VZCZCXRO3209
RR RUEHRG
DE RUEHSO #0038/01 0281839
ZNR UUUUU ZZH
R 281839Z JAN 08
FM AMCONSUL SAO PAULO
TO RUEHC/SECSTATE WASHDC 7849
INFO RUEHBR/AMEMBASSY BRASILIA 9003
RUEHBU/AMEMBASSY BUENOS AIRES 3038
RUEHAC/AMEMBASSY ASUNCION 3286
RUEHCV/AMEMBASSY CARACAS 0655
RUEHMN/AMEMBASSY MONTEVIDEO 2592
RUEHLP/AMEMBASSY LA PAZ 3696
RUEHSG/AMEMBASSY SANTIAGO 2289
RUEHRI/AMCONSUL RIO DE JANEIRO 8554
RUEHRG/AMCONSUL RECIFE 3974
RHEHNSC/NSC WASHDC
RHMFISS/CDR USSOUTHCOM MIAMI FL
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC 3013
RUEHC/DEPT OF LABOR WASHDC

UNCLAS SECTION 01 OF 03 SAO PAULO 000038 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA/BSC, EEB/IFD/ODF, INR/IAA, INR/R/AA 
STATE PASS USTR FOR KATE DUCKWORTH 
NSC FOR TOMASULO 
TREASURY FOR JHOEK 
USDOC FOR 4332/ITA/MAC/WH/OLAC 
USDOC ALSO FOR 3134/USFCS/OIO 
DOL FOR ILAB 
SOUTHCOM ALSO FOR POLAD 
USAID FOR LAC/AA 
 
E.O. 12958: N/A 
TAGS: PGOV SOCI EAID EFIN ECON BR
SUBJECT: GOVERNMENT EXPANSION OF "BOLSA FAMILIA" BENEFITS DRAWS 
CRITICISM 
 
REF: (A) 07 SAO PAULO 10; (B) 07 SAO PAULO 1005 
 
------- 
SUMMARY 
------- 
 
¶1.  On the last working day of 2007, President Lula expanded the 
scope of Bolsa Familia, the federal monthly stipend benefiting some 
11 million poor families, to include an additional payment for each 
child aged 16 and 17.  Opposition politicians called the action 
unethical and possibly in violation of electoral law, which frowns 
upon new or increased public benefits in an election year, but they 
will not mount a legal challenge against it.  None of their 
candidates wants to go on record - or on the campaign trail - 
opposing so popular a program.  In October, Brazilians voters will 
elect the Mayors and City Councils of the country's 5564 
municipalities.  End Summary. 
 
¶2.  The Bolsa Familia program ("BF"; ref A) provides 58 Reals per 
month (about USD 33) to families with a per capita monthly income 
under 60 Reals (about USD 34).  Families with a per capita monthly 
income between 60 and 120 Reals are eligible for partial benefits 
based on family size and other factors.  In addition, each head of 
household is entitled to 18 Reals (about USD 10) per child up to the 
age of 15, but children must attend school and be vaccinated, and 
pregnant women must comply with pre-natal care requirements. 
However, the extent to which the government monitors and enforces 
compliance is the subject of some controversy. 
 
------------------- 
JUST UNDER THE WIRE 
------------------- 
 
¶3.  Bolsa Familia, the government's flagship anti-poverty program, 
already covers about 45 million Brazilians or just under one-fourth 
of the population, about double the numbers when Lula took office in 
2003, and thanks to effective government communication and outreach 
the public strongly identifies the BF with President Lula personally 
and with his Workers' Party (PT).  In October 2007, the 
administration sent to Congress draft legislation to extend the 
program to cover children 16-17 years old with a proposed monthly 
stipend of 30 Reals (about USD 17) for such beneficiaries.  When 
Congress, consumed by the battle to renew the CPMF financial 
transactions tax (ref B), failed to vote on the bill, Lula on 
December 28 signed a "Provisional Measure" with the same language as 
the draft legislation, which took effect the next day. 
 
¶4.  Marco Aurelio Mello, President of the Superior Electoral 
Tribunal (TSE), opined that the timing and manner whereby the 
administration expanded the program were legally problematic.  He 
cited a 2006 electoral law that prohibits the government from 
distributing goods, values, or benefits to voters during an election 
year.  By acting at the last possible moment before the beginning of 
2008 - a year in which municipal elections are scheduled to take 
place in October - to create a new benefit for a large number of 
voters, the government appeared to be trying to skirt the law, in 
his view. 
 
---------------------- 
CHASING THE YOUTH VOTE 
---------------------- 
 
¶5.  Observers were quick to note that voting is mandatory in Brazil 
and 16 is the minimum voting age.  Gaudencio Torquato, a prominent 
Sao Paulo political analyst and commentator, told poloff that the 
measure was clearly designed to attract first-time voters to the PT. 
 The Ministry of Social Development and the Fight Against Hunger, 
 
SAO PAULO 00000038  002 OF 003 
 
 
which administers the program, estimated that the measure will 
create an additional 1.7 million new beneficiaries, but this is 
considered a rough estimate and the actual figure could be higher. 
 
¶6.  Minister of Justice Tarso Genro, for his part, asserted that the 
action was legal and said it was intended to highlight the 
government's determination to protect the Bolsa Familia program in 
the face of possible budget cuts required by Congress's failure to 
renew the CPMF.  In a December conversation, Minister of 
Development, Industry, and Foreign Trade Miguel Jorge told the 
Ambassador that the "graduation" of some BF beneficiary families to 
higher incomes had freed up funds to enable the government to raise 
the age of eligibility from 15 to 17.  However, the program's 
expenditures continue to grow: its budget increased from 7.5 billion 
Reals in 2006 to 8.7 billion in 2007, and is projected at 10.4 
billion Reals (USD 5.95 billion) in 2008, an increase of about 20 
percent. 
 
¶7.  Several members of the two main opposition parties, the Social 
Democracy Party of Brazil (PSDB) and the Democrats Party (DEM), 
shared Minister Mello's view that the action was potentially 
illegal.  Federal Deputy Antonio Carlos Pannunzio, PSDB leader in 
the Chamber of Deputies, complained of the government's growing use 
of Provisional Measures for legislation it is unable to convince 
Congress to pass, while Senator Jose Agripino Maia, the DEM leader 
in the Senate, questioned the legality of the government's action, 
but neither party has challenged the provisional measure in court. 
 
 
------- 
COMMENT 
------- 
 
¶8.  From a political and electoral perspective, a legal challenge is 
probably a non-starter.  Families with children about to turn 16 who 
were facing the loss of the 18-Real monthly stipend will now instead 
see it rise by 67 percent to 30 Reals.  If the opposition were to 
succeed in blocking the measure, their reward would be to have 
stopped the government from giving money to poor families, offering 
a propaganda victory to the government and ruling party.  According 
to media reports, President Lula anticipated the opposition's 
dilemma and reaction.  He was quoted saying that the opposition 
would know better than to shoot themselves in the foot. 
 
¶9.  Bolsa Familia remains a controversial program in Brazil.  Even 
its fiercest critics acknowledge that it provides a lifeline to 
Brazilians living in dire poverty.  The government cites it as a 
major contributor to poverty reduction and alleviation and, citing 
its school attendance and vaccination provisions, stresses its 
potential to break the cycle of poverty by ensuring better education 
and health care for poor children.  The opposition PSDB complains 
frequently that the Lula administration merely consolidated several 
assistance programs initiated by President Fernando Henrique Cardoso 
into one umbrella program and then expanded it by softening the 
eligibility requirements and providing lackluster enforcement, 
thereby turning it into a major electoral vehicle.  They also argue 
that without accompanying investment to develop the economy in 
impoverished areas, the program will only perpetuate dependency. 
Many business representatives complain that workers turn down 
employment offers to avoid losing their BF benefits, choosing 
instead to work on the informal economy. 
 
¶10.  The government's expansion of the program so close to the 
stroke of midnight - and while Lula is assuring the public in almost 
the same breath that all branches of government will tighten their 
belts and make sacrifices in the face of anticipated revenue 
shortfalls - is open to question, but Lula is probably correct that 
 
SAO PAULO 00000038  003 OF 003 
 
 
the negative comments will soon pass, while his commitment to 
Brazil's poorest citizens will be noted and remembered.  End 
Comment. 
 
¶11.  This cable was coordinated with and cleared by Embassy 
Brasilia. 
 
WHITE