Self-proclaimed anarcho-capitalist President Javier Milei of Argentina became the primary foreign leader to go to President-elect Donald Trump since his second term. He arrived in Florida on Thursday to attend a gala dinner at Trump's Mar-a-Lago resort, where Milei was a VIP speaker.
“The world is a much better place and the winds of freedom are blowing much stronger,” Milei said after Trump was elected.
He called Trump's Nov. 5 victory “the greatest political comeback in history, defying the political establishment despite risking his own life.”
Milei also mentioned the name of one other participant within the gala audience: Tesla and SpaceX CEO Elon Musk.
“I want to thank the great Elon Musk for the wonderful work he has done to save humanity,” Milei said through an interpreter.
Milei's presence in Florida on Thursday and his warm words to Trump and Musk offer a glimpse into the evolving and necessary dynamic between the 2 American billionaires and a frontrunner who has promised to save lots of Argentina's long-struggling economy through “shock therapy.” – deep spending cuts and drastic regulations.
Musk and Milei are already big fans of one another. They have met several times and Milei has been to the Tesla factory and posted photos of the 2 together.
A photograph Milei posted in September shows Musk wearing a “dark MAGA” hat with Trump's campaign logo written in black on black.
Photos from Thursday's gala posted on social media showed Musk, Milei and Trump together, all smiling.
Musk spent the last week at Mar-a-Lago, serving as one in all Trump's closest advisers because the president-elect fills his Cabinet with unexpected nominees – a few of whom have promised to offer their very own brand of shock therapy to the federal agencies they elected chosen for leadership.
Trump has also announced that Musk and entrepreneur Vivek Ramaswamy will lead a “Department of Government Efficiency” dedicated to slashing the federal budget.
The announcement fulfilled Trump's campaign promise to offer Musk a serious role in advising his administration Government spending. Despite the name, DOGE won’t be a federal agency, but will act as an external advisory body to the White House Office of Management and Budget.
Still, Musk claims he can save $2 trillion from the roughly $6.75 trillion U.S. budget. The only place that has seen cuts of this magnitude in recent times is Argentina under Milei.
“All government spending becomes either inflation or direct taxation. The Department of Government Efficiency will fix this,” Musk said at Trump’s rally at Madison Square Garden last month.
To understand the origins of Musk's idea to chop the federal budget by a 3rd, let's have a look at what Milei achieved.
Since taking office last December, Milei has cut Argentina's advantages Federal spending by 32%in response to the Center for Argentine Political Economy (CEPA).
In a rustic where annual inflation rates have exceeded 300% and destabilized the country, inflation in Argentina reached its lowest level since 2017 this October: 2.7%.
An enormous a part of Milei's agenda is to eliminate federal spending. And in response to Milei, Musk has reached out to Argentina's leadership to seek out out the right way to do it.
“The United States has noticed our example and is following it,” Milei said at a META Day Argentina conference in Buenos Aires on Tuesday. “Musk speaks with us [Minister of Deregulation] Federico Fallenegger on the deregulation of the US economy.
In Argentina, Milei reduced the number of ministries by 13, leaving only nine. More than 30,000 public sector workers were laid off. He stopped all infrastructure projects.
The drastic cuts had equally drastic consequences, plunging the Argentine economy into a deep recession. Argentina's GDP fell by more than 5% in the first quarter of 2024.
However, the World Bank estimates that the worst is over and that the overall decline will be around 3.5% by the end of the year. The bank also forecasts that Argentina's GDP will grow by 5% in 2025.
To be sure, cuts of this magnitude would likely be much more difficult to implement in America than in Argentina. First of all, Argentina's national budget is much smaller than that of the United States at about $101 billion, which is less than New York City's budget.
But unlike Milei, it is not clear whether American voters gave Trump a mandate to cut spending like Argentine voters gave their president.
Cutting the federal budget was Milei's most important campaign promise; As a sign of his determination to eliminate bloated government spending, he often carried a chainsaw with him on the campaign trail.
Milei won his election last year by 10 points, indicating that a clear majority of voters agreed with his plan.
Trump, in turn, campaigned on securing the border and improving the economy, but above all through tax cuts and tariffs. Fiscal restraint did not play a major role in Trump's campaign platform.
This reality has not gone unnoticed by the markets.
There has been a significant rise in US long-term interest rates since Trump's election, suggesting a possible return of the so-called “bond vigilantes”.
The term “bond vigilantes,” coined by Ed Yardeni of Yardeni Research in 1983, refers to the concept if financial and monetary authorities don’t control their spending, the bond market will achieve this by charging much higher borrowing costs.
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