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Brazil's Rousseff Suffers New Setback Over Austerity

  • Reuters

Brazil's President Dilma Rousseff attends an event launching the "Olympic Year for Tourism" in Brasilia, Brazil, Oct. 7, 2015.

Brazil's President Dilma Rousseff attends an event launching the "Olympic Year for Tourism" in Brasilia, Brazil, Oct. 7, 2015.

Brazilian President Dilma Rousseff failed to get enough support in Congress on Wednesday for her efforts to rebalance the country's overdrawn public accounts in yet another setback for the besieged leader.

Congress put off for a fourth time a vote on whether to back or overturn her vetoes of two spending bills after her government was unable to gather enough lawmakers for a quorum despite a cabinet reshuffle last week that was meant to bolster her support.

"It's as if the government has ceased to exist," said congressman Pauderney Avelino of the opposition Democrats party.

The postponement highlighted Rousseff's political isolation as she struggles to stave off impeachment efforts amid Brazil's worst corruption scandal and the deepest recession in 25 years.

Later on Wednesday, Brazil's federal audit court is expected to reject her government's accounts for 2014 because budget results were manipulated.

Some of her opponents are waiting to pounce on the ruling as a pretext to impeach the president for violating Brazil's budget law, although it is not clear how much support they will have inside Congress.

In a last-ditch bid to win time, the government asked the Supreme Court to delay Wednesday's ruling by the Federal Accounts Court, known as the TCU. The Supreme Court denied the injunction.

The bills Rousseff vetoed would raise public spending by 63 billion reais ($16.4 billion) over the next four years and include a hefty 78 percent increase in salaries of judiciary employees and a raise in payments for retirees.

Upholding the vetoes was the first key test of Rousseff's position since she reshuffled her cabinet to give more positions to her main allies, the center-right PMDB party, in the hopes of winning approval for her belt-tightening measures.

The congressional setback calls into question her ability to raise taxes needed to plug a widening budget gap that led Standard & Poor's to strip Brazil of its investment-grade rating earlier this month.

Uncertainty over Rousseff's ability to survive the political crisis and pull Brazil out of an economic tailspin has driven down its currency, the real, to its weakest levels ever.

In another threat to Rousseff's presidency, Brazil's top electoral authority ruled on Tuesday there are grounds to investigate irregularities in her re-election campaign last year, including the suspicion of illegal funding from kickbacks in the corruption scandal engulfing state-oil from Petrobras.

The TSE electoral court investigation requested by her challenger in last year's election, Aecio Neves, could lead to the invalidation of Rousseff's slim victory, though the judicial case is expected to last for months if not years and can be appealed to the Supreme Court.

Rousseff and her Workers' Party maintain all campaign donations were legal and they accuse the opposition of seeking to unseat a legitimately elected president.

"Brazilian democracy is strong enough to prevent these attempts at a coup d'etat," Rousseff said on Wednesday in a radio interview.

The only good news Rousseff has had recently was the confirmation by Swiss authorities that her declared enemy in Congress, lower house speaker Eduardo Cunha, holds bank accounts in Switzerland, which he had denied.

Cunha, who holds the key to starting impeachment proceedings in the lower house, already faces charges of corruption in the Petrobras bribery scandal. On Wednesday he said he had no intention of resigning.

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