Brazil’s leaders tout austerity (just not for them)

SÃO PAULO, Brazil — Brazil’s sickly economy is hemorrhaging thousands of jobs a day, states are scrambling to pay police officers and teachers, and money for subsidized meals is in such short supply that one legislator suggested the poor could “eat every other day.”

Still, not everyone is suffering. Judges are enjoying a 41 percent raise. Legislators in São Paulo, Brazil’s largest city, voted to increase their own salaries by more than 26 percent. And Congress, which is preparing to cut pension benefits around the country, is allowing its members to retire with lifelong pensions after just two years in office.

Brazil is struggling to pull out of its worst economic crisis in decades, and President Michel Temer says the country needs to curb public spending to do so.

Yet it did not help his dismal approval ratings when he hosted a lavish taxpayerfunded banquet to persuade members of Congress to support his budget cuts, with 300 guests eating shrimp and filet mignon.

Outside such rarefied circles, Mr. Temer’s austerity measures are igniting a fierce debate over how the richest and most powerful Brazilians are protecting their wealth and privileges when much of the country is enduring a harrowing economic decline.

Much of the ire revolves around the centerpiece of Mr. Temer’s austerity drive: his success in persuading the scandal-ridden Congress to impose a cap on federal spending for the next 20 years.

Mr. Temer, who rose to power last year after supporting the impeachment of his predecessor, Dilma Rousseff, says the cap, which would limit the growth in spending to the rate of inflation, is needed to scale back ballooning budget deficits.

Investors have applauded the measure as a turning point for Latin America’s largest economy. But critics are lashing out at the spending cap, saying it could harm the poor for decades to come, especially in areas like education.

The debate is all the more caustic because Mr. Temer’s government is resisting calls to raise taxes on wealthy Brazilians, who still enjoy what some economists describe as one of the most generous tax systems for the rich among major economies.

For instance, Brazilians remain exempt from paying any taxes at all on dividends from stock holdings, and they can easily use loopholes to significantly lower taxes on other sources of income.