Milei’s Veto Prevails as Argentina’s Congress Pivots on Key Bill

(Bloomberg) -- Argentine President Javier Milei’s veto of legislation that would have increased social security spending prevailed Wednesday after government lobbying efforts chipped away at the measure’s support.

With 153 votes in favor out of a total of 248 cast, Argentina’s lower house of Congress failed to obtain the two-thirds majority needed to override Milei’s veto. It’s a reversal from the chamber’s first vote earlier this year when the bill surpassed that threshold, and seems a result of Milei courting some moderate lawmakers in recent days to change their stance. 

Milei opposes the bill because he says it risks his promise to balance Argentina’s chronic fiscal deficit that’s widely seen as the root cause of the country’s recurring economic crises. Analysts estimate the new inflation-adjusted pension formula would have added the equivalent 0.45% of gross domestic product to public spending, flying directly in the face of his historic austerity campaign.

The bill sparked sharp debate on both sides of the aisle and protests outside the legislature. The average social security recipient has lost half of their purchasing power since the most recent peak in 2017 due to inflation and currency devaluations. So far this year, recipients are narrowly edging inflation. 

The bill’s reversal in the lower house was particularly important for Milei since overcoming a two-thirds majority in the Senate would have been a tall task given that senators in August passed it in overwhelming 61-8 general vote. His ability to win over moderate lawmakers is another sign, along with approval of his landmark legislation in June, of Milei’s capacity for pragmatism despite explosive rhetoric. 

Milei’s legislative win caps a week of victories, albeit while Argentina is still in recession with triple-digit inflation and rising unemployment. Manufacturing data published Monday posted the best results of Milei’s nine-month tenure, while savers are depositing billions of dollars back into the financial system in a vote of confidence for him. New inflation data Wednesday showed annual price increases slowed significantly. 

With tensions still high, the libertarian leader plans to make an unusual address to Congress Sunday, the legal date when his administration must publish his annual budget proposal for 2025. Most governments simply announce the budget, while the timing allows Milei to take a victory lap in front of his rivals.  

More stories like this are available on bloomberg.com

©2024 Bloomberg L.P.