Brazil's President Fernando Henrique Cardoso will be remembered for his administration's accomplishments as well as the problems his government left unresolved. On the one hand, fiscal policy represents one of Cardoso's success stories: the Plano Real curbed inflation, established economic stability, and enabled the central government to rein in subnational governments' out-of-control spending patterns, which had been a key source of macroeconomic instability. However, the question remains whether Brazil can truly escape from the political and economic consequences of past fiscal profligacy. Despite many successes, Cardoso's own policies have created additional obstacles that future administrations will necessarily confront, in particular a dramatic increase in Brazil's internal debt. Observers of Brazil should count both sides of the accounting ledger when evaluating the Cardoso administration. Much has been gained, but the costs of those gains must be recognised and the impact of those gains on the range of policy choice available to future administrations understood. This article explores the factors that contributed to Brazil's macroeconomic difficulties prior to 1995, and then explores how the Plano Real provided the Cardoso administration with leverage to constrain the capacity of subnational actors to affect Brazil's economy. Subsequently, however, the paper describes how the Cardoso administration's policies have created Brazil's current ‘fiscal straitjacket’, and concludes by discussing how Cardoso's policies will constrain future administrations.