President Michel Temer

What – Riots broke out during protests in numerous Brazilian cities against a fiscal policy approved by the Senate, with government buildings being attacked and numerous arrests being made. Protestors claim that the policy will negatively influence the socioeconomically disadvantaged in Brazil by cutting funding from important sectors such as education and health.

Why – Senate approval of a 20-year cap on federal spending was passed, solidifying the promises of austerity measures made by Temer when replaced impeached former-president Dilma Rousseff. The approval could limit spending to the rate of inflation in an attempt to reduce aggregate demand in the economy, which has been suffering from a severe crisis. In addition, protestors have been calling for the president to resign over claims that he solicited illegal campaign donations from the large Brazilian construction company Odebrecht as well as allegations that he pressured a cabinet minister to assist an ally in a property deal. Temer has indicated he has no intention of stepping down and will hold office until January 2019 when Rousseff’s term official ends. 

General Background – Michel Temer took office in September following the impeachment of Dilma Rousseff. Rousseff was accused of, and impeached for, moving funds between government budgets in order to hide deficit holes in social programs and increase her popularity leading up to the 2014 election. Such actions are illegal under Brazilian law. Temer entered office with promises of economic reform to help stabilize and bring Brazil’s suffering economy out of a deep recession. 

What’s Next – The Senate still must hold votes on other pieces of the austerity bill, including the exemption of education and health from spending limits. These votes will help determine whether fears of the cap negatively affecting Brazil’s impoverished citizens are legitimate or alleviated.

Update 1: The Senate has approved the spending cap bill, known as PEC 55, which will limit public spending to inflation for the next 20 years. Lawmakers are expected to reject calls to exempt spending on education and health despite protests.