IT'S ON
Milei racks up political defeats, but his revolution has the wind at its back
President Javier Milei of Argentina will give a national address tonight in the face of a week that was politically bad for him. The lower house of Congress worked around the clock on Wednesday to deliver vote after vote, some by wide margins, defeating him on a list of policy matters big and small. Some were mere procedural advances on proposed revenue sharing with provinces and jacking up funding for universities, stepping over his objections. But a Congressional inquiry into the so-called $LIBRA scandal also advanced, intended to embarrass him rather than get to the bottom of what happened.
The biggest defeats were a series of late-night votes to overturn a handful of his reform decrees, which he’d issued under delegated authority the Congress had granted him.
Milei is reportedly going to use his televised address to hit back tonight on the overturning of the decrees, signaling that he may challenge it in the courts and continue to implement them in defiance of the opposition. The address will set the tone of political combat ahead of the August 27 official kick-off of the all-important legislative election campaign.
What is underneath?
One cannot trivialize the political setback Milei faced this week in Congress. In part it was somewhat anticipated blowback on a number of fronts where Milei and his inner circle have been exerting maximum pressure on a number of key allies they need:
The Governors. Milei has been unbending over his zero-deficit structural and revenue policies, and has refused to budge on his austere position regarding the distribution of tax revenues shared by the federal government and the 23 provinces along with the Autonomous City of Buenos Aires (CABA). In a truly unprecedented move of unity, they all backed the House vote to advance their agreement in defiance of Milei.
The Candidate Lists. It wasn’t just money that sent the usually pliant governors into the opposition’s arms on Wednesday. Milei’s La Libertad Avanza political party has promised to run its own slates of candidates against the governors’ local machines in October, which upset the feudal poobahs who value their local machines as negotiating tools (for more revenue, usually). This probably sweetened the opposition’s pitch for their support on Wednesday.
The PRO. In CABA, however, Milei has pressed hard for a unity ticket between LLA and the center-right PRO of former president Mauricio Macri. Much of the PRO firmament has either migrated to LLA or has strong affinity for its reform agenda and its political popularity in their base regions. Macri has held out, and often been in conflict with Milei and his inner circle. In the end, a coalition deal was struck this week for the CABA election lists that represents an LLA domination of the PRO in the capital district, something that many PRO loyalists have chafed at. The votes on Wednesday probably gave some of them reason to smile out of bitterness, but the PRO ultimately needs to run and win with Milei in October if it wants to have a future in Argentine politics.
So, in a way the defeats this week had an element that was in the moment and not a sign of imminent collapse by any means. This is reflected in public opinion polls, which are far more relevant in gauging the big picture.
Taking in a set of key surveys in Argentina, Milei’s approval rating is still hovering near 50% and has dipped to as low as 43% in some. But his numbers are well above those of his immediate predecessors at this point in their presidencies, facing the midterm legislative elections. Indeed, he is about 7 points ahead of where Macri was in 2017, and Macri won those midterms handily.
More importantly, a survey published by Clarin this week found that while 6 out of 10 Argentines believe the economy is “bad”, nearly half of Argentines believe it will improve.
Our take:
Putting the two sets of polling numbers together, it appears the public is still holding onto the hope that Milei’s economic and structural reform efforts will yield positive results for them despite the pain of the moment. This is what Milei needed at this moment to head into the midterm campaign.
Some 46% of Argentines believe better economic days are coming, 15% believe it will stay the same and 39% believe the economy will “get worse”, according to the Clarin poll. This shows the economic numbers are resonating with the public.
There is an undeniable drop in inflation since Milei took office, which was spiraling out of control when Milei was elected to fix it.
A massive budget deficit and strangling currency controls have been replaced by consecutive budget surpluses and a managed release of the “clamp” on capital exits. Even with some volatility with the dollar against the peso and with monthly inflation figures on some products, the new financial order is holding steady.
The poverty rate has dropped significantly year-on-year, by more than 23%.
In short, Milei can lose floor votes in Congress, and be thwarted by opponents and erstwhile allies alike from week to week. But he is winning the expectation game with the voters.
Enough of the public still believes the investment in pain and austerity will be worth it. The challenge will be for Milei to keep faith with them and win back a few stragglers from his record landslide victory in 2023. Should the LLA coalition come out in first place in October, even if it doesn’t gain workable majorities in either chamber of Congress, it will be a win for Milei’s reform revolution anyway. It will have overcome the gravitational drag of pessimism that has kept the country out of the running for so long and proven there is reason to keep hope alive for real change.