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Original article: La motosierra de Milei que salpica a Kast

The promised fiscal cuts by the Republican candidacy echo the fiscal policies of Javier Milei’s government, who famously wielded a chainsaw during his campaign to express his disdain for public services. The austerity measures implemented by La Libertad Avanza in their first year plunged Argentina’s industrial activity, resulting in a 9.4% decline. Two years into the libertarian experiment, Trump came to Milei’s rescue, notably acknowledging its absolute failure.

The national budget cuts proposed by José Kast draw inspiration from across the Andes, particularly from Javier Milei, who built his campaign brandishing a chainsaw at his rallies. The rise of La Libertad Avanza in the Argentine political landscape was based on a fiercely anti-state rhetoric, declaring that «there is no viable alternative to fiscal adjustment» through an economic shock without anesthesia or gradualism.

True to their word, once in power, their Economy Minister, Luis Caputo, announced 10 measures labeled as «stabilization and public spending cuts» aimed at avoiding an «economic catastrophe» in Argentina. Such superlatives are common in far-right propaganda, as noted by Victor Klemperer in his analysis of Nazi language. In practice, the Argentine peso was devalued by 50%, plummeting from 400 to 800 per dollar; the number of ministries was slashed from 18 to 9, and secretariats from 106 to 54; and substantial cuts were made to budgets for healthcare, education, public works, science, and technology.

The shock policy also included the immediate removal of subsidies for transportation, energy, and public services; the freezing of pensions and state salaries, severely undermining the purchasing power of the population. Concurrently, the government liberalized punitive interest rates set by lending agencies, which soared to 500%.

The Downfall of Argentine Industry

Controlling inflation is the major achievement touted by Milei’s administration, which decreased from 9.3% in 2023 to 5.2% in 2024. These figures were met with applause from the International Monetary Fund (IMF), which also highlighted the fiscal surplus achieved during the first year of the libertarian government. According to economic analyst Alejandro Marcó del Pont, «this contractionary fiscal effort creates the primary surplus: the government collects more in pesos than it spends internally. However, this surplus is not a sign of health; it is a symptom of an internal hemorrhage. It is a forced saving extracted from the bowels of the domestic economy.»

The end of subsidies led to a 140% increase in fuel prices within two months, and in the scientific community, 4,000 researchers were laid off from the National Council of Scientific and Technical Research (Conicet). Expenditure on public works saw a 64.8% contraction in 2024 compared to the previous year. Public investment decreased by 92.6% in the first quarter of 2025 relative to the first quarter of 2023.

In the first year of government, the effects were immediate. Domestic demand was the first to retract. According to a report by the Argentine Confederation of Medium Enterprises, the retail sales index collapsed by 28.5% within the initial two months of Milei’s administration, with food sales dropping by 37.1% and pharmaceuticals by 45.8%.

Pensioners have also borne the brunt of Milei’s severe fiscal adjustments. In the first year, he froze the pension bonus at 70,000 pesos, despite rising living costs. A report from the Center for Argentine Economy and Politics (Cepa) determined that the loss of purchasing power among pensioners accounted for 19.2% of the state’s spending adjustments made in 2024 by Milei. The minimum pension amounts to approximately 333,000 Argentine pesos, equivalent to 229 dollars.

2024 statistics from the National Institute of Statistics and Censuses (Indec) highlighted the failure of libertarian economic success: industrial activity plummeted by 9.4%, while the construction sector experienced a recession of 27.5%. All sectors of Argentine industry fell, except for the petroleum industry (+2%), with declines in the production of construction materials (-24.3%), machinery and equipment (-18.6%), steel (-17.5%), textiles (-17.1%), and automotive production (-11.3%).

Initially fervent supporters of Milei’s government, industrialists reported in a study from the Association of National Entrepreneurs for Argentine Development that around 1,200 industrial establishments closed during 2024 due to a significant economic downturn.

The lack of state investment and cash in the pockets of Argentines has repercussions throughout the Argentine economy. In the first quarter of 2025, unemployment reached 7.9%, while informal labor stood at 36.3%, one of the highest rates.

The failure of the economic policies of La Libertad Avanza in Argentina has spurred capital flight. Estimates from the consulting firm Instituto Argentina Grande indicate that 17.3 billion dollars exited the financial system in the first part of 2025, surpassing the IMF disbursements during the same period. This capital outflow was exacerbated in April of this year when Milei’s government lifted currency controls. The consulting firm noted that in July alone, 5.432 billion dollars left Argentina, coinciding with a 12% devaluation of the currency. In August, 1.5 million Argentines bought dollars as a safeguard against the volatility of the local currency.

By late September 2025, the Argentine Central Bank sold 1.110 billion dollars over three days to stabilize the Argentine peso.

In this year’s provincial legislature elections in Argentina, the electorate rejected La Libertad Avanza. In the province of Buenos Aires, the Peronist opposition triumphed with over 47% of the votes compared to 33% for the coalition of Milei’s party and Mauricio Macri’s PRO. Thus, Peronism secured 34 provincial parliamentarians while La Libertad Avanza garnered 26.

The Trump administration has also taken note of the near-failure of Milei’s government, recently providing a monetary support line of 20 billion dollars. «President Milei is restoring economic stability after decades of poor Argentine management,» stated Treasury Secretary Scott Bessent in defense of the loan. However, it is evident that U.S. public funds are financing the ultraliberal Argentine experiment.

While the loan temporarily bolsters the Argentine libertarian project, when President Trump concluded his remarks, it sounded more like an epitaph: «they have no money, they have nothing, they are struggling hard to survive, and if I can help them survive in a free world… The president of Argentina is doing the best he can, but they are dying.»

By Mauricio Becerra Rebolledo

CITATIONS:

(1) Alejandro Marcó del Pont: Argentina: the mirage of stability. El Tábano Economista, September 22, 2025.

(2) Emilio Cafassi: The flights of Icarus: the free fall of libertarian belief. Rebelión, October 14, 2025.

La entrada Milei’s Chainsaw Policies Impact Kast’s Fiscal Strategies in Argentina se publicó primero en El Ciudadano.