Historic Rejection: Brazil's Congress Overrides Presidential Decree

In a landmark decision, Brazil's Congress on Wednesday overturned a presidential decree by President Luiz Inácio Lula da Silva, marking the first such nullification in decades. The rejected decree sought to increase a financial transactions tax, covering areas such as foreign exchange and credit card transactions. The move signals diminishing congressional support for Lula's left-of-center administration, as only 98 allies backed the decree against 383 votes in the lower house.

Senators also swiftly followed suit, emphasizing the growing political challenges for Lula one year ahead of the presidential election campaign. Despite negotiations with key legislative leaders like Speaker Hugo Motta and Sen. Davi Alcolumbre, the president faced a decisive defeat. "Each branch of power has to understand the other's limits. That's democracy," stated Motta, without further elaboration.

Political consultant Thomas Traumann described the situation as a "historic defeat," highlighting Lula's lack of a stable majority in Congress. The last time Congress overturned a presidential decree was 32 years ago, during Fernando Collor's presidency. As the government grapples with this setback, Finance Minister Fernando Haddad mentioned potential responses, including court appeals, finding new income sources, or budget cuts.

(With inputs from agencies.)