Should the United States come to Argentina’s rescue? Financial markets in the Latin American country, led by the libertarian firebrand President Javier Milei, have been embroiled in chaos since local elections forced institutional investors to lose sleep at night. But Treasury Secretary Scott Bessent believes Buenos Aires is worthy of US government support because Milei’s economic reform agenda “will make Argentina great again.”
Earlier this month, the Buenos Aires Province, which accounts for a sizable share of Argentina’s economy and population, held legislative elections considered to be the first electoral test for President Milei and his La Libertad Avanza since ascending to the throne in 2023. The results? The Peronistas, the left-leaning entity that ran Argentina into the ground, handed Milei a 13-point loss as voters signaled their discontent with the government’s chainsaw economics.
Critics – at home and abroad – suggested that markets have lost faith in Milei. However, it is the exact opposite. The sharp declines indicate that traders are concerned that it will be more difficult for the president to implement his economic reforms now that leftists have regained more control. It would not make any sense for the bull run to suddenly reverse into bearish territory after decades of decimating what was one of the wealthiest countries in the world a century ago.
The Trump administration was able to stop the bleeding with one X post and one meeting.
First, Bessent published an X thread on September 22, announcing that the Treasury Department is prepared to tap into all available options to stabilize Argentina’s markets, calling it “a systematically important ally” in the region. “We remain confident that [President Milei’s] support for fiscal discipline and pro-growth reforms is necessary to break Argentina’s long history of decline,” Bessent wrote on the social media platform.
He alluded to several potential tools, including currency swaps, direct currency purchases, and drawing on the Treasury’s Exchange Stabilization Fund. But market watchers say that Washington will unlikely employ any of these measures, suggesting that simply mentioning intervention would be enough to halt the chaos.
Second, President Donald Trump met with Milei on the sidelines of the UN General Assembly. It was a cordial meeting between the two men, with Milei behaving like a bobby soxer. Trump told the press:
“I’m doing something I don’t often do, I’m giving my full endorsement to him. … The people of Argentina – we’re backing him 100 percent. He, like us, inherited a mess, and what he’s done to fix it is good. … [W]e need to make Argentina great again, so it’s an honor for me to endorse.
“We’re gonna help them but I don’t think they need a bailout. He’s doing a fantastic job.”
But many of President Trump’s critics, including Sen. Elizabeth Warren (D-MA), were unhappy about a potential US bailout, calling it “deeply troubling.” In a September 23 news release, Warren expressed concern that a personal and political bailout would be at the expense of US taxpayers.
“At a time when Americans are struggling to afford groceries, rent, credit card bills, and other debt payments…it is deeply troubling that the President intends to use significant emergency funds to inflate the value of a foreign government’s currency and bolster its financial markets.
“I understand why President Milei, careening from crisis to crisis and unable to effectively manage the Argentinian economy, wants the American people to finance a bailout. I do not understand why it is in the interest of the United States to provide one, nor how one would be designed to ensure the best outcomes for the Argentinian people, instead of hedge fund investors.”
Has she seen what Milei has done for Argentina? By slashing government spending, removing price controls, balancing the budget, and introducing economic reforms, the Argentine leader has vanquished inflation, posted budget surpluses, generated significant GDP growth, and registered the lowest urban poverty rate in seven years. Even consumers, ravaged by years of rampant inflation and a destroyed currency, have been opening their wallets.
What’s more, Warren has previously howled at the moon over the current administration’s cuts to USAID, which was essentially a slush fund for progressivism (and incompetence). US taxpayer money went to foreign DEI programs, transgender operas overseas, and meals for al-Qaeda-affiliated fighters in Syria. Even if Bessent and his team approve support for Argentina, it would be rich for Warren and others to complain.
The upcoming elections will be crucial for Milei’s economic agenda. If he can push back against the Peronistas, the nation will be in good shape. However, if investors sense a potential return to failed policies, interventions, and controls, they will undoubtedly withdraw their money and flee the country, causing a return to pre-2023, when hyperinflation was rampant on the streets of Buenos Aires.
That said, Bessent had an interesting comment during his September 24 interview with Fox Business, telling Maria Bartiromo that Warren’s protégé, New York City mayoral candidate Zohran Mamdani, will be running to Washington for a bailout due to his failed socialist policies. If so, according to Bessent, the administration will quote President Gerald Ford: “Drop dead.”