History Blog 4

            In the midst of the global economic crisis, Brazil’s economy is not exempt from a recession.  In fact, recent numbers show that Brazil recently entered an official recession.  However, Brazil’s economy is likely to bounce back much faster than any other developed country.

            Brazil has a number of things that will help the economy recover quickly.  Many people are investing money in the economy and hope to make a return on investment through diverse exports.  In order to expedite the economic recovery, Brazil’s President, Lula da Silva, is implementing new tax breaks.  The tax breaks were issued to various industries in order to stimulate spending within Brazil’s economy.

            However, President Lula agrees that cutting taxes is not a long-term solution for a stable economy.  According to the online article, President Lula hopes to distribute money to the lower class of Brazil through government welfare programs.  The Brazilian President thinks it is a more efficient way to boost the economy as opposed to cutting taxes.  The money dispersed directly to the poor will increase commerce and consumption within the country which is vital for economic growth.  Since government welfare programs go directly to the people for spending, it is more likely to immediately stimulate the economy through spending. 

Some Brazilian businessmen who benefit from the tax breaks do not lower the prices of their services and goods, therefore; the common consumers do not directly benefit from the tax breaks.  The excess money the business industry receives from the tax breaks are kept in banks which does not help stimulate the economy.  Thus, the government welfare programs are critical to enable the lower and working classes of Brazil to contribute to the spending and stimulation of the Brazilian economy.