Lula in his maze

 

The crisis of credibility experienced by the Lula government in the management of public accounts and the escalation of the dollar forced his economic team to try a change of behavior at this time and to defend the revision of federal expenditures with more phase. In the last few days, President Lula ended up showing that he was not convinced of the task (prolonging the series of ups and downs observed in fiscal policy).

As the comings and goings have accumulated since the beginning of the government, due to the political and electoral difficulties of each initiative launched or studied. The extension of the recipes faces a growing reason from the economy, while the options to reduce the expenses generate fears of an increase of the unpopularity indexes. These are too many signals. Haddad tried to maintain a balanced agenda by publicly launching disciplinary measures, but in the end, he was defeated by the lack of support in Congress and within the government itself.

Lula is now and then as if fiscal matters do not matter. There is a duality of behavior that many attribute to the influence of the First Lady. Lula comes out of the house revolutionary and when he meets institutionalism, he moderates himself to repeat the cycle, confusing the markets and the Minister of Economy. It is not known if it is the first lady, but certainly in decisions and speeches, the intimate environment can influence. Lula debates every day whether to cut taxes or increase them. Haddad backs both maneuvers. For him, the important thing is to balance the budget, or get as close to it as possible, in order to avoid macroeconomic imbalances, which in Brazil are amplified by the critical mass of the economy. 

The movements of the economic team and the attempts to turn the page on the market are seen in the midst of an additional challenge, or to reduce the risks that there has been talk within the government of a "second transition" due to the changes in leadership at the Central Bank and the goals of the Lula government with a view to re-election or the next election in 2026.

Meanwhile, the president's discursive dynamic continues to create unease. The president is reportedly adopting a unionist tactic to deal with the problem: speak loudly in public, then sit down at the table and negotiate the best gains at the lowest possible cost. According to members of the government, this tactic works in disputes between employers and employees, but it needs to be adapted to the financial market. This is because the market has the potential to react, speculate and worsen economic conditions, thus weakening the government's position. This can be seen in the dollar rates. The prudent thing to do would be to use a softer discourse that reassures the market but does not, in practice, give up on what is considered essential. In other words, the president should not keep repeating that he will not do what the financial market wants. However, internal critics of Lula's recent speeches recognize the difficulty of doing this in interviews, which are seen not only by the market, but also by the general public, to whom the president must also convey his messages.