Disenchantment with Haddad reduces chances of succeeding Lula in 2026

The trajectory of the Minister of Finance, Fernando Haddad (PT), as a possible candidate for the Palácio do Planalto in 2026 can be compared to a “flight of the chicken”. He is one of the Workers’ Party’s main candidates to compete to succeed Luiz Inácio Lula da Silva (PT), if the president is unable to run or simply decides not to seek re-election. But Haddad found himself demoralized this week, after Lula publicly buried the minister’s zero deficit bet.

The term “flight of the chicken” is used by economists to describe the short periods of economic growth that mark Brazilian history, always induced by temporary factors and then suddenly ended due to a lack of solid foundations to sustain it. But it can also be applied to the curve drawn by the rapid rise and sudden fall of Haddad’s prestige over the course of this year.

Initially, Haddad had to face distrust from financial agents, but he managed to overcome it thanks to a recognized stance of dialogue and cooperation with the market and Congress. This recognition was driven by unexpected optimism, which rocked investors and consumers, amid generally favorable economic indicators.

However, after the approval of some items on the government’s economic agenda, especially tax reform in the Chamber of Deputies, the enthusiasm surrounding Haddad gave way to disenchantment. In recent months, the decline has accelerated thanks to growing disbelief in the fiscal target for 2024. This trend was confirmed on Friday (27), when Lula said he does not want to establish a fiscal target that would force him “to start the year by making cuts billions in the works”.

The “chicken landing” warning made by the president himself when discrediting the fiscal effort of his own economic team suggests Haddad’s exit from the race among left-wing presidential candidates, initially strengthening Lula himself, still seen as the PT’s main alternative . “Planalto’s candidate in 2026 was always Lula”, jokes Juan Carlos Gonçalves, general director of the think tank Ranking dos Políticos.

But the minister’s failure also fuels the ambitions of others, starting with First Lady Rosângela da Silva, known as Janja. Names on the betting exchanges, such as ministers Flávio Dino (Justice and Public Security) and Rui Costa (Casa Civil), depend on the situation, with unfolding facts involving the future of their careers.

In July, Haddad was at his peak, playing an active role in the negotiations of tax reform and new governance rules for the Administrative Council of Tax Appeals (Carf). Even the president of the Chamber, Arthur Lira (PP-AL), praised him.

“I wanted to make a point here, to praise the work with regard especially to the Executive power of Minister Haddad, who participated in all the conversations and was extremely important in providing the necessary support, so that in the federative part, the reform [tributária] there were ways for us to build a global agreement”, said Lira on July 24, after approval of the tax reform.

Haddad feels the consequences of the “worst job in the world”

In the opposite situation, Haddad found himself at his worst moment in the last days of October. In a press conference held last Monday (30), the minister was confronted by journalists about Lula’s statements regarding the goal of zero deficit in 2024.

With evident impatience, Haddad responded disrespectfully to questions and left the meeting. Maybe you realized why your position is considered “the worst job in the world”, a term coined by political analyst Thomas Traumann in his book about the difficulties faced by Brazil’s finance ministers.

In the Senate, the main structural measure of his administration, tax reform, was distorted by the action of several lobbies, which created a series of exceptions to the standard tax rate. Upon returning to the Chamber, the text of the Proposed Amendment to the Constitution (PEC) should undergo further adjustments, signaled by the “largest Value Added Tax (VAT) in the world”.

But there are analysts who believe there was a combination of interests between Lula and Haddad that led the president to suggest an opposite view in relation to the balance of public accounts. This is because, by saying that the government will “hardly” be able to meet the zero deficit target, set out in the fiscal framework, it assumed the burden of fiscal laxity, maintained Haddad’s fiscalist role and also took the pressure off him to achieve a “bold” objective. too much”.

The connection between Lula and Haddad has been strong over the last few years and the last elections. The president overcame pressure to make the minister take charge of the economy and did not create major obstacles to his actions. When he was imprisoned in Curitiba, Lula chose Haddad to represent him in the 2018 elections. Likewise, in 2022, when Lula looked for someone to boost his candidacy for the Presidency in São Paulo, the largest electoral college in the country, he delegated the mission again to the minister, who was a candidate for Palácio dos Bandeirantes.

Worsening public assessment confirms Haddad’s wear and tear

The charm of the so-called Faria Lima – the avenue in the capital of São Paulo that brings together offices of the country’s main banks and brokers – with the Minister of Finance was short-lived. He was seen as a positive counterpoint to Lula’s stances, seen as threatening to economic stability, but, without being able to provide security for the evolution of public accounts, Haddad and the government distanced themselves from the financial market and began to depend even more on Congress.

According to the Quaest survey commissioned by Genial Investimentos and released on Wednesday (25), the Finance Minister’s assessment has worsened among Brazilians, who are also more pessimistic regarding the drop in inflation, unemployment and salary losses. Haddad’s performance was rated as average by 30% of those interviewed. For 26%, management is positive and 26%, negative. The survey shows that 50% of the population believes that the economy will improve in the next 12 months (it was 59% in August). But 29% see it getting worse (22% in the previous survey) and 18% say it will stay the same (it was 16%).

But for political scientist Luiz Filipe Freitas, Haddad’s presidential candidacy in 2026 is not yet buried. “We are coming to the end of the first year, with a view to a municipal election in 2024, a tax reform and all economic planning for the coming years”, he highlights. He recognizes that Lula’s incoherent speeches generated weariness for the minister and that there is a predominant desire in the PT for re-election. “But the good traffic in Congress is still a differentiator for Haddad, the holder of the key to the safe,” he said.

Freitas assesses that, if the age factor of the president, who will be 80 years old in 2026, interferes in the decision on his candidacy, and the economy, in turn, brings good news, Haddad could return to the board. Marcus Deois, director of the consultancy Ethics Intelligence Policy, believes that, as we are still in the first year of the government, “the scenario is still absolutely unpredictable”.