Senate, Supreme Court decide to blow up Brazil’s federal budget

Earlier this week, future economic tsar Paulo Guedes talked about “cornering” Congress into approving the unpopular pension reform. Less than 24 hours later, Mr. Guedes was cornered himself, as the Senate passed a 16-percent pay raise for the 11 Supreme Court Justices and the Attorney General – taking their monthly income to BRL 39,300, roughly 42 times the minimum wage in Brazil.

However, the decision will not only impact the 12 people who were granted the raise. It will have a ripple effect on all levels of the public administration and, according to studies carried by experts in the Senate, it will raise public spending on government payroll by BRL 4 billion to 6 billion per year. “The entire Justice system will get automatic pay hikes, as the salaries of all civil servants are proportional to those...