The State, the giant that Milei did not defeat
The legislative debate on increasing pensions and extending the pension moratorium , and to a lesser extent, the Garrahan crisis, demonstrated a common ground this week: there is a significant segment of the opposition that values the fiscal balance achieved by Milei but, at the same time, objects to the way he adjusts the accounts to achieve it. A ñoqui is not the same as a resident, they seem to say. If this is the case, Argentina would have achieved at least an important consensus and would be entering into a transcendent discussion: that of resource allocation. However, the fall in bond prices as soon as the bills were approved in the House of Representatives allows for more skeptical interpretations. The market, for one, may have asked itself that afternoon the same thing as Pablo Gerchunoff on Twitter: "Is this sustainable fiscal balance or repressed public spending?"
The question is crucial because it indicates the extent to which the stage of economic delusions has been overcome . Social spending represents 60% of state expenditures: it's difficult to imagine a cutback that could circumvent it. This is especially true in a country that has been accumulating imbalances since 2008, when the moratoriums took effect and the pension system was nationalized.
The composition of Congress is no stranger to these tensions. It fully represents a society that celebrated, or at least tolerated, the State taking not only the flow of funds, but also the stock that each contributor had saved until then in their individual accounts, and that 17 years later, exhausted by a crisis with double-digit inflation, ended up electing Milei in a runoff. It is this Congress, the institutionally designated forum for discussing spending allocation, that hasn't convinced those who might invest in Argentine bonds and, consequently, contribute to lowering country risk. The market doesn't quite believe it. Does it assume that the bills that include pension increases with their respective sources of financing are a sham?
It's true that recent experience doesn't help either. Argentina is on its third postponed budget due to a lack of agreements. Nor does society sometimes seem convinced by its own stereotypes. According to the latest survey by the University of San Andrés, approval of Milei's government rose 4 points in May to 49%, compared to 48% who disapprove, and the level of satisfaction with this administration has risen from 36% to 42% since March, with "economic policy" being the most valued achievement. And yet, the report says, 52% of those surveyed prefer "a larger state," versus 27% who would like "a smaller state." Should Milei put away the chainsaw? Those interviewed also delve into the budget: they call for increases in social security (84%), public health (83%), and education (77%).
In light of this context, the surplus seems more the result of Milei's personal conviction than a consensus. This is what leads many businesspeople to wonder if a dialogue-oriented leader could have achieved it. And the market, to doubt. It's not due to ideology that the most frequently asked question in corporate forums lately is what will happen in the elections. "How do you see Argentina?" political scientist Rosendo Grobocopatel asked Paolo Rocca the day before yesterday at a seminar organized by Endeavor, and the Techint expert dodged the question. "The industry shares its destiny with the community of which it is a part," he replied. All that said. "You're a skillful exponent," the interviewer concluded.
Business leaders appreciate the restructuring of the macroeconomic landscape , but the future remains uncertain: not all sectors are showing the same degree of recovery, and productivity is at its lowest level in 20 years. How can this be improved? By lowering taxes? And what about pensions?
Milei's style can also be useful for political discourse and, as Santiago Caputo says, confronting "the party of the state," but it has a drawback: it sometimes provokes unrest among those who should be her allies for reforms that support the program. This has just happened with Pro, where not everyone has yet overcome the insults of the Buenos Aires elections. Not so much Mauricio Macri, who recommends forgetting that defeat and focusing on 2027, but several deputies who abstained this week and allowed the partial sanction. María Eugenia Vidal, Silvia Lospennato, Luciano Laspina. Partners in the runoff who now accuse the ruling party of lying to them and even of being a bad payer for what they believe they have contributed in 2024: governability. "Without us, we would be in a Massa unity government," was heard on that program this week.
On Tuesday, the day before the vote, several people went to see Macri at the Pro Party offices on Balcarce Street. “Vote with your conscience,” instructed the former president, who was smiling hours later, with the results posted. Macri believes these numbers, which leave the government 20 votes short of the necessary number to sustain a potential veto, will influence the negotiations for the lists for October.
Something similar is happening to the Radicals . On Wednesday, upon learning that Osvaldo Jaldo, governor of Tucumán, had lined up his deputies to vote in favor of the pension increase and the emergency for disability, someone from Rodrigo de Loredo's bloc advised his fellow party members: "Anyone who feels they have a commitment to the government should save it for another occasion, because this time they lose."
And so it was. Martín Menem, leader of the ruling party bloc, knew it early on. "That's it , this is going to be vetoed," he said in the afternoon. In addition to Jaldo, governors like Gustavo Sáenz of Salta and Gerardo Zamora of Santiago del Estero had decided not to support the veto this time. They are wary. They fear, for example, that the Casa Rosada (Presidential Palace) will now transfer the costs of national hospitals to them. "Healthcare is provincial," said Federico Sturzenegger in an interview with Antonio Laje. Could this be the next step?
Disruptions brought on by the Garrahan crisis. A conflict that exposed residents, but which the Ministry of Health had been anticipating for a long time, as soon as they detected the resistance that the implementation of biometric controls provoked among some department heads. One of the taboos of healthcare. What prestigious doctor is willing to work hours at a public hospital and thus give up the hours that would allow them to earn an income commensurate with their position in the private sector?
The government needs to resolve the conflict urgently and without showing weakness . Behind Garrahan comes a list of sectors hurt by the adjustment. All just demands. Like business owners, it is obligated to be efficient. In collecting payments from patients with prepaid insurance who often receive free care, for example, or in the face of debts owed by provincial social security funds. Jaldo's concern.
These are sensitive and explosive issues. And not just within the government . It was already early Thursday morning when Máximo Kirchner stormed up to the bench of Germán Martínez, head of the UP bloc, to reproach him for the Radicals having slipped an article into the disability text that was uncomfortable for union representatives. The point in question, introduced by Natalia Sarapura, states that employers who hire workers with disabilities for an indefinite period will be exempt from 50% of employer contributions. The worst proposal for Paco Manrique, Sergio Palazzo, or Vanesa Cilley. “We can't be constantly taking contributions from the systems,” said Manrique. “This is more defunding of the pension system,” concluded Palazzo. And even Miguel Pichetto's bloc had friction. Seeing that the extension of the pension moratorium was being approved, something he hadn't agreed to with his colleagues, Pichetto slammed his fist on the bench and confronted Nicolás Massot. “You screwed me, kid: you knew this was going to turn out like this,” he said, and hurriedly left the room.
The government hopes the October elections will give Congress a different composition. So far, from the outside, investors see a country in turmoil or without a clear direction. The myth of a "present State" comes at a cost in terms of national risk. Milei must manage with the precision of a timekeeper. An obvious metaphor: there are places where the scalpel seems the best instrument.
lanacion
