3 SOURCE: INSTITUTO BRASILEIRO DE GEOGRAFIA E ESTATÍSTICA.

Established by the results of the elections and supported by the success of the stabilization economic plan, initiated when he was minister of Finance of Itamar’s government, Fernando Henrique Cardoso took office as president of the Republic on January 1^st, 1995, wanting changes in the Constitution. He got a majority in the Congress, gathering different groups from the center-left-wing to the right-wing. He proposed a wide program of constitutional reforms but he did not get it approved fast, neither with the desirable extention. The reforms were concerning: economic order (approved in 1995 and almost without changes by the Congress), Public Administration (approved in 1998 but deeply altered in the Parliament), and social security (still in the Congress but it has already been very distorted).

In order to sustain this stabilization program, the country needed to attract external investment. To achieve this goal, the government raised interest rates because, from the end of 1994 on, the Brazilian trade balance has been have deficit to keep the flow of imports (and low inflation rates) through competition of foreign products in the national market. However, high interest rates cool the economy, bring unemployment and increase the cost of the public debt running, and thus, raise the fiscal deficit. A wide privatization program and the public services concessions have been contributing to the maintenance of the current economic policy but there are pressures in favor of social investments.

The modernization of the industrial sector, the imports, high interest rates and the unemployment rates became the most serious economic and political problems for the current government. The bureaucracy argued that the Mexican crisis, in 94 and 95, and the Asian crisis, in October of 97, forced the maintenance of high interest rates. The opposition prefers to blame the economic team for the use of monetary orthodoxy approach. In fact, the unemployment rates in the 90s are worse than in second half of the 80s, and during Fernando Henrique's government, they were always growing: in 95 = 4.6%; in 96 = 5.6%; in 97 = 5.7%; and in 98 = 7.8% (by May).

However, the rate of the Gross Increase in Permanent Investments in the GDP improved from 16.6% in 95 to 20.0% in 97 (not established data / estimative from IPEA in May/98). The available part of the revenue of the Union, supported by the creation of the Fund of Fiscal Stabilization that succeded the Social Fund of Emergency, also presented positive data: in 95 = 27.0%; in 96 = 32.1%; in 97 = 36.7%; and in 98 = 35.8%.

In the period of Fernando Henrique's first term, the great conquest was the elimination of the inflation (see table 13).

3 SOURCE: INSTITUTO BRASILEIRO DE GEOGRAFIA E ESTATÍSTICA.

* ESTIMATES.

In summary, the stability of the currency was fundamental to prepare the conditions of the promised, although not yet accomplished, cycle of sustained development and for the obtaining of the high indices of popularity for the president of the Republic. A candidate for re-election, Fernando Henrique was victorious in the first round on October 4^th of 1998.

3 - THE IMPACT OF THE SUPREME COURT’S DECISIONS

In this chapter, the impact of the Supreme Court’s decisions about four cases will be discussed. Three actions are directly related to the public servants and the other one is more generic and interests the whole of society. In each case we will observe the amount of money involved, identifying the real influence of these Court’s decisions in the economic situation during the period in focus.

3.1 - DIRECT ACTION OF UNCONSTITUTIONALITY no. 313

On June 15^th, the president Fernando Collor issued the Decree no. 99.300, establishing proportional time of work wage payment for civil servants placed on paid availability. After that, several actions were referred to different instances of the Judiciary against this act and eight Direct Actions of Unconstitutionality were submmited to the STF. Four actions were initiatives of different trade unions and four actions were brought by opposition parties. The Adin no. 313 was brought by the Brazilian Democratic Party (PDT) in 20.6.90, and it was the only action to receive definitive judgement by the STF. The others, in the measure that they were related to the same object, were not considered on their merits.

When in June of 1990 the Supreme conceded the preliminary verdict requested in the ADIn no. 313, forcing the government to pay integral wages for the officials placed on paid availability, the first sign of dissatisfaction with the Collor’s administration had already been demonstrated by the National Congress when it rejected MP no. 185. Starting with the edition of MP no. 190, like MP no. 185, the Supreme Court judged against the admissibility of the measure, leaning on the will of the majority of the parliamentarians, that had already appreciated and rejected the similar MP no. 185, which authorized the Superior Labor Court to suspend Regional Labor Court’s decisions about collective lawsuits.

At that moment, the government's allies in the Congress were dispersed and amazed by a lot of controversial proposals. On the other hand, the decision on this case could not be postponed, once the subject had primary consumption nature and the wages of the officials were, in fact, frozen.

Approximately 50,000 employees would be reached by this measured, but, in 27.6.90, the majority of the Supreme Court’s justices decided to grant the preliminary verdict requested by PDT and suspend the effects of the Decree by the final decision on this subject matter. This decision reached all the involved employees, because this kind of action has erga omnes effects, that means, besides the parts that brought the action.

In 21.8.91, the majority of the justices decided to judge in favor of the officials, declaring unconstitutional the Decree issued by Collor. This decision happened after the issue of a new economic plan by the government, that did not agree with the Congress about wage policy; the inflation rates increased every month; the economy of the country was in a recessive phase; and president Collor's team was involved in accusations about corruption. On the other side, the Executive also paid high wages for some officials and adjusted the military salaries above the values for the civil servants.

The amount of officials that would be reached by the Decree no. 99.300 (50,000 employees) corresponded to 8.3% of the total civil servants in activity, that was about 600,000. The payroll of the federal public sector (including the military sector) was R$ 35.1 billion and the payroll of the civil servants in activity was about 40%, that means R$ 14 billion.

Among the civil servants placed in availability, most of them had lower wages and a medium level of formal education. In both cases, they had more than 20 years of service. Even if we considered the hypothesis that these officials in availability had the same profile of those in activity and, as a consequence, the same average wage, and that their time of service was in the average time of career, we would have an annual saving of, at the most, R$ 581 million (14.000.000.000,00 x 0,083 x 0,5).

In 1990, the government's available revenue was R$ 27 billion (24.3% of the total revenue of R$ 111,4 billion). It means that, it was not possible for the government to press the STF, affirming that economic chaos would happen in case of a defeat of the Executive in this matter, because it would not be true. A favorable decision of the Supreme Court to the public employees would not imply the failure of the government's economic plan. The Court judged with readiness and rigidity in the defense of the constitutional text, which said that the salaries of civil and military government employees may not be reduced and that they have tenure.

3.2 - DIRECT ACTION OF UNCONSTITUTIONALITY no. 525

This action was brought by the Brazilian Socialist Party (PSB), on 31.5.91, alleging the unconstitutionality of MP no. 296, of 29.5.91, that established different wage adjustment among civil and military servants. Other actions were also brought to the STF and to other levels of the Judiciary, but this was the first suit to be heard and it influenced the other cases. By majority vote, on 12.6.91, the justices denied the preliminary verdict requested by PSB, that intended to suspend the different wage rates and to extend the increase to other careers.

With this judgement, the Court transferred to the Congress the responsibility of the decision about the constitutionality or not of the measure. On 26.6.91, the Congress rejected the MP and the Supreme Court escaped to judge the merit of the matter and did not rule on the concept of equal wages nor on the constitutionality of the concession of different wage adjustments among the officials as established in the Constitution. On 28.8.91, the STF filed the action because it had lost its object.

The STF avoided conflict. The constitutional text hindered, expressly, the different wage adjustments among the servants - rule that the government wanted to suppress (and it was, when the public administration constitutional reform was approved at the beginning of 1998). Besides, the political and economic scenery of the country was full of turmoil in this period. The president tried to start over. He changed the minister of Economy and he sought new alliances in the Congress, since his political base had been unhappy with the measures of the Collor Plan II. With the edition of this plan, in February, inflation, which was more than 20% during the months at the beginning of the year, dropped to less than 10% in the following months, and only in June did the inflation rate cross the barrier of the 10%. The chief of justice Sidney Sanches declared to the press that if the preliminary verdict was granted it would remove an advantage of many officials that received low wages and president Collor could blame the Judiciary for suspending the adjustment.

This case is very interesting because, although it is not possible to quantify the cost of the possibility of different wage adjustments in the medium and long term, and the cost in short term for the government be reduced, which was in game was a public policy desired by the Executive in order to separate the wage adjustments among civil and military servants, privileging some careers in the civil service.

The government argued that the impossibility of concession of different wages among the servants impeded the recruitment/maintenance of good professionals and, if the government granted high wages for every public servant, the investments in the public sector would be made impracticable, worsening the budget deficit.

3.3 – WRIT OF MANDAMUS no. 22.307

A group of officials brought this case to the Superior Court of Justice, and the writ went to the STF to judge it on ordinary appeal on 31.5.95. In this case, a judicial decision about this matter would be only applicable to the parts of the suit. On 19.2.97, the request was granted by the justices, although only partially. On 17.6.97, the Union appealed and most of justices decided partly in favor of the officials on 11.3.98.

This case challenged the military wage adjustment of 28.86%, which was extended to a few civil servants in the beginning of the year 1993 by Law no. 8.622, of January 19, 1993, and Law no. 8.627, of February 19, 1993. Other similar cases were brought to the judicial system by the public servants requesting the use of the same index in their wages. Many of them were victorious in their first judicial hearing but the government always appealed these decisions and they arrived at the Supreme Court for final decision.

Although the STF’s decision in this case had effect only among the parts involved in the suit, the government decided to issue MP no. 1.704, of June 30, 1998, extending to all officials adjustments from 0% to 28.86%, which was the object of the STF’s decision. It means that the government had adopted this measure because the labor indebtedness in this case was already high; there were a lot of suits about this subject in the judicial system and the government was only delaying these decisions when appealed; and perhaps because it was an election year.

The projections done at that time showed that about 600 thousand servants in activity and retired will receive any kind of index in their wages (an average of 12.5%). Nowadays, the payroll of the Union’s employees (including servants in activity and retired) is around R$ 48 billions / year. According to the terms of the MP, the government should spend about R$ 600 million by the end of the year 1998 to pay its adjustments. The indebtedness will begin in 1999 and it will be done in two instalments (in February and August), and could be concluded in seven years. It will cost from R$ 5 to 6 billion. From 1999 on, the servants’ payroll should have an annual growth about R$ 1,2 billion.

In this case, the Executive power concentrated its efforts to avoid a favorable judgement to the civil servants by the Supreme Court. Ministers of State and the president declared that the judges who decided in favor of increasing the wages using the index of 28.86% did not want what was best for Brazil, because the budget would not support the costs of this benefit and it would imply expenses above R$ 10 billion per year, besides the indebtedness could add about R$ 40 billion. If the values were really in this way, there were no doubts that the concession of the adjustments back to February, 1993, could provoke enormous disarray in the Brazilian economy but, in fact, the cost of the Supreme Court’s decision was much smaller.

In this episode, the Executive branch, when challenged in Court, tried to win on the merit of the case, and did not argue in time that many careers of servants had already received other adjustments in that period. When the government was defeated, it presented new arguments appealing against the sentence (prohibited procedure in this stage). However, the Supreme Court accepted the new arguments of the appeal, which should be only to explain better the content of the previous sentence. Instead, the STF used these arguments to decrease significantly the government's debt.

This judgement was very polemic and jurists, politicians and bureaucrats did not accept the final arrangement. Some justices decided against the government's interest in this case, causing a split decision. In fact, the Court preferred the economic peace to the unharmed of the law.

3.4 - DIRECT ACTION OF UNCONSTITUTIONALITY no. 534

As we saw, the freezing of the financial assets established by MP no. 168, of 15.03.90, during the Collor’s government reached 67% of M4. The inflation rate in March would surpass 80%, being the highest monthly index in Brazilian economic history. The involved constitutional aspect was very ordinary: it was a government’s rule impeding the free use of the financial assets by the citizens. The jurists did not have doubts concerning the unconstitutionality of the measure. However, the central issue was another: what would happen if the STF decided immediately on this matter?

After the issue of this MP, several cases were brought at different levels of the Judiciary requesting the liberalization of the money. Some judges decided in favor of the free movement of the financial assets and privileged citizens got to recover the frozen money, but the majority of the population reached by the MP was not benefitted. The Court did not rule on the matter.

The condition of the Brazilian economy was so critical in this phase, that the opposition parties did not make a lot of noise against the measure. MP no. 168 was approved by the National Congress and transformed into Law no. 8.024, on April 12, 1990. Only on 19.6.91, the Brazilian Socialist Party (PSB) submitted a Direct Action of Unconstitutionality (Adin no. 534) to the STF, challenging the Law no. 8.024/90. When the majority of the Court’s justices denied, on 27.6.91, the preliminary verdict in the case, alleging that the action was brought much time after the act, the party had to wait the final decision about the matter.

The balances above 50,000 cruzados novos would be indexed and returned in 12 monthly equal instalments starting from September 16, 1991. On 26.8.92, the STF decided to file the action and the justices did not analyze the constitutionality of the freezing. It happened because the last instalment of the blocked money had already been returned and the action lost its object. Starting from the integral refund of the frozen financial assets, without any residual effects, and the complete elimination of the effectiveness of the state act, the STF filed the action.

If the Supreme Court decided, immediately, in favor of the unconstitutionality of the frozen money, the Executive power could react against the decision which would be contrary to its interest, forcing the financial system to have no respect for the decision. On the other hand, we did not have an idea of how the financial system could react. Because in despair, it could opt to disobey the Court’s decision. Anyway, there would be a serious institutional crisis.

From the point of view of the economic stability, the maintenance of the freezing was fundamental in the period that preceded the total liberation of the financial assets, because, otherwise, the population would withdraw its money from the banks and the financial system could be seriously affected. Those that got to recover their assets, would try to buy dollars, real state or any other kind of tradable assets or goods, provoking a considerable increase in the dollar rates and, certainly, hyperinflation. In fact, in this case, it was not simply the government's alarmism or pessimism, but it could really cause chaos.

The position of the Supreme Court was extremely uncomfortable. If the justices decided for the constitutionality of the MP it would be a juridical aberration but if they decided for its unconstitutionality would throw the whole country into a dangers situation. Under these conditions, the STF adopted the non-decision strategy.

The Supreme Court did not judge the actions related to this subject submitted for its consideration, did not grant the preliminary verdict requested in the Adin no. 534 to suspend the currency freezing and did not decide the merit of the case in time for the sentence produce a real effect. That means that the STF gave in to the dictatorship of the political and economic situation, in order to satisfy the Executive power and guarantee the social peace.

4 - CONCLUSIONS

It seems reasonable to conclude that when the Supreme Federal Court understands that the social and economic peace are threatened by its decisions about any specific matter, the justices opt to protect the Nation's governability, although sometimes, to the detriment of the constitutional principles which they should care for.

On the issues involving public servants’s rights, the STF also acts carefully, to avoid destabilizing the government with undesirable decisions about State funds distribution to the officials.

In the period on which this study was based, the main national problems to be solved by the governments were related to the control of the inflation rates and the public debt. Therefore, the STF needed to judge supported by the law but exercising its political and juridical mission, it had to make its decisions compatible with the expectations of the society and making effectiveness the government’s program.

In general, the poll makers wanted the government balanced its budget, reducing the official’s wages. They said the servants had a lot of benefits that are not usual in the private sector and they were inefficient. Then, the STF lived in a permanent dilemma: it should opt for decisions that grant or suppress economic benefits to the officials.

The Welfare State, that flourished in the United States and in the Western Europe after the World War II (Offe, 1984), did not happen in the same way in Brazil. Some laws, however, were created to protect workers’ rights, such as vacations, 13^th wage, turn of work, etc., and the Brazilian Constitutions used to guarantee benefits that the State had difficulties to execute.

The Constitution of 1988 expanded much more the social rights guaranteed by the State, but the congressmen who wrote the text did not point out the sources of money that would assure their execution. For public servants, for instance, the Constitution established that (1) the general review of the remuneration of government employees would be made without distinction between the indices applied to civil and military servants, and it shall always occur on the same date; (2) the salaries of civil and military government employees may not be reduced; (3) the retirement pension shall be revised, in the same proportion and on the same date, whenever the remuneration of the servants in activity is changed, and any benefits or advantages subsequently granted to the servants in activity shall also be extended to the retired servants; (4) the job tenure was extended to other employees; (5) it would have a sole juridical regime; and (6) would have equal salaries for officials with equal or similar duties.

The agencies created by governments to execute the tasks of the Welfare State, as mentioned by O'Connor (1973), were also created in Brazil, for example, the agencies to implement public policies in the health, education, habitation, transport and social security areas. However, the author teaches also that the welfare state proposal brings, in consequence, the growth of the unproductive public sector, which consumes many funds from the State and requests high taxes, provoking high inflation rates and fiscal deficit (as also happened in Brazil).

Nevertheless, despite the Brazilian State did not realize the desirable social welfare by the population, the public sector suffered the consequences of successive inefficient management and had serious fiscal problems. The public servants were seen as the main ones responsible for the government budget disarray. Brazil got welfare’s burden without having the expected social programs.

The protection of the job and the attention to the basic needs of the workers that Offe (1984) refers to as one of the commitments of the Welfare State can be seen in the public sector. These workers got tenure in the job and a special retirement system (different from workers in the private sector), but the officials also became a labor force with lack of incentive, inefficient and costly for the government.

As well as in other countries, the neutrality of the Judicial branch in Brazil was broken with new laws. The Brazilian constitutional court needed to settle many disputes that came from the expansion of the collective rights in the Constitution of 1988, deciding in accordance with the needs of the State and the expectations of society about desirable social justice goals. The new Constitution was an important factor in the democratization process of the country, after the long military dictatorship period, and still propitiated a discussion about the role of the Judiciary in the political scenery, in the measure that the Constitution facilitated the access of the population to the judicial system. In the case of the STF, for instance, a larger number of actors acquired the capacity to bring Direct Actions of Unconstitutionality and, therefore, to submit for the court’s consideration important and polemic issues for the society.

The disputes involving public servants’ rights (those expanded by the Constitution or changed by specific rules) also arrived at the STF. These lawsuits with distributive nature placed the Supreme Court in an uncomfortable position, which was to decide about conflicts not solved by the Executive and Legislative branches, confirming or rejecting the validity of the public policies for the officials, vis-à-vis the expectations of the society around the government's programs.

Since the Republic, the STF has juridical and political duties. Inspired by the American Supreme Court, the STF, from its creation, received the capacity to decide about issues formerly restricted to the political branches, the Executive and the Legislative. But in spite of its capacity to intervene against other powers, which was reinforced in the Constitution of 1988, the Supreme Court has difficulties to exercise this role and acts as the necessary counterbalance in the Brazilian "checks and balances" democratic system, mentioned by Cappelletti (1993). This author believes that the role of the constitutional courts is emphasized in judgements involving constitutional matter, social rights and diffuse interests, a similar situation to when the STF had to decide the actions selected for this study.

The magistrates’ warranties and the Judiciary autonomy to manage its budget were guaranteed in the Constitution and it was a great leap forward to create an independent and harmonious relationship among the three powers in Brazil. However, it does not mean that the Judiciary, and particularly the STF, will be free from political pressures.

We also could notice that opposition political parties used the STF as an alternative channel for the discussions of their disputes. And as explained by Stone (1994), when the parties submit an issue to the constitutional court for review, they modify the discussion about the subject matter – like the actions brought by PDT and PSB.

Therefore, the expansion of the role of the Brazilian Supreme Court was not restricted to the new duties brought about by the Constitution of 1988, but the growth of the conflicts among the three powers, which ended many times in the STF, is provoking the politicization of the Judiciary. Due to the political nature of these conflicts, the Judicial branch, and especially the STF, have been confronted more and more with issues that have political, economic and social implications, and need to be decided in the light of juridical and political arguments. In sum, the Supreme Court was and will be requested to make a ruling in the important moments in the history of the country, the more improved was the democratic regime in Brazil.

BIBLIOGRAPHICAL REFERENCES

Baleeiro, Aliomar (1968), O Supremo Tribunal Federal, esse outro desconhecido. Rio de Janeiro, Ed. Forense.

Campilongo, Celso Fernandes (1994), "O Judiciário e a democracia no Brasil" (cap. 10), in Revista USP - Dossiê Judiciário, nº 21, São Paulo, Ed. Universidade de São Paulo.

Cappelletti, Mauro (1993), Juízes legisladores?. Porto Alegre, Sérgio Antonio Fabris Editor.

Faoro, Raymundo (1976), Os donos do poder: formação do patronato político brasileiro (vols. 1 e 2). 3ª ed., Porto Alegre, Ed. Globo.

Faria, Lilian Fonseca de A. (1997), O processo de decisão do Supremo Tribunal Federal sobre a constitucionalidade de lei ou ato normativo federal de natureza econômica de interesse do servidor público federal civil e/ou militar no período de 1990 a 1995. Brasília, Dissertação de Mestrado em Ciência Política, Universidade de Brasília.

Ferraz Jr., Tercio Sampaio (1994), "O Judiciário frente à divisão dos poderes: um princípio em decadência?" (cap. 2), in Revista USP - Dossiê Judiciário, nº 21, São Paulo, Ed. Universidade de São Paulo.

Governos da República (1996), 3ª ed., Brasília, Biblioteca da Presidência da República.

Guarnieri, Carlo (1991), "Magistratura e politica: il caso italiano", in Rivista Italiana di Scienza Politica/a, XXI, Aprile, nº 1.

Lindblom, Charles Edward (1981), O processo de decisão política. Brasília, Editora Universidade de Brasília.

Lopes, José Reinaldo de Lima (1994), "Justiça e poder Judiciário ou a virtude confronta a instituição" (cap. 3), in Revista USP - Dossiê Judiciário, nº 21, São Paulo, Ed. Universidade de São Paulo.

Nequete, Lenine (1973), O poder judiciário no Brasil a partir da Independência (vol. 2). Porto Alegre, Livraria Sulina Editora.

O’Connor, James (1973), The fiscal crisis of the state. New York, St. Martin’s Press.

Offe, Claus (1984), Problemas estruturais do Estado capitalista. Rio de Janeiro, Ed. Tempo Brasileiro.

Rodrigues, Lêda Boechat (1965), História do Supremo Tribunal Federal - defesa das liberdades civis (1891-1898), vol. I. Rio de Janeiro, Editora Civilização Brasileira S/A.

__________(1968), História do Supremo Tribunal Federal - defesa do federalismo (1899 - 1910), vol. II. Rio de Janeiro, Editora Civilização Brasileira S/A.

Rohde, David e Spaeth, Harold (1976), Supreme Court decision making. San Francisco, W.H. Freeman.

Sadek, Maria Tereza (org.:1995), "A organização do poder judiciário no Brasil", in Uma introdução ao estudo da justiça, Série Justiça, São Paulo, Editora Sumaré.

Sadek, Maria Tereza e Arantes, Rogério Bastos (1994), "A crise do Judiciário e a visão dos juízes" (cap. 4), in Revista USP - Dossiê Judiciário, nº 21, São Paulo, Ed. Universidade de São Paulo.

Segal, Jeffrey A. e Cover, Albert D. (1989), "Ideological values and the votes of U.S. Supreme Court justices", in American Political Science Review, vol. 83, nº 2, New York, State University of New York, Stony Brook.

Stone, Alec (1994), "Judging socialist reform - the politics of coordinate construction in France and Germany", in Comparative Political Studies, vol. 26, nº 4, Irvine, University of California; Sage Publications, Inc.

APPENDIX

Depois de concluir o curso de graduação em Comunicação Social, na Universidade de Brasília, UnB, a bolsista fez o de Mestrado em Ciência Política na mesma Universidade. Antes de se tornar assessora do Ministro de Estado Extraordinário dos Esportes, foi analista do Tribunal Superior do Trabalho, em Brasília. Tem experiência de jornalismo, pois ocupou a editoria econômica de diferentes órgãos de imprensa do país.