Between a rock and the other thing

Brazil President Dilma Rousseff is set to announce details of a massive cut in government spending this week in a bid a make good on promises to fight inflation. Because Rousseff has pledged that the $30 billion reduction won’t come from a massive infrastructure program known here as PAC, it’s unclear where the money will come from. Unlike in the United States, where Congress sets the budget by law, Brazil’s president has a broad discretion to control spending as a fiscal year unfolds. But many observers are saying she doesn’t have nearly as much room to maneuver as she may like, because two of Brazil’s biggest spending areas are effectively off-limits. She’s legally barred from touching salaries and pensions of public employees and there’s a desperate need for infrastructure as Brazil tries laying a foundation for surging economic growth while preparing for the Olympics and World Cup.