VZCZCXRO4094
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #7064/01 3602139
ZNR UUUUU ZZH
P 262139Z DEC 06
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 4712
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEHRC/DEPT OF AGRICULTURE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHC/DEPT OF LABOR WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY
RHMFIUU/CDR USSOUTHCOM MIAMI FL PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 MEXICO 007064 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA/MEX, WHA/EPSC, EB/IFD/OMA, EB/ESC 
USDOC FOR 4320/ITA/MAC/WH/ONAFTA/ARUDMAN, ITS/TD/ENERGY 
DIVISION 
TREASURY FOR IA/ALICE FAIBISHENKO 
USDA FOR ONU 
DOE FOR INTERNATIONAL AFFAIRS KDEUTSCH AND SLADISLAW 
STATE PASS USTR/EISSENSTAT/MELLE/SHIGETOMI 
STATE PASS FEDERAL RESERVE/CARLOS ARTETA 
STATE PASS USAID FOR EGET/EG AND AA/LAC 
NSC FOR FISK AND PENDLETON 
 
E.O. 12958: N/A 
TAGS: EAGR ECON EFIN ENRG MX
SUBJECT: MEXICAN CONGRESS PASSES SPENDING BILL, CLOSES IN 
SPIRIT OF PARTISAN COMITY 
 
REF: A) MEXICO 7049 B) MEXICO 6934 
 
¶1. Summary: After easily passing the revised revenue package 
on December 21 (ref A), the Mexican Chamber of Deputies 
passed a USD 208 billion spending bill on December 23 by a 
vote of 440 in favor to 20 opposed, with five abstentions. 
The final bills largely conformed with President Calderon's 
budget proposal, but some changes were made to provide more 
funding than he had initially requested for public 
universities, pensions in rural areas, highway construction, 
and social programs.  To help offset these plus ups, the 
Chamber of Deputies cut Calderon's requests for state oil 
company PEMEX, the federal judiciary, the Congress, the 
Federal Electricity Commission, and the Federal Electoral 
Institute.  Both the revenue and spending portions of the 
2007 budget will be signed by President Calderon and 
published in the Official Gazette in time for them to take 
effect on January 1.  End summary. 
 
¶2. The official appropriations text has not yet been made 
available, but summaries from the Finance Secretariat and 
news media report that Congress has kept the vast majority of 
Calderon's 2007 budget request intact.  Congress boosted 
revenues by USD 2.4 billion over what the executive branch 
had proposed (reftel A), and cut USD 5.2 billion from the 
President's spending proposal (see para 4), thus allowing an 
additional USD 7.6 billion of spending for the 
congressionally favored winners listed below. 
 
----------------- 
More for the Poor 
----------------- 
 
¶3. Deputies from the left-leaning Revolutionary Democratic 
Party (PRD) pushed for additional spending on the poor that 
had not been included in Calderon's original request.  They 
succeeded in securing enough support from other parties for 
both a milk subsidy and a monthly pension of USD 46 for more 
than a million rural inhabitants over the age of 70.  In 
return, they agreed to fund three of Calderon's campaign 
promises: 1) refunds of social security taxes paid by 
employers who hire recently graduated first-time entrants to 
the workforce; 2) a criminal database; and 3) health care 
insurance for newborns.  The National Autonomous University 
of Mexico (UNAM), the country's largest public college, 
received USD 62 million more than had been called for by the 
executive branch.  As detailed in ref B, Calderon's proposed 
level of spending on education -- considered low by the PRD 
and many others -- had sparked controversy and led to 
Calderon asking his finance secretary to work with Congress 
on a deal.  Others who made out better on the final version 
of the bill include the Oportunidades program (ex-President 
Fox's signature anti-poverty program that links payments to 
poor families to school attendance by their children and 
regular health check-ups), basic public education and health, 
the agriculture sector, and other social programs.  The 
deputies also allocated a further USD 1.3 billion for 
infrastructure and highways, much of which is destined for 
poor states like Oaxaca and Chiapas. 
 
----------------- 
Less for the Rest 
----------------- 
 
¶4. To make up for the extra largesse distributed to the 
above-mentioned institutions and programs, the Chamber of 
Deputies had to slice Calderon's proposed appropriations for 
other accounts (in addition to boosting the amount of 
government income called for in Calderon's revenue proposal). 
 Despite declining oil production and calls for more 
aggressive exploration, PEMEX instead will get two percent 
less than the President requested.  Deputies also cut funds 
for the judiciary and legislative powers, the Federal 
 
MEXICO 00007064  002 OF 002 
 
 
Electricity Commission, and the Federal Electoral Institute. 
 
 
--------------------------------------------- ---- 
Comment: How Long Will the Christmas Spirit Last? 
--------------------------------------------- ---- 
 
¶5. Jorge Zermeno, the Chair of the Chamber of Deputies, 
closed the 2006 congressional session with praise for the 
cooperative spirit that marked the hurried deliberations over 
the budget.  His message was borne out by the large 
majorities by which the Chamber of Deputies passed both the 
revenue and spending bills (the Senate also approved the 
former by a wide margin - it has no vote on spending bills), 
neither of which ended up looking significantly different 
from Calderon's original proposal.  This constitutes clear 
evidence that, despite the intense political acrimony of the 
preceding months, Mexico's major parties are capable of 
putting aside partisanship to take care of the basic business 
of governing.  However, these votes did not force decisions 
on fundamentally thorny economic issues like expanding the 
tax base and reducing the government's dependence on the 
increasingly weak PEMEX, so it might be safer to chalk up the 
easy passage of the 2007 revenue and spending bills to a 
desire to get home in time for the holidays and a willingness 
to defer to Calderon's mostly vanilla-flavored first budget 
proposal.  As meatier reform issues make their way onto the 
agenda, congressional comity will be sure to face a sterner 
test.  End comment. 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity 
BASSETT