How Brazil’s Fiscal Chaos Is Breeding the Next Populist Wave

The recipe is familiar, and Brazil is mixing it again. Fiscal recklessness, institutional self-dealing, and a political class visibly more focused on its own perks than on governing — these are precisely the conditions that produced Jair Bolsonaro’s anti-establishment surge in 2018. Eight years later, the ingredients are back on the table.

The latest provocation came in early February, when Congress approved performance bonuses of up to 100% of base salary for its own staff, opening a path for legislative employees to earn R$77,000 ($12,800) a month — far above the constitutional pay ceiling of R$46,366 ($7,700). The vote was symbolic, meaning no lawmaker went on record. Only the Novo party opposed it. Lula has since signaled he will veto the measure, citing its unpopularity and a Supreme Court ruling suspending extra-ceiling benefits across all three branches.

But the damage runs deeper than one vote. The Lula administration itself keeps undermining the fiscal targets it proposed, treating budget discipline as a bargaining chip rather than a constraint. Permanent spending commitments pile up without matching revenue, and parliamentary leaders defend their opaque budget amendment powers as untouchable entitlements. The result is a state captured by short-term logic — a textbook incubator for outsider politics.

Anti-system politics resurges in Brazil

The aspirants are already positioning. Senator Flávio Bolsonaro, chosen by his imprisoned father to run in 2026, is repackaging the same anti-politics rhetoric that propelled the clan to power. The MBL’s newly registered Missão party, whose founder Renan Santos openly promises to “throw wood on the fire,” is building a right-wing alternative to both Lula and Bolsonaro. A Quaest poll found 24% of voters want a candidate tied to neither — fertile ground for a disruptor.

Most paradoxically, Lula himself — approaching his twelfth year leading Brazil — now attacks “elites” and the financial press as if he were the scrappy challenger. Digital provocateur Pablo Marçal’s strong showing in São Paulo’s mayoral race last year already proved how quickly anti-system energy can translate into real votes.

Advanced democracies show lasting change comes from incremental reform and strong institutions, not demolition promises. Brazil tried that experiment in 2018 and the cost was steep. The warning signs that it could happen again are growing impossible to ignore.

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