ABSTRACT

I explored the dynamics of the federal distributive game in the presidencies immediately following the transition to democracy in Argentina and Brazil. This chapter applies the game-theoretical model to the presidencies of Fernando Collor de Mello and Itamar Franco in Brazil. These two administrations had to deal with the reforms to the federal balance introduced during the 1987–1988 constitutional assembly. Several scholars, analysts, and politicians have claimed that one of the several causes of the economic turmoil in this period, and the subsequent political instability, was the subnational pressures on the federal budget generated by these reforms. In the following sections, I analyze the distribution of political power in the federation and the fiscal context the actors faced. Having characterized the setting of the federal distributive game, I analyze the tensions between the need to reverse some decentralizing reforms, a crucial goal the president sought, and the need to preserve the status quo, the governors’ main strategy.