Brazil Votes for More Lula

Brazilian President-elect Luiz Inácio “Lula” da Silva, a member of the Workers’ Party, defeated Senator Flávio Bolsonaro, the conservative Liberal Party candidate, in the runoff of last Sunday’s presidential election.

Before the vote, opinion polls favored Bolsonaro, but Lula managed to narrow the gap. With 99% of votes counted, Lula secured 52% of the vote compared to his rival’s 48%.

This result is a bitter disappointment for conservatives, but it would be wise for them to note that when Lula takes the oath of office on January 5, he will return to the presidency at a time when Brazil’s right wing has made tangible progress.

Bolsonaro surprised poll organizers by topping the first round on October 4, garnering 47% of the vote against Lula’s 45.2%.

In legislative elections, however, the right performed better. The Liberal Party won 19 of the 54 Senate seats up for grabs. With a total of 28 seats, it will enter the next legislative term as the largest single bloc in the 81-member chamber.

In the Chamber of Deputies, Bolsonaro’s party will also hold the largest single bloc, with 121 seats out of 513. In a highly fragmented parliament where more than a dozen parties compete for influence, these results represent significant developments.

The demand for economic freedom is growing in Brazil. It is enough to look at the strong performance of the right and center-right in the elections for governors of all 27 states.

Sergio Moro, the liberal judge who oversaw Lula’s conviction on corruption charges in 2017, also won the governorship of Paraná state.

Lula’s victory in a fourth, non-consecutive presidential term does not constitute a clear popular mandate. His rise from a poor family, his charisma, and his left-wing populism made him a hero of the labor movement and an icon of socialism in Latin America. He was a close friend of Fidel Castro. For years, Workers’ Party candidates benefited from his popularity, which helped them win. But the task was harder this time.

Brazilian youth want to afford the cost of living and have access to opportunities, and Lula has not delivered that. Inflation is expected to approach 5.2% in 2026, while forecasts for next year indicate it will exceed 4.3%. Wages have not kept pace with rising prices. With the central bank targeting an inflation rate of 3%, it has kept the overnight lending rate, known as “Selic,” at a high level of 13.75%.

The effects of this policy are clearly visible in Brazilian companies and households burdened by debt. Economic growth in 2026 is not expected to exceed 2%.

As inflationary pressures intensify due to deficit spending, Brazilians aspiring to improve their economic conditions are seeking an alternative to Lula. Bolsonaro promised to curb fiscal excesses and balance the federal budget, pledged to cut taxes on small businesses, reduce the regulatory burdens placed on them, and accelerate economic growth.

Brazilians also want the government to tackle drug trafficking run by gangs, extortion, kidnapping, and illegal gold mining operations that generate huge profits.

The United States has designated two of Brazil’s largest criminal gangs as foreign terrorist organizations. Lula described this designation as an attack on Brazilian sovereignty, but he has not offered a credible strategy to combat these crimes.

As of September, Lula held a comfortable lead in opinion polls. But that changed when documents were revealed linking Supreme Court Justice Alexandre de Moraes to former Master Bank CEO Daniel Dourado.

The court did little to improve its image on Sunday, when Justice Cristiano Zanin, Lula’s former lawyer, approved an extraordinary request from the president’s campaign to extend voting by two hours, citing public transportation problems.

Lula’s continued competitiveness despite escalating corruption allegations within state institutions suggests he still retains a loyal base of voters. However, after the first round, when Bolsonaro led in the polls, the president felt compelled to do more to mobilize votes.

He announced a 15% increase in monthly social assistance payments, loan exemptions, and cash transfers of nearly $1,000 for micro-enterprises, as well as free bus rides for everyone.

The cost of the financial benefits Lula provided over the past year in his re-election bid is estimated at around $60 billion, or more than 2% of GDP.

Bolsonaro’s narrow victory in the first round indicated that a significant number of those who supported Lula in the 2022 election had abandoned him this time. Lula’s eventual victory, however, may demonstrate the government’s ability to spend its way into winning over voters harmed by Bolsonaro’s policies.

* Member of the Wall Street Journal editorial board since November 2005. Member of the board of directors of Liberty Fund, based in Indianapolis.