Argentina's libertarian President Javier Milei vetoed on Monday an attempt to hike spending on pensions in the country and a law expanding protections for people with disabilities, saying the legislation would have undermined his flagship pledge to eliminate the nation's chronic fiscal deficit before October’s midterm elections.
In publishing the veto decisions, Milei's administration said that Congress last month passed the spending bills – meant to more fully compensate retirees for inflation and offer more financial benefits for people with disabilities – "without determining the source of the funds."
It said the bills "contradicted (Milei’s) popular mandate" to bring down inflation.
Since coming to power in late 2023, Milei has vetoed all efforts to boost public spending, often wielding the slogan "there is no money" against people's demands that he restore subsidies. The government projects that the additional expenditures, including a 7.2% pension increase, will amount to about 0.9% of gross domestic product (GDP) this year and 1.68% next year.
"This president prefers to tell an uncomfortable truth rather than repeat comfortable lies: There is no money," the government said. Spinning off the slogan of his ally, U.S. President Donald Trump, it added: "The only way to make Argentina great again is with effort and honesty, not the same old recipes."
Last year, Milei racked up Argentina's first annual fiscal surplus in 14 years by making painful cuts to social spending and public works. The austerity measures helped drive down Argentina’s monthly inflation rate to below 2% in June for the first time in five years, compared to more than 25% when Milei entered office in December 2023.
But the fiscal shock program has also deepened economic misery for many Argentines: Unemployment has climbed, wages adjusted for inflation have declined, and prices are still up 40% year-on-year.
Congress can still overturn these vetoes with a two-thirds majority in both chambers, a challenge for Milei’s libertarian party, which holds only a small minority of seats.
Milei, whose relationship with lawmakers has been tense ever since he took office, last year managed to win enough votes from his party's closest ally, the conservative PRO bloc, to prevent the pension increases.
Milei is looking to Argentina's crucial midterm elections in October to boost his party’s representation as he seeks to continue his fiscal balance drive and draw more foreign investment.
The elections are widely seen as a referendum on his two years in office.
Retirees have been at the forefront of protests against Milei's government. Every Wednesday now for months, dozens of older Argentines struggling to scrape by on pensions of just $400 a month have faced off against security forces armed with tear gas and water cannons.
