When President Javier Milei appears before Congress tomorrow to present next year’s Budget bill proposal, he will come face to face with what he describes as “the caste.” And this week, he has spent more time in political dealings than arguably at any other time during the first nine months of his Presidency.
His agenda this week was purely defensive but crucial. Since Congress passed the only two bills of the Milei administration so far in late June — the ‘Ley de Bases’ and its accompanying fiscal package — the ruling party has lost the initiative. It has been on the defensive, trying to prevent the opposition from scoring points that could raise uncomfortable questions about the President’s ability to govern.
The most significant of these moments occurred in the lower house Chamber of Deputies on Wednesday, when the ruling party narrowly avoided a vote that would have overridden one of Milei’s vetoes. The law in question proposed an increase in pensions, which directly targeted the heart of the government’s economic programme: the fiscal surplus. But beyond this bill, if Congress were to establish a pattern of gathering supermajorities against Milei and his veto powers, the President could face a difficult year until a new Congress is sworn-in after next year’s midterm elections.
Milei personally worked to organise what little support he has from a few small, allied parties and to co-opt some opponents, ensuring that his vetoes would hold. Ergo, he had to grudgingly follow the advice of engaging with the people he once referred to as “Lilliputians.” The result? On June 5, the Chamber of Deputies had voted 160 to 72 — a clear two-thirds majority — to approve the pension increase; now, the same chamber voted 153 to 87, just short of the threshold required to uphold the law.
The President called these 87 deputies “heroes” – from dwarfs to giants. The swing votes came from a handful of deputies from the centrist Unión Cívica Radical (UCR) in the provinces of Tucumán, Corrientes, Córdoba, Misiones, and Neuquén, whom Milei took the time to meet at the Casa Rosada earlier in the week.
There may be nothing more “caste” than a group of deputies who vote one way one day and another way a few weeks later. But a pragmatic Milei knows that some elements of the caste are more useful than others, depending on which side of the political equation they fall.
By most accounts, Argentina’s government is beginning to look radically conventional and willing to settle for mediocre results, despite its leader’s tendency to boast of his popularity as a major global and historical figure.
Take inflation. After a quick reduction that followed the peak of 25 percent monthly inflation in December, price increases have remained stubbornly in the four-percent range for more than a quarter, even with the official and parallel exchange rates under control and dramatically lagging inflation. August’s 4.2 percent inflation rate, reported by the INDEC national statistics bureau this week, is the same figure as in May, four months ago. Inflation is the number Argentines will judge Milei by when they go to the polls again in October 2025. The slowdown is bad news for the President.
In his speech to Congress tomorrow, Milei will insist that the path forward is strict fiscal discipline. He will need inflation to return to a downward trend if he is going to convince sceptical legislators that the effort is worthwhile.
On the transparency front, Milei is also starting to raise doubts. This week, he quickly fired a government trustee at the Río Turbio coal mine who was suspected of sending a friend to request a bribe from an Israeli firm. It is hard to know how well the government is controlling such actions across the administration when, at the same time, it is seeking to limit access to public information about government officials’ activities. The recent establishment of an Economy Ministry committee that will decide which projects fall under the RIGI Major Investments Incentives scheme — set to distribute billions in benefits with no external oversight — has also raised suspicions that transparency may not be the norm.
These are the kinds of issues leaders overlook when they are at the peak of their popularity but which return like poisoned boomerangs when public opinion turns against them. Just ask the Kirchners, who enjoyed years of economic boom 20 years ago and little accountability — until the corruption scandals caught up with them all at once.
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