Defusing the Time Bomb
Lula has put the brakes on a social security system run wild. The benefits of pension reform are small, but they will at least head off a payments crisis.
For years, Brazil's state-run social
security system was a ticking time
bomb that nobody seemed able to
defuse. Governments came and went,
from a little tinkering here
and there, they did nothing to stop the
system's gargantuan deficits. Political
opposition was just too great,
particularly from public employees -
who stood to lose the most - and the
Workers Party. Once the party's leader,
Luiz Inácio Lula da Silva, became
president, he made dealing with the
problem the first item on his list of
economic reforms. In August, the PT and
its Congressional allies won enough
support to overhaul the system in Lula's
first political triumph since taking office
In an oblique reference to his
predecessor Fernando Henrique Cardoso,
a former university professor, Lula
boasted, "I learned, not in the university
but on the factory floor, how to negotiate
and talk to people." Lula personally
worked to win a majority in Congress,
but his success was due less to his ability
to "talk to people" and more to a brutal
deployment of government patronage,
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