The debate about Budget 2026 He left behind an unpleasant certainty in the Casa Rosada: Javier Milei does not have his own majorities nor the political space to push through their agenda without negotiations. The president managed to avoid an important vote senateBut He did it rightly, through urgent calls, Promises of debt guarantees and a political operation that exposed the fragility of the ruling party and the continued centrality of the governors.
In fact, the first vote won the budget by chapter, not by article. he won it with 39 votes to 33only two senators above the quorum.
Then the budget It was generally adopted with 46 votes in favour, 25 against and one abstention (by Alejandra Vigo from Cordoba).
A far cry from the libertarian story of “defeated caste”The budget process has shown this In 2026, Milei continues to be conditioned by Congressthe provinces and a real economy that is not accompanied by the optimism of macro numbers and the slowdown in inflation.
Milei discovered that the cow is not tiedbut is tied to the governors and dialogue allies. Since yesterday, for example, the need not to end the fight with the head of the PRO deputies bloc has become much more important. Cristian Ritondonot even with the former president Mauricio Macriif governability is to be guaranteed. The triumph was excruciating. And tentatively.
The three simultaneous emergencies facing the government
The government has three simultaneous emergencies. The first is financial: it comes on January 9th a debt maturity of $4.2 billion. To pay for it, Milei must demonstrate that its currency, tax and exchange rate program is sustainable in the long term. The debt placement in recent days, led by Luis “Toto” Caputo, has been poor, It only received $1.8 billion at a rate of 9.26%.and left more questions than certainties. Now the minister is promising “other sources of funding,” even though the lifeline is not yet on the market.
The Government of the President of the United States, Donald Trump, It began with a resounding approval and the announcement of a $20 billion bank loan. After a discussion with these banks about the guarantees with the Ministry of Finance, which he heads Scott BessentA tranche of $7 billion is currently being discussed.
The second urgency is political: reactivation of the Labor Modernization Law, postponed until February 12, 2026 due to the conflict that the budget has caused among MPs and the parallel battle with the PRO over the appointment of the auditors of the Auditor General of the Nation (AGN). This project will be the next minefield.
In addition, Milei threatened to veto the budget after it was cut by deputies within its Chapter 11 scope, causing panic among governors who withdrew their support for labor market modernization until a veto-free budget was approved: they want to guarantee their financial obligations.
The third is social and economic: Within two years, more than 19,000 SMEs closed and 270,000 redundancies were made You begin to feel empowered in consumption and activity. Although the government has an annual growth rate of 5% of GDP, the real economy in industry, trade and construction still does not reflect an indisputable social consensus. In many industries the feeling is simple: “It wasn’t my turn” and “I can’t make ends meet.”
The ruling party had already suffered a decisive defeat in the House of Representatives: The House of Commons abolished Chapter 11 of the project. which aimed to repeal emergency disability laws and university funding. It was an alarm signal that was sent to the Senate. It was also a shock in relations with the governors.
There it was possible to push the budget forward, but it was particularly painful for Articles 12, 30 and 35 of Chapter 2associated with the financing of education, science and technology, training in technical schools and the defense fund. Article 61, which cuts pension funds to the 13 provinces that have not transferred their pension funds to the nation, also faced strong opposition. Of the planned $2,975 million in debt, the budget guarantees only $86.2 million.
The emergency operation that saved the budget
He Thanks to an emergency political operation, the budget remained “intact” in the Senate.. Patricia BullrichChairman of the La Libertad Avanza bloc, asked the Casa Rosada for direct help. Javier Milei was activated from Olivos Diego Santilli, Santiago Caputo and Eduardo “Lule” Menem go out to persuade wayward governors and reverse votes that already seemed lost.
Santilli, interior minister, became a political fireman. Together with Lule Menem and Finance Secretary Carlos Guberman, they settled into Bullrich’s office to make the final counts and negotiate until minutes before the vote. Debt guarantees, public works and pension funds were the currency.
The strategy was clear: Break Peronism with the help of governors like Raúl Jalil (Catamarca), Osvaldo Jaldo (Tucumán) and Gerardo Zamora (Santiago del Estero).. Plan B was to win through abstentions.
Labor reform as the next battleground
Once the budget is exceeded, Milei will have to start more serious negotiations with the CGT and with businessmen to advance labor reform. The project includes a drastic reduction in income taxes for large companies and the elimination of internal taxes on insurance, telecommunications, digital services, cars, boats and aircraft.
The estimated fiscal impact is between 0.8% and 2% of GDP, or about $12,000 million. The provinces would no longer receive a share of around $3.8 billion. There are also work flexibilities: company agreements, working time quotas, vacation sharing, changes in joint ventures and stricter regulations on strikes and meetings. An explosive combination for the CGT.
At the same time, the ruling party opened another front: the fight for the AGN. Martín Menem agreed with Máximo Kirchner and Sergio Massa on the appointment of Mónica Almada (LLA)Juan Carlos Forlón (PJ) and Pamela Caletti (Massismo). The agreement was supported by Karina Milei, but it strained the relationship with the PRO.
Cristian Ritondo and Mauricio Macri were angry. Now Santilli, an old friend from when they fought alongside Ramón “Palito” Ortega, Sergio Massa and Jorge Capitanich, will be responsible for “tempering” Ritondo. Politics has a long memory and changes sides.
A divided Peronism as Milei’s only advantage
Milei plays with an additional advantage: the internal of Peronism. Axel Kicillof and Juan Grabois try to corner Máximo Kirchner’s La Cámpora without completely breaking with Cristina Kirchner or Massa. Other presidential names also appear in Kirchnerism for 2026, such as Gerardo Zamora or Sergio Uñac.
This disorder gives the president breathing room, but does not guarantee governability. The 2026 budget confirmed that Milei will not let the cow be tied up. Every law is negotiated vote by vote, every article costs concessions and every victory is narrow. The libertarian epic collides with parliamentary arithmetic and with a real economy that is not getting going.
In 2026 The president will continue to rely on the governors. And his ability to convince her that the change this time is good for her too.
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