While the impasse persists over the government’s decision to challenge in court the payroll exemptions granted by Congress to 17 economic sectors and thousands of municipalities, the president of the Senate, Rodrigo Pacheco (PSD-MG), still has the support of the president Luiz Inácio Lula da Silva (PT) for his candidacy for the government of Minas Gerais. But the clash between the Legislative and Executive, which now reaches the Judiciary, adds complexity to the senator’s already bold political project.
On Tuesday (30), Pacheco reiterated his protest against the Executive’s decision to take the issue of exemptions to the judicial field, highlighting it as “an error”. In a threatening tone, he pointed to the injunction granted by Minister Cristiano Zanin, of the Federal Supreme Court (STF), which suspended the benefit, as an “illusory victory” for the government, as it also generates a “crisis of trust between the Powers”. To embarrass Planalto and the STF, Pacheco announced a plenary session on the afternoon of May 13 to debate the cities’ pension debts. Lula warned during the celebration of Labor Day, this Wednesday (1st), in São Paulo, that he will insist until the end to end the exemption.
The case began to be judged in the Court’s virtual plenary session, with four votes in favor of the rapporteur’s position, but Minister Luiz Fux requested a review, which will take the discussion to the physical plenary session, on a certain date. During this period, the injunction will remain in force, contradicting the law approved by Congress and affecting companies in 17 sectors that together employ around 9 million people. Congress last week appealed to the STF against the decision and left the risk of delays in other votes in the air. Despite this, the Senate confirmed on the same Tuesday (30) the restriction on the Emergency Events Sector Resumption Program (Perse), requested by the government to prevent revenue losses.
While Pacheco highlighted the government’s “illusory victory” in relation to the injunction, the Minister of Finance, Fernando Haddad, expressed his gratitude to the senator and the president of the Chamber, Arthur Lira (PP-AL), for approving the limited Perse. According to Haddad, the benefit would bring an annual tax waiver of R$13 billion to R$25 billion, but has now been reduced to around R$5 billion, making it viable within the Budget. “I thank both Lira and Pacheco, who brought morality to a program that was facing problems”, he explained. In addition to this gesture of sympathy, the appointment of one of his nominees to the Superior Labor Court was also seen as a gesture to the president of the Senate ( TST) on the same day.
Pacheco and Lula will have to review political partnership
On Thursday night (2), Lula invited Pacheco to dinner with the aim of trying to alleviate the conflict. Interlocutors anonymously told the press that the tax relief for the 17 sectors and the state debts had been dealt with and Lula had tried to reverse the bad climate. The report was unable to confirm these reports with independent sources.
Despite the gestures of reciprocal goodwill immediately after the toughest clash, relations between Pacheco and Lula will still require a review of their terms. The current scenario is very different from when the two exchanged praise in public at an event in Belo Horizonte on February 8, with the presence of governor Romeu Zema (Novo), to announce federal works in the state. The current situation also clashes with the atmosphere of the happy hour offered by the President of the Republic at Palácio da Alvorada to Senate leaders on March 5th, in which Pacheco was received by Otto Alencar (PSD-BA) as “the future governor of Minas” .
It was in this first quarter that a combination was forged between Pacheco, the Minister of Finance and Lula himself to build a “solution” for the resumption of federal debt payments by the Minas Gerais government, suspended by the STF. In this rehearsed game, Zema was presented as silent and intransigent, while Pacheco presented himself as a willful actor, denouncing the excessive austerity intended by the Minas Gerais government in the renegotiation. The impasse continued and dragged with it the situation of the other states heavily indebted to the Union – Rio de Janeiro and Rio Grande do Sul.
The president of the Senate, in collaboration with his main ally in Minas Gerais and co-religionist Alexandre Silveira, minister of Mines and Energy, in addition to coordination with the central government, made significant efforts to influence the public debt situation in Minas Gerais, the which totals R$165 billion. Its intentions include the federalization of state-owned companies in Minas Gerais and the institution of a nationwide incentive for all federative units that pay off half of their debts. These measures would provide immediate financial relief to the state treasury.
Governor and opponent prepare for 2026
With great popularity in the mandate for which he was re-elected, Zema needed to give clearer evidence that he is seeking dialogue with Lula and the economic team to find a way out of the issue of the state’s federal debt, breaking the thesis that ideological differences prevent you from trading. Even the federalization of the largest state-owned companies in Minas Gerais, which he prefers to privatize, was accepted as an object of negotiation.
In parallel, Zema is initially trying to promote the candidacy of his deputy Matheus Simões (Novo) for his succession in 2026. Not by chance, “Professor Simões’ has intensified his agendas for the state and led the dialogue with the government base in the Assembly Legislative and was involved in the thorny negotiation of the mining debt with the Union.
Pacheco, in turn, has been directly involved in the articulations involving the PT in the municipal elections in Minas Gerais. The senator worked to get his party, the PSD, to give up its own candidacies in interior cities to reinforce PT campaigns. The party must support, for example, the mayors of Contagem, Marília Campos (PT), of Juiz de Fora, Margarida Salomão (PT), both pre-candidates for re-election. In Belo Horizonte, the PSD supports the re-election of its member Fuad Noman, who has not appeared well in the polls.
This is yet another movement guided by the formation of a future common platform for his candidacy for the Palácio da Liberdade and for Lula’s re-election campaign. This venture also has as one of its creators the Minister of Mines and Energy, Alexandre Silveira, licensed president of the state PSD. The expectation is that the PT will nominate the name of the vice-president on Pacheco’s ticket for the state of Minas Gerais. Other actions in favor of transfers of federal resources to city halls governed by a broad partisan spectrum, with parliamentary amendments and funds from ministries, complement the electoral engagement of this political group in 2024 and 2026.
Government fears Pacheco’s actions as a candidate
Lula warned his party’s leadership that he needs to expand the arc of alliances in Minas Gerais, the second largest electoral college in the country, counting on Pacheco as a candidate to succeed Zema. In recent weeks, however, some of the Senate president’s stances have worried those around Lula, who fear retaliation from him and the effects of bomb agendas, with emphasis on the proposed amendment to the Constitution (PEC) that promotes real and automatic salary adjustments for judges and other categories. At dinner with Pacheco, Lula would have tried to convince him to pay less attention to this issue.
Born in Porto Velho (RO), but raised in Minas, where he had a career in law and politics, Pacheco is seen as a “Minas Gerais politician” due to his apparently calculated gestures and speech in favor of reconciling opposites. However, he has collected dubious positions in relation to so-called judicial activism and the government’s agenda to seek a challenging fiscal balance. The proposal that defends the end of monocratic decisions by STF ministers is stalled in the Chamber and the end of the benefit that allows the temporary release of prisoners in a semi-open regime, the “saidinhas”, was partially vetoed by Lula.
According to political scientist and electoral consultant Paulo Kramer, the government has nothing to complain about Pacheco, because thanks to him, Haddad’s economic agenda moved forward, with a focus on increasing revenue to address the weaknesses of the fiscal framework, also approved by Congress. . Furthermore, despite Planalto’s political articulation failures, the tax reform advanced, as did its regulation scheduled for this year.
“However, even Pacheco has to satisfy his base, be it the collegiate of 81 senators that he represents, the Congress institution that he presides over, or even the electorate of the state that elected him in 2018”, he noted. The Senate president’s positions aim to improve his image among the same profile of voters who voted for him, from the center-right and right-wing.
In this tense environment, neither Pacheco, who depends on the support of Planalto to advance his political platform, nor the President of the Republic, who only has an unstable majority in the Senate and the support of the Judiciary to face pressure and approve his proposals, benefit. For politician and director of Action Consultoria, João Henrique Hummel, the frequent clashes between the three powers are becoming a dangerous routine, revealing an attempt by the government to test the limits of its control over the national agenda, while also showing signs of suffering defeats in Congress, such as the postponement of sessions to evaluate presidential vetoes. “Is Lula willing to run the risk of being run over by the Legislature, ignoring that he still has two and a half years left in office? It’s an interesting unknown,” he mused.
