It’s Milei’s turn to move

When we said in this column three weeks ago that the government could have an eight-month break until August next year, we highlighted three necessary conditions. One of them was that the ruling party should not “make political mistakes (which it was quite prone to making when it felt enlarged).” Several of the aspects that have been defined to advance labor reform raise some questions, from the formal ones – including tax issues and trying to get started with the Senate? – to political.

The agenda is comfortably handled by libertarian management; Therefore, the responsibility to ensure that everything goes well after such an election victory on October 26th lies with them. If a significant setback occurs, the responsibility lies with you. It will be very interesting as a test of the workings of Javo, his immediate circle and his legislative soldiers, starting with Patricia, who has never been a senator.

The first point is that the Libertarian government decided to pass a maximum law in the style of the omnibus law, which failed in early 2024 precisely because it was equally ambitious. This means multiplying the fronts, which means you have to face more conflicts and more lobbies playing against you. All of this contradicts the claim of having half a sanction before the end of the year (which sounds like believing in Santa Claus). On the other hand, they could argue that the ruling party is now much more powerful legislatively and that it has a wonderful ability to seduce after the election. Both are true, but they are further away from an absolute majority in the upper house than in the MPs, suggesting that the collaborative actors will increase the price of their shares. Time is playing in favor of the latter – PRO, Radical, Provincial – who have no incentive to speed up the process while everyone clinks glasses and eats sweet bread.

The second point is financial. As we have already discussed here as a key political fact, most provinces will be in the red in 2025, partly due to election spending, but also because transfers from the state have fallen in recent months. The cascade effect is already making it difficult for many municipalities to pay out bonuses. If this new omnibus law also makes it possible to deprive large economic actors of taxes, which affects the collection of income tax – which is co-participatory – it would be no secret that negotiations are stalled. This would be exacerbated if the government also wanted to punish provinces and municipalities that are running a deficit with sanctions. The question would be: Deficit due to additional spending or declining participation?

The third point is communication. Given that the project took many twists and turns until the last minute before it was sent to the Senate, it negatively impacts LLA’s selling points. The line of communication seems a bit scattered and lacks assertiveness. Almost as if they had given up discussing the issue publicly. Is it a strategy in case a Tuesday the 13th comes along and ruins the party, and is it better to take advantage of the fact that the vast majority of society is already thinking about year-end celebrations and holidays? How much expectation should you create? In this regard, labor expert and project consultant Julián de Diego acknowledged that the adoption of the law is not expected to result in a major recruitment of workers, since this requires economic reactivation. Plague, he said.

The fourth issue is the disagreement at Mileist’s political table over how to address this issue. Yesterday’s opponents agreed that the ruling party would be taking unnecessary risks with the chosen approach, and Toto fears that the party will be expensive. And here the eyes turn to Pato. Let us remember that she was De la Rúa’s Minister of Labor and was involved in heated disputes with Hugo Moyano and the trade union movement. If she manages to get this project approved, regardless of the outcome, she will become a libertarian hero. But what if something goes wrong? Who is to be blamed politically? Will this stop her from taking on the position of CABA head of government or a more ambitious body? “But Fara, Patricia will be able to bear the costs, but the one who would lose the most in the event of a setback would be the president himself.” It’s true, but politicians always look a little further, sometimes irresponsibly.

Will the reform ultimately be passed in the Senate? It’s likely, but the point is that the process won’t be quick or easy… and then they’ll be waiting for it in the House of Representatives. The sharp people in the House of Commons will be watching closely how the ruling party behaves now to see where the dog is going and try to blackmail it later. Because let’s not forget that the reform is of interest primarily to the government and some sectors of the economy. The social majority wants more job opportunities… with or without reform. If markets sensed trouble, questions about governability would remain and country risk would not diminish. Call Toto again, especially if it continues to insist it doesn’t want to buy reserves and wants to fund the capital account with more debt.

Meanwhile, inflation isn’t falling below 2%, the industry’s installed capacity was the worst in 15 years, bounced checks are on the rise, this week’s debt settlement left a bittersweet aftertaste, the fishing sector says it also wants a reduction in retentions, and our “speculator” farmers aren’t liquidating heavy crop dollars as expected (they’re withholding 7,000 green sticks; they’re expecting a better dollar and demanding a new bulk soybean dollar). Poor Toto.

Trump can be anything, but he is sincere: he said he supported the lion and won. That’s like telling him it’s his doing. It’s a little more complex, but it makes sense. In any case, the American has already done his thing. Now it’s Milei’s turn to do his own thing. He plays with white and it is now his turn to move.