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This article assesses the Lula government at midterm. The PT-led government has steered a surprisingly orthodox course in economics, social policy and party politics in light of the factors that led it to victory in 2002, namely, the PT’s critique of the economic and social models promoted by the Cardoso administration, its reputation as untainted by corruption and clientelism, and Lula’s close personal identification with the plight of the poor. While following convention has helped ensure political and economic stability, the PT’s long-term contribution to democracy rests on its ability to promote meaningful social development and political reform.