Javier Milei and his ‘chainsaw’ austerity win big

Argentina’s president Javier Milei has led his party to a landslide victory in Sunday’s midterm elections, after defining the first two years of his presidency with radical spending cuts and free-market reforms.

His party, La Libertad Avanza, won nearly 41% of the vote, taking 13 of 24 Senate seats and 64 of the 127 lower-house seats that were contested.

His gains will make it much easier for the president to push ahead with his programme to slash state spending and deregulate the economy.

Before the vote, Milei’s ally Donald Trump made it clear that the US’s recently announced $40bn lifeline for Argentina would depend on Milei keeping political momentum.

Milei’s supporters welcomed that, though critics accused Donald Trump of foreign interference in Argentina’s elections.

In a nod to his North American ally, Milei told cheering supporters: “We must consolidate the path of reform we have embarked upon to turn Argentina’s history around once and for all… to make Argentina great again.”

Before these elections his party had just seven Senate seats and 37 seats in the lower house.

That meant his programme of spending cuts and reforms faced various political obstacles.

His vetoes of bills to boost funding for state universities, people with disabilities and children’s healthcare were all overturned by opposition lawmakers.

After Sunday’s result, hundreds of his supporters gathered, cheering, outside a hotel in Buenos Aires where he was watching the result.

“Milei didn’t have 15% of Congress in his favour. Now, with many more deputies and senators, he’ll be able to change the country in a year,” one young voter Dionisio said.

“Our province was devastated by previous governments,” another voter Ezequiel said.

“Now, thank God, freedom has won. We want our daughter to grow up in this beautiful country. What happened in previous years is regrettable.”

These elections were the first national test of President Milei’s popularity since he took office in 2023, pledging to shrink state spending by taking a metaphorical “chainsaw” to it. He brandished a real one during his campaign rallies.

He’s since cut budgets for education, pensions, health, infrastructure, and subsidies, and laid off tens of thousands of public sector workers.

Supporters, including Trump, hail him for taming inflation – which hit triple figures annually before he took office – cutting the deficit, and restoring investor confidence.

His critics, though, argue the price has been job losses, a decline in manufacturing, crumbling public services, a fall in people’s purchasing power and an imminent recession.

Juliana, who works with children with disabilities in Tucumán province, is concerned that a law to increase funding for people with disabilities – which Milei vetoed, before being overturned – could be “in danger” with the president’s position strengthened in Congress.

“Our salaries are low, it remains the same, while other things are increasing. We still don’t see a change,” she added.

Veronica, a retired police officer, has been hit by Milei’s pension cuts.

“You see a lot of poverty,” she said. “It’s very hard: for retirees, for people with children with disabilities, for young people. There’s a lot of unemployment. Many factories have closed.”

Milei has also kept inflation down by propping up the peso, leaving it overvalued and draining reserves ahead of $20bn of debt repayments next year.

This had caused alarm that Argentina could be hurtling towards an economic crisis.

That, coupled with a poor election result in Buenos Aires province in September, spooked the financial markets that Milei’s cost-cutting agenda may not be politically sustainable.

These factors prompted the US to step in to help. It has now offered Argentina a potential $40bn lifeline via the combination of a currency swap, buying pesos and arranging private investment.

“If he wins, we’re staying with him. If he doesn’t win, we’re gone,” Trump had threatened.

Before this election, doubts had grown about Milei’s political future due to some voters tiring of his austerity programme, as well as a series of corruption scandals that had rocked his party.

This election turnout was 67.9%, the lowest in a national election in decades, representing widespread apathy with politicians of all stripes.

Some voters backed him reluctantly.

“Milei has two years left and should try to do what he can,” said Dardo, a business owner in Buenos Aires. “I think we’re on the right path, but the middle and working classes are suffering too much.”

He is sceptical the support from the US will help, saying “we’re going to have to pay for it at some point”.

Others, like political science student Thiago, said they understood the need for fiscal balance but questioned Milei’s means.

“There’s a lack of investment in hospitals, infrastructure, in people with disabilities,” he said. “There’s a certain false hope.”

This election result, though, shows that many Argentines remain unwilling to return to the Peronist model Milei blames for decades of economic mismanagement.

“Argentines showed that they do not want to return to the failed model, the model of inflation… the model of a useless state,” he declared.

Financial markets are expected to rally after the win: a sign that, for now, Milei’s political survival has also kept his economic experiment alive – and US support in place.

His new mandate gives him the power to implement more radical changes ahead of the next presidential election in 2027, when his name could be on the ballot once more.

The question now is whether ordinary voters start feeling better off, or if the pain of some of his cuts tests people’s patience once more.

For now, it appears a significant proportion of voters are – once again – prepared to give him time.