Maia and Alcolumbre Seek to Dominate Economic Policymaking After Bolsonaro-PSL Split

By January 2020Brazil

President Jair Bolsonaro faces a series of noteworthy political challenges ahead of the municipal elections in October 2020. He has seized control over economic decision-making and secured approval of the keystone pension reform, but he fractured his fledgling conservative-nationalist movement by leaving the second-largest party in Congress, the Social Liberal Party (PSL); he and his closest allies instead launched the Alliance for Brazil.

This division within the president’s political coalition now opens up greater opportunities for moderate political forces to seize the congressional agenda, via the leadership of Chamber of Deputies President Rodrigo Maia and Senate President Davi Alcolumbre – both members of the Democratas (DEM). A new generation of economically liberal social democratic representatives, including Federal Deputy Tabata Amaral, are eager to take advantage of the moment. They will vote for economic reforms while projecting a youthful, modern social democracy that strives to overcome the deep political polarization between Bolsonaro’s movement and the Brazilian left, led by the Workers’ Party (PT) and former President Luiz Inacio Lula da Silva.

The October municipal elections will test Bolsonaro and the sustainability of his conservative-nationalist movement. They will largely be focused on local issues but will also serve as a referendum on Bolsonaro and his economic policymaking. If the results lean left, then the president would likely lose his current ability to direct a congressional majority. For now, Bolsonaro continues to earn high marks among Brazilian voters, with ratings hovering around 60%. Of note, though, these are down from his honeymoon heights of 66%. He still rallies support as a crime and corruption fighter, but the economy threatens his popularity in 2020. Secretary of Economic Policy Adolfo Sachsida forecasts growth of 2% in 2020, with most of the expansion occurring during the second half of the year. Few expect unemployment, currently at 11.2%, to drop below 10% before October, and Brazilian voters remain anxious about their economic welfare.

Bolsonaro’s movement faces internal obstacles as well. In early January, the president announced that voters should only cast ballots for candidates who reject public campaign financing. His call may further distance himself from his former party, the PSL, which expects to spend over $43mn in public funds on the municipal elections in 2020. His new Alliance for Brazil must collect 492,000 membership cards before 4 April to qualify as a registered party so that it could nominate candidates for this year’s elections. The expansion of the new party and the president’s opposition to public campaign financing will further fragment the already-weakened conservative movement just months before the municipal elections.

Liberal moderates like Maia and Alcolumbre are the primary beneficiaries of this fragmentation. They are unifying, centrist politicians intent on deepening the government’s economic and fiscal reforms while also curbing Bolsonaro’s social policies, his authoritarian impulses, and the conservative movement’s electoral reach. We expect Maia and Alcolumbre to forge electoral coalitions in the coming months with the participation of the Progressive Party (PP), the Social Democratic Party (PSD), the Brazilian Democratic Movement (MDB) and the Brazilian Social Democratic Party (PSDB). Together with the Democratas, a coalition uniting all of these parties would hold 167 votes in the 513-seat Chamber of Deputies and 42 of 81 seats in the Senate. Maia’s and Alcolumbre’s presidential terms expire at the end of 2020, so their success in electing allies in this year’s municipal races will determine their continued influence on the congressional agenda in 2021.

This possibility also depends on the leadership of a new generation of social democrats who support the liberal economic agenda, as represented by Federal Deputy Amaral of the Democratic Labor Party (PDT) from Sao Paulo. This new generation seeks to weave anti-corruption legislation around responsible fiscal policies and improved public services in order to win over a majority of voters who are weary of the PT yet unwilling to support Bolsonaro’s social conservatism. Amaral is joined by her new boyfriend and rising star, Federal Deputy Joao Campos (PSB) of Pernambuco, as well as his partisan colleague Felipe Rigoni (PSB) of Espirito Santo, the first blind federal legislator. Both Amaral and Rigoni emerged from the social movements Acredito and Renova BR, which seek to train candidates in ethics and public policy.

While all three of these deputies are affiliated with traditional parties of the Brazilian left, they exercise substantial autonomy from the party chiefs; they instead project their own national leadership on policy issues such as education and environmental protection. In early January, for example, Amaral announced that she is leading a new movement, Let’s Go Together (Vamos Juntos), which aims to prepare female candidates to contest the municipal elections. Together with her younger colleagues, she could play a decisive factor in determining the balance of political power and the course of the congressional agenda by year-end. For IOCs, the outcome of the municipal elections will determine whether the Bolsonaro administration can direct a congressional majority or if it will lose its influence over economic and energy policymaking.