Latin America's rainmakers are not in the habit of eating humble pie. Until just the other day, after all, hyper-popular leaders like Hugo Chávez of Venezuela, Evo Morales of Bolivia and Brazil's Luiz Inácio Lula da Silva could do just about what they pleased, leaving their political foes little choice but to stand by and stew in frustration. But if recent events are any indication, the Latin charismacrats may have to get used to an unsavory set of new rules.

Across the region, democracy is biting back. On Dec. 1, Venezuelans handed Chávez a stinging defeat by turning down a 69-point referendum proposing everything from curbing private property to unlimited reelection. It was El Comandante's first loss at the ballot box, and a sign that the ballyhooed Bolivarian revolution will not be implemented by steamroller. Nor are things looking so rosy for Chávez's closest disciple, Morales, the coca-leaf grower-turned-messianic leader, who vowed to recreate Bolivia by recasting the constitution to redeem the country's teeming poor and forgotten. Now he presides over a nation riven ethnically, between the destitute indigenous majority and the relatively well-heeled light skinned heirs of the Spanish colonialists; geographically, between the hardscrabble Altiplano and the fertile, oil-and-gas-rich lowlands; and ideologically, between the left-wing nationalists who blame foreigners for Bolivia's woes and the globalists who want desperately to connect to world markets. So volatile is the political climate, the constituent assembly had to finish drafting the new constitution under military guard.

Now it looks like Lula's turn for a comeuppance. On Dec. 12, the Brazilian Senate dealt the leader a stunning setback by killing a controversial financial transactions tax known as the cpmf. Conceived as a temporary tax, and originally earmarked for the ailing public health system, the 40 billion reals ($22 billion) a year levy had come to represent a war chest for revenue-gobbling bureaucrats. Most Brazilians (63 percent wanted it extinguished, according to polls) loathed the cpmf as perhaps the most extravagant of the dozens of ways public authorities have of separating Brazilians from their money. Brazilians pay one of the highest tax burdens in the developing world.

The irony is, if it weren't for the hubris of the ruling claque in Brasília, Lula just as easily might have preserved the tax nest egg (which expires at midnight Dec. 31). One honorable solution would have been a gradual reduction of the levy to zero over the next several years. But that would have meant meeting the political opposition halfway, something that the starstruck ruling Workers Party (PT) has been loathe to do since Lula came to power five years ago.

Faced with a revenue shortfall, now Brasília has no choice but to curb its ravenous fiscal appetite (expenses are rising at double the rate of gdp) and swallow its pride. Which, come to think of it,  might not be a bad recipe for the rest of Latin America.