President Lula’s administration is navigating a challenging political moment marked by declining approval ratings, internal crises, and growing tensions with Congress. Recent polls show a stagnation in the president’s popularity, with disapproval levels comparable to those faced by Jair Bolsonaro at a similar point in his term. At the center of the discontent is the INSS crisis, compounded by public backlash to a proposed increase in the Financial Transactions Tax (IOF). While Finance Minister Fernando Haddad has introduced a new tax package to mitigate fiscal pressure, resistance in Congress — especially from influential parties like PP and União Brasil — has intensified. In parallel, Lula’s communications team struggles to manage the government’s image, and Chamber of Deputies President Hugo Motta has adopted a more confrontational stance, amid disputes over budget amendments and executive decisions. The political environment remains tense as the administration works to regain control and public trust.
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Adverse Scenario
The adverse polling scenario faced by President Lula (PT) closely resembles that faced by Jair Bolsonaro at the same point in his term, in 2021. Just under a year and a half before their respective reelection bids, both presidents registered 57% disapproval in Quaest surveys, with similar numbers in Ipsos-Ipec and Datafolha polls. The good news for the PT president is that Bolsonaro managed to recover enough to compete in the runoff; the bad news is that it was not enough to win. In Bolsonaro’s case, the crisis stemmed from the COVID-19 pandemic. In April of that year, a parliamentary inquiry (CPI) was launched to investigate the government’s alleged mishandling of the health crisis. Now, Lula faces the INSS episode, which could also lead to a CPI and is undermining the positive signs that internal polls had begun to show, driven by a decline in economic pessimism.
New Polls
The recovery in President Lula’s (PT) approval ratings has stalled, according to a new Datafolha poll. The institute reports that 40% disapprove of the PT president, while 28% approve — maintaining, in terms of negative evaluations, the worst level recorded during his three terms. In the previous poll, conducted in early April, 38% disapproved of Lula, compared to 29% who rated him as excellent or good. That round brought relatively good news for the government, especially after the February slump when Datafolha measured 41% disapproval and 24% approval. The main political event since then has been the INSS crisis, which has had a broad negative impact on the government’s image.
Ministry of Communications
Tasked with containing the erosion of President Lula’s popularity, the Minister of the Secretariat of Social Communication (Secom), Sidônio Palmeira, has faced successive crises. The ministry has become a kind of “bunker” within the Planalto Palace. Five months into the role, Palmeira has yet to find a communication strategy capable of boosting the government’s image. Referred to as a “firefighter” by other government members, the marketing expert has already had to manage turbulence caused by announcements about Pix, the revelation of pension embezzlement at INSS, and now, the fallout from the government’s attempt to increase the Financial Transactions Tax (IOF).
IOF Crisis
Amid political turbulence, Lula personally intervened by calling influential senators and deputies — starting with Hugo Motta — to reach a minimum consensus around the MP that recalibrates the IOF increase. Behind the scenes, the president has been accused, even by allies, of being disconnected from the crisis. However, he has been actively working to try to reverse a situation that remains difficult. Parties such as PP and União Brasil have taken a firm stance: they oppose tax increases and reject the provisional measure in its current form. However, by Lula’s decision, the government published the MP containing changes to the taxation of financial investments and tax hikes for some sectors.
New Tax
Finance Minister Fernando Haddad stated on Thursday (12/06) that a package of measures, presented as an alternative to the increase in the Financial Transactions Tax (IOF), is expected to generate just under R$20 billion in additional revenue for the government this year. The measures include a Provisional Measure (MP), published on Wednesday (11/06), along with other initiatives still under consideration. The MP introduces a series of changes in the taxation of financial investments and increases taxes on certain types of companies. It was formulated to replace the IOF decree rejected by Congress, which was also withdrawn on Wednesday (11/06).
Change in the Chamber of Deputies
The president of the Chamber of Deputies, Hugo Motta (Republicanos-PB), has shifted from the conciliatory tone of the early days of his term to a more assertive stance toward the Supreme Federal Court (STF) and President Lula’s administration (PT), after risking the loss of support among colleagues. Motta made two strong moves to consolidate his base: he determined that the plenary would decide on the loss of deputy Carla Zambelli’s (PL-SP) mandate following her STF conviction and advanced two legislative decree proposals to suspend Executive Branch norms. At the center of this dispute are parliamentary budget amendments — mechanisms by which legislators direct funding to public works and services in their constituencies. In addition to blaming the STF and the federal government for delays in implementing these amendments, Motta has also lacked access to the key tool his predecessor used to secure support: fund distribution.
Analysis:
The current political scenario reflects a significant deterioration in President Lula’s political capital, just as his administration hoped to reverse the trend of growing disapproval. The resemblance to Jair Bolsonaro’s situation at a similar point in his presidency is striking, especially in terms of public perception and the emergence of a high-profile crisis — then the pandemic, now the INSS scandal. Both cases demonstrate how a government’s failure to manage essential services or articulate convincing responses to public dissatisfaction can quickly erode support, even among loyal constituencies.
Congressional resistance, particularly from center-right parties such as PP and União Brasil, further complicates Lula’s path. The IOF crisis — and the provisional measure introduced as a workaround — has become a symbol of the government’s difficulty in building consensus, despite Lula’s efforts to personally negotiate with key political figures.
Sources: G1; O Globo [1], [2], [3], [4], A Folha de SP [1], [2].
