenge, of an economic nature, is represented by the obstacles that exist with the spending cap policy, despite the flexibility provided by the fiscal framework and the existence of an independent Central Bank, which make the Brazilian government unable to coordinate its fiscal and monetary policies, make public investments in the expansion of the economy and obtain macroeconomic stability and, the second challenge, of a political nature, is represented by the obstacles existing in the National Congress due to the fact that it does not have a majority in parliament, which prevents the federal government from putting its national developmental project into practice and fully meet social demands. For Brazil's progressive forces to re-elect President Lula in the 2026 presidential elections and obtain a parliamentary majority in the National Congress committed to political, economic and social advances, the Lula government will have to be successful on the economic front, promoting the expansion of the economy, increasing significantly generating jobs and income, keeping inflation under control and meeting the maximum social demands that benefit, above all, the country's underserved populations. Brazil's progressive forces need to commit, starting from the 2024 municipal elections, towards to elect the maximum number of mayors and councilors committed to Brazil's political, economic and social advances. These are the conditions to prevent, in 2026, right-wing extremists from regaining the Presidency of the Republic, expanding their participation in state governments and the National Congress and putting their nefarious anti-social and anti-national project into practice.

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THE OBSTACLES THAT IMPEDE THE DEVELOPMENT OF BRAZIL IN THE
CONTEMPORARY ERA AND THEIR POLITICAL CONSEQUENCES
Fernando Alcoforado*
This article aims to demonstrate that the Lula government is faced with two major
challenges in its effort to promote the economic and social development of Brazil that
needs to be overcome to prevent right-wing extremists from regaining the Presidency of
the Republic and expanding their participation in the state governments and in the
National Congress and put into practice their nefarious anti-social and anti-national
project. The first challenge, of an economic nature, is represented by the obstacles that
prevent the Brazilian government from making public investments in the expansion of
the economy and coordinating its monetary and fiscal policies, and the second challenge,
of a political nature, is represented by the obstacles existing in the National Congress
imposed by retrogrades politicians and parties that disable the Brazilian government from
implementing a national developmentalist project. Brazil's political, economic and social
advances in the present and future will only be achieved if the Lula government is
successful in overcoming these obstacles.
The inability of the State in Brazil to make public investments in the expansion of the
economy is part of the strategy of globalized neoliberal capitalism to transform it into a
minimum State since 1990. Minimum State is the name given to the idea of neoliberal
capitalism that the role of the State within of society must be as small as possible, carrying
out only those activities considered “essential” and of the first order. Neoliberal doctrine
preaches the smallest possible participation of the State in the economy, giving preference
to the private sector. As a result, the expected direct and indirect effects of reducing the
size of the State would be the reduction of taxation, market liberalization, privatization of
economic activities, de-bureaucratization and a more business-friendly environment.
The neoliberalism strategy to transform the Brazilian State into a minimal State began in
1990 during the Fernando Collor government, which, among other economic evils it
produced, culminated in the adoption of the public spending ceiling policy during the
Michel Temer government, whose central objective was to prevent the lack of control of
public accounts and the adoption of Central Bank autonomy during the Jair Bolsonaro
government with the aim of controlling inflation. With the public spending ceiling policy,
the Brazilian State was limited in its ability to promote public investment with the
financial asphyxiation to which it was subjected and made the Brazilian State's ability to
adopt economic, fiscal and monetary policies, articulated with each other with the
autonomy of the Central Bank. In addition to facing restrictions in its investment capacity,
the Brazilian State has also lost the capacity to act in the search for economic stability in
Brazil, given that it is with an increase in public spending or investment that the federal
government will be able to compensate for the eventual drop in the household
consumption (C), private investment (I) and exports (X) and the increase in imports (M)
to maintain GDP growth = C+I+ G+X-M or, with the reduction in public spending,
compensate the eventual increase in household consumption (C), private investment (I)
and exports (X) and the fall in imports (M).
If the public spending ceiling policy for the Union were maintained, the main trend would
be that, within a few years, federal government spending would have an increasingly
smaller share in the formation of Brazil's GDP, compromising economic and social
development of the Country, given that the federal government would be prevented from
increasing public spending to promote Brazil's economic growth or combat the recession

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with the adoption of compensatory measures from a macroeconomic point of view. This
is the reason why the inclusion of the spending cap policy in the federal Constitution
constituted a crime against the development of Brazil, that is, a crime against the country.
The public spending ceiling policy inserted in the Constitution of Brazil based on PEC
55/2016 during the Michel Temer government was a crime committed against the
development of Brazil because it sought to limit public spending for the next 20 years,
starting in 2017, which they would only be readjusted based on the previous year's official
inflation with the possibility of revision from the tenth year of validity. This means that
the federal government would be prevented from preparing the Union budget with a value
greater than that of the previous year and could only correct its values according to
inflation.
With the spending cap policy, some public spending could grow more than inflation, as
long as they were compensated with real cuts in other areas. This implied that, in practice,
public spending could not grow during its 20-year term, that is, public spending would be
frozen for 20 years, compromising public investments in energy infrastructure, transport,
communications, education, health, basic sanitation and popular housing necessary for
the economic and social development of Brazil. This means that if the public spending
ceiling policy were maintained, the Lula government would be unviable. In an attempt to
alleviate the burden of the cursed legacy of the spending ceiling policy adopted during
the Temer and Bolsonaro governments, the Lula government instituted the so-called fiscal
framework that has also been called the “new spending ceiling” now conditioned to the
increase in public collection. With the fiscal framework, the Lula government will be able
to increase public spending as long as there is an increase in public collection this year
and in future years to balance the government's accounts. This is an immense challenge
since the increase in public revenue depends on the expansion of the economy which, in
turn, depends on the increase in public and private investments. In other words, if there
is a drop in public revenue, the Lula government will not be able to make the public
investments necessary for Brazil's development.
In addition to the absurd PEC 55/2016 during the Michel Temer government, which
established the public spending ceiling, the National Congress during the Jair Bolsonaro
government approved Complementary Law 179/2021, which established the autonomy
of the Central Bank, whose president and directors have mandates fixed periods of four
years, not coinciding with that of the President of the Republic, both measures aimed at
incapacitating the Brazilian State in the adoption and execution of fiscal and monetary
policies. With the autonomy of the Central Bank, the National Congress made it
impossible for the federal government to adopt coordinated fiscal and monetary economic
policies, as is currently the case, as the recessive monetary policy imposed by the Central
Bank with extremely high interest rates, the largest in the world, makes the effort
unfeasible of the Lula government to promote the resumption of national development.
Furthermore, there is an obvious fact that the Central Bank's adoption of interest rates as
a method of controlling inflation has not worked in Brazil. The extremely high Selic
interest rates adopted by the Central Bank did not contribute to keeping inflation below
the inflation targets established from 2008 to 2015 and also in 2021. Inflation rates were
only below the inflation targets from 2017 to 2021 due fundamentally to the gigantic
economic crisis that occurred from 2016 onwards in Brazil and the impact of the new
Coronavirus pandemic that contributed to the fall in aggregate demand in the Brazilian
economy and not due to the Selic interest rates imposed by the Central Bank.

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The ineffectiveness of the Central Bank with its policy of increasing Selic interest rates
to combat inflation in Brazil has been proven. The ineffectiveness of the method of
increasing Selic interest rates in combating inflation in Brazil, which only benefits
rentiers, places on the agenda the need to replace this method with effective direct action
by the federal government on the factors that generate inflation with the adoption of
concrete measures to eliminate demand inflation, cost inflation, monetary inflation,
inertial inflation and the possibility of hyperinflation, when they occur. The Lula
government should combat inflation in the demand for goods and services by planning
the economy together with the productive sector so that national production meets the
internal demand for goods and services. When domestic production is insufficient, the
Lula government should commit to importing what the country needs. The Lula
government should combat inflation in production costs by monitoring the evolution of
the prices of wages, raw materials, inputs and taxes to adopt measures that help to avoid
their increase without a corresponding increase in productivity and encourage an increase
in productivity in agricultural production , industrial, commerce, services, electrical
energy and oil production systems and cargo transportation, and the increase in the
government's own productivity at all levels. It should be noted that increasing
productivity means increasing production over time, with the least use of resources, at the
lowest possible cost and the elimination of unnecessary expenses and waste. This can be
achieved through the use of more modern production systems and the rationalization of
the working methods used. To avoid monetary inflation, the government has to avoid
uncontrolled issuance of currency. To avoid inertial inflation, it is necessary to avoid price
indexation. To avoid hyperinflation, it is necessary to avoid inertial inflation.
Unfortunately, none of these measures to combat inflation can be adopted by the Lula
government with the existence of the independent Central Bank.
In addition to the first obstacle, of an economic nature with the obstacles represented by
the spending ceiling policy, despite the flexibility provided by the Lula government's
fiscal framework and the existence of an independent Central Bank, which make the
Brazilian government unable to coordinate its fiscal and monetary policies and making
public investments in the expansion of the economy, the second major obstacle occurs,
of a political nature, represented by the fact that the Lula government does not have a
majority in the National Congress, which prevents the federal government from obtaining
approval for its priority projects. In addition to being composed mostly of conservative
politicians, opportunists mostly uncommitted to the interests of the vast majority of the
Brazilian population, the National Congress also has among its members extreme right-
wing parties and politicians who seek to disable the Brazilian government from
implementing a national developmentalist project. The current political and economic
situation in Brazil demonstrates that it is not enough to elect a President of the Republic
committed to the country's progress. It is also necessary to renew the National Congress
by electing progressive representatives of the people to prevent the obstacles that impede
Brazil's development from continuing.
In addition to the first challenge, of an economic nature with the obstacles represented by
the spending ceiling policy, despite the flexibility provided by the fiscal framework and
the existence of an independent Central Bank, which make the Brazilian government
unable to coordinate its fiscal and monetary policies, carry out public investments in
expanding the economy and achieving macroeconomic stability, the Lula government
faces the second major challenge, of a political nature, represented by the fact of not
having a majority in the National Congress, which prevents the federal government from
putting into practice its national developmental project and meeting social demands in

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fullness. In addition to being composed mostly of conservative, opportunist politicians,
largely uncommitted to the interests of the immense majority of the Brazilian population,
the National Congress also has among its members extreme right-wing parties and
politicians who seek to disable the Brazilian government to implement a national
developmentalist project and avoid implementing projects of a social nature. The current
political situation in Brazil demonstrates that it is not enough to elect a president of the
Republic committed to the country's progress. In addition to electing a progressive
president, it is also necessary to renew the National Congress by electing the majority of
representatives of the people committed to political advances, economic and social to
overcome the obstacles that impede Brazil's development.
For progressive forces in Brazil to re-elect President Lula in the 2026 presidential
elections and obtain a parliamentary majority in the National Congress committed to
political, economic and social advances, the Lula government will have to be successful
on the economic front, promoting the expansion of the economy, significantly increasing
job creation and income, keeping inflation under control and meeting the maximum social
demands that benefit, above all, the country's underserved populations. Furthermore,
progressive forces need to commit, starting from the 2024 municipal elections, to elect
the maximum of mayors and councilors committed to Brazil's political, economic and
social advances. These are the conditions to prevent, in 2026, right-wing extremists from
regaining the Presidency of the Republic, expanding their participation in state
governments and the National Congress and putting their nefarious anti-social and anti-
national project into practice.
* Fernando Alcoforado, awarded the medal of Engineering Merit of the CONFEA / CREA System, member
of the SBPC- Brazilian Society for the Progress of Science, of IPB- Polytechnic Institute of Bahia and of
the Bahia Academy of Education, engineer from the UFBA Polytechnic School and doctor in Territorial
Planning and Regional Development from the University of Barcelona, college professor (Engineering,
Economy and Administration) and consultant in the areas of strategic planning, business planning, regional
planning, urban planning and energy systems, was Advisor to the Vice President of Engineering and
Technology at LIGHT S.A. Electric power distribution company from Rio de Janeiro, Strategic Planning
Coordinator of CEPED- Bahia Research and Development Center, Undersecretary of Energy of the State
of Bahia, Secretary of Planning of Salvador, is the author of the books Globalização (Editora Nobel, São
Paulo, 1997), De Collor a FHC- O Brasil e a Nova (Des)ordem Mundial (Editora Nobel, São Paulo, 1998),
Um Projeto para o Brasil (Editora Nobel, São Paulo, 2000), Os condicionantes do desenvolvimento do
Estado da Bahia (Tese de doutorado. Universidade de
Barcelona,http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e Desenvolvimento (Editora
Nobel, São Paulo, 2006), Bahia- Desenvolvimento 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), A Invenção de um novo Brasil (Editora CRV, Curitiba, 2017), Esquerda x Direita e a sua
convergência (Associação Baiana de Imprensa, Salvador, 2018), Como inventar o futuro para mudar o
mundo (Editora CRV, Curitiba, 2019), A humanidade ameaçada e as estratégias para sua sobrevivência
(Editora Dialética, São Paulo, 2021), A escalada da ciência e da tecnologia e sua contribuição ao progresso
e à sobrevivência da humanidade (Editora CRV, Curitiba, 2022), a chapter in the book Flood Handbook
(CRC Press, Boca Raton, Florida United States, 2022), How to protect human beings from threats to their
existence and avoid the extinction of humanity (Generis Publishing, Europe, Republic of Moldova,
Chișinău, 2023) and A revolução da educação necessária ao Brasil na era contemporânea (Editora CRV,
Curitiba, 2023).

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