Argentina’s Senate Overturns Milei’s Veto on Disability Benefits

In a significant political setback for President Javier Milei, Argentina’s Senate voted to override his veto on a bill that increases disability benefits. This decision, made on October 5, 2023, marks the first congressional reversal of his presidency, with lawmakers approving the measure by a decisive 63-7 vote.

The legislation aims to enhance financial support for individuals with disabilities, a move that diverges sharply from Milei’s libertarian agenda. The vote represents a growing challenge for the president, who has faced multiple controversies, including a corruption scandal linked to his sister, Karina Milei, and a struggling economy characterized by a weakening peso and soaring interest rates.

This legislative defeat comes on the heels of another troubling month for Milei, during which the Senate also passed two bills aimed at increasing public spending on healthcare and education. These developments threaten his commitment to achieving a balanced budget, a cornerstone of his campaign. Reports indicate that some polls have shown Milei’s approval ratings dipping below 40%, raising questions about his political future in a country grappling with severe economic challenges.

As financial markets brace for potential volatility, Argentine stocks have experienced sharp declines, and bond yields have surged. This atmosphere of uncertainty coincides with an upcoming provincial election in Buenos Aires, taking place on October 8, 2023. While this election primarily affects regional policies, it could further shake investor confidence and complicate Milei’s efforts to implement his austerity measures ahead of the national midterm elections later this month.

To advance his free-market policies and regain investor trust, Milei must navigate a complex political landscape, as his party, La Libertad Avanza, currently holds less than 15% of the seats in Congress. In the Senate, where the recent disability benefits law was upheld, his party controls only seven out of 72 seats. The president has frequently relied on veto power to maintain fiscal discipline, negotiating with center-right allies to counteract spending initiatives.

This strategy faltered during the recent vote, particularly in light of the ongoing scandal involving his sister, who is alleged to have accepted bribes for awarding medical contracts related to disability services. Senator Guadalupe Tagliaferri from the right-wing PRO party expressed the gravity of the situation, stating, “When they ask me where the money to fund this law comes from, I’ll tell them it comes from overpricing and bribes.”

The newly approved law is projected to increase costs by 0.28% of Argentina’s gross domestic product this year and 0.46% next year, according to estimates from the congressional budget office. Senator Alejandra Vigo highlighted the importance of this legislation, noting, “For families, that percentage means the difference between sustaining the life of a person with disabilities or falling into despair.”

The Senate’s decision to override Milei’s veto underscores a growing political challenge for the president as he attempts to steer Argentina through a prolonged economic crisis while facing significant opposition within Congress. The upcoming elections and ongoing scandals will likely play crucial roles in shaping the future of his administration and the broader economic landscape of Argentina.