Lula converges approval and voting intention

The approval rating of the government (51%) and voting intentions (51% and 52%), even with a scenario of a first-round victory for President Lula, converge in the Atlas/Bloomberg poll released this Friday, indicating that the Workers' Party candidate is right to reinforce his core electorate with issues that resonate with him, such as tax justice, confronting the "upper echelons" of organized crime, and defending the national flag. 

The movement has increased the president's competitiveness and, consequently, his ability to attract allies and drag in opposing factions, as suggested by the continued presence of ministers from the Centrão (center-right bloc) against the wishes of their party leaders. In a scenario of resilient polarization, it is crucial to seek synergy between electoral performance and government popularity, since the election results also reflect a division in perception about the administration, generating a dynamic in which approval and voting intention mutually transfer.

Without Lula, Finance Minister Fernando Haddad would defeat any potential opponents from the center and right, indicating a favoritism towards Lula's supporters, not just the president. On Lula's list of opponents are governors Tarcísio de Freitas (SP), Ronaldo Caiado (GO), and Ratinho Jr. (PR), former first lady Michelle Bolsonaro, and former president Jair Bolsonaro, who is likely serving a prison sentence during the presidential race. Haddad's opponents would defeat Tarcísio, Caiado, Ratinho, and Zema.

GOVERNABILITY AND AMENDMENTS

It is in this context that the Speaker of the Chamber of Deputies, Hugo Motta, states that the Executive Branch needs to improve its relationship with the Legislative Branch, especially regarding the payment of parliamentary amendments—which should not occur in relation to those with technical problems, under scrutiny by oversight bodies, that are outside the framework defined by the Supreme Federal Court (STF), and those that will be cut to meet the fiscal target. Even so, some billions from sectoral ministries may be released to accommodate the reorganization of the allied base and comply with the mandatory budget.

Minister Flávio Dino announced that he will instruct the Lula government to conduct an advertising campaign, in traditional media and digital platforms, on the transparency and traceability of amendments between December and February, which is likely to increase social rejection of the misuse of these resources. 

Dino also ordered states and municipalities to adopt their own measures to guarantee transparency and traceability in the execution of amendments from legislative assemblies and municipal chambers starting January 1, 2026, under penalty of being blocked, which could partially reverse the advance of state deputies and councilors over the prerogatives of governors and mayors.

BUDGET, HOUSE OF DEPUTIES vs. SENATE

Motta warned that, before scheduling the 2026 Budget Guidelines Law (LDO), it is necessary to resolve the fiscal problem. Haddad should move forward with three main points, in two measures, to balance the public accounts: one, with spending cuts, which could be voted on next week, although another, with a review of tax benefits, should be left for later; and a third, with taxation of betting and fintechs, which will probably be rejected. However, the resistance of the Centrão (center-right bloc) to revenue-raising measures aimed at the financial system and high-income earners may open another opportunity for the government to mobilize public opinion.

Reacting to the adverse political climate, the Chamber maintained the text that creates rules for monocratic decisions in the Supreme Federal Court (STF), sending the project to the Senate, where the proposal must be contained and the conclusion of the Income Tax reform remains pending. Meanwhile, without the Sentencing Guidelines, Bolsonaro will face the fate of Papuda prison or house arrest granted by the STF. The viability of a "light" amnesty, however, depends on overcoming resistance among senators. The ruling with Bolsonaro's sentence was published this week.

With the Senate's approval of the bill that excludes R$ 5 billion in Armed Forces expenses from the fiscal target, the Executive branch could exceed R$ 150 billion in exceptions to the rule by 2026, according to the Independent Fiscal Institution (IFI). These deductions include measures already adopted, such as the payment of court-ordered debts outside the limit, expenses for the reconstruction of Rio Grande do Sul and for fires, investments from the PAC (Growth Acceleration Program), and aid to companies affected by the US tariff hikes. These exceptions point to the need for a new fiscal pact that considers climate pressures, social demands, strategic national needs, and the prerogatives of the branches of government starting in 2027. 

Supreme Court, Trump, and Interest Rates

The president postponed the nomination of Luís Roberto Barroso's replacement on the Supreme Court, which may occur next week or in November, when the Senate is expected to reappoint the Attorney General of the Republic (PGR), Paulo Gonet. Lula may expand political talks to reduce tensions before announcing his choice, after returning from Asia, according to government leaders. In Malaysia, Lula is scheduled to meet with US President Donald Trump on Sunday, amid escalating tensions between Washington and Caracas, under the American justification of combating drug trafficking, a conflict that now involves Colombia. Once again, the virtue and fortune that mark the president's career will be on the table.

The week was also marked by deliverables from the Executive branch, such as the “Reforma Casa Brasil” program—which facilitates credit for renovations, expansions, and adaptations of housing throughout the country—and the “anti-faction package,” which toughens the fight against organized crime, providing for the seizure and early forfeiture of assets, restrictions on parole for gang leaders, and the infiltration of agents. Petrobras was authorized to prospect the economic potential of oil exploration in the Equatorial Margin, despite opposition from 61% of the population, according to Datafolha, which demonstrates the president's willingness to compete for positions in society.

Finally, the National Consumer Price Index 15 (IPCA-15), considered a preview of inflation, has been contributing to the trend of reducing the Selic rate from the first quarter of 2026 onwards, whose "climate" of interest rate reduction tends to favor Lula's reelection, in an environment likely resistant to the resumption of the old Spending Cap regime.

www.idealpolitik.com.br