Cardoso was inaugurated as president on January 1, 1995, under the most auspicious circumstances. He had won an outright victory in the first round of the election and had potentially strong support blocs in the Chamber of Deputies and Senate. He had strong support from a majority of the newly elected governors, including those from the important states of Minas Gerais, São Paulo, and Rio de Janeiro, which had elected governors from the president's own PSDB. Further, the December 1994 inflation rate was less than 1 percent, unemployment was low, and popular expectations ratings were extremely high.
After his inauguration, Cardoso called the lame-duck Congress into session in an attempt to pass important legislation not acted on in 1994. President Cardoso abolished the CEI, which had not yet finished investigating corruption in the Franco administration, and transferred its mission to the new Internal Control Secretariat (Secretaria de Contrôle Interno--SCI). The Cardoso government pushed privatization and organized the sale of the Rio Dôce Valley Company (Companhia Vale do Rio Dôce--CVRD), one of the world's largest mining firms; the telecommunications system; and the electricity sector.
In 1995 Congress enacted major constitutional reforms, including economic deregulation, eliminating state monopolies, and changes in election and party legislation. By July 1995, the lower house had passed (and transmitted to the Senate) all five amendments dealing with the economic area. The amendments reduced to varying degrees state-held monopolies on coastal shipping, natural gas distribution, telecommunications, and petroleum, and eliminated the distinction between domestic and foreign firms in Article 171.
Perhaps the most important task of the Cardoso government in 1995 was to promote the reform of key sections of the 1988 constitution in order to reduce the role of the state in the economy, reform the federal bureaucracy, reorganize the social security system, rework federalist relationships, overhaul the complicated tax system, and effect electoral and party reforms to strengthen the political representation of political parties. In February 1995, the new Cardoso government moved quickly to initiate constitutional reform by a three-fifths majority of each house.
In the area of political reforms, Congress sought to improve Brazil's very weak party system. Congress proposed establishing a mixed system, prohibiting coalitions in proportional elections, establishing a minimum representation threshold (5 percent), permitting immediate reelection to executive office, imposing more rigid party fidelity norms, restricting party access to television and radio time, and establishing stricter regulations for campaign finance.
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