Argentina will get U.S. help despite its perverse economic policies, because Trump and Argentina’s Milei are soulmates. It won’t work.View this email in your browser [link removed]

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****SEPTEMBER 24, 2025****

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****Kuttner on TAP****

**Bessent’s bizarre bailout**

**Argentina will get U.S. help despite its perverse economic policies, only because fellow economic pervert Trump and Argentina’s Milei are soulmates. It won’t work.**

In an unhinged rant yesterday **at the United Nations** [link removed], Trump disparaged most of the world’s nations as dismal failures. Meanwhile, his Treasury secretary, Scott Bessent, was **pledging** [link removed] to use bottomless U.S. financial resources to prop up one of the world’s chronic economic failures, Argentina, which has lurched into its latest debt and currency crisis.

Why bail out Argentina? Because the current president, Javier Milei, is a far-right libertarian sycophant of Donald Trump. And the two are twins when it comes to perverse economic policies.

Milei, who was elected in October 2023, has used extreme austerity, ravaging social spending, to balance the budget, restore international confidence in the peso, reduce inflation, and attract foreign capital. However, the strategy has backfired in every respect.

At first, inflation fell. The International Monetary Fund (which loves austerity) rewarded Milei with a loan package of $20 billion to further reassure investors. Argentina, which already had $44 billion in previous IMF credits, more than one-third of the IMF’s total resources, had stopped paying interest on that debt.

This year, everything about Milei’s program unraveled. Little foreign investment materialized. Inflation crept back up. The overly strong peso depressed exports. Argentina has had to dip into scarce dollar reserves to defend the peso’s value against the dollar and is almost out of hard currency. The austerity crushed both consumer demand and Milei’s approval ratings. His political credibility, at home and globally, sank with the peso. A **poor showing for Milei’s party in local elections** [link removed] in Buenos Aires Province, ahead of midterm elections next month where the party is on track to lose further ground, collapsed markets.

On Tuesday, Bessent **elaborated on his pledge** [link removed] to bail out Milei. He vowed to purchase dollar-denominated Argentine government debt “as conditions warrant,” and offer immediate credit through the Exchange Stabilization Fund, as well as a $20 billion swap line with the Argentine central bank. It’s a strange form of libertarianism that gets a lifeline from a foreign government. And of course, this really bails out the global investors (including companies with eyes on Argentina’s large stocks of lithium) who stand to lose money if Argentina defaults.

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Bessent also said he consulted with U.S. multinationals about investments in Argentina, and that the U.S. would “start working with the Argentine government on its principal repayments.” But he tied those last two options to a “positive” result in the midterms, clumsily attempting a political bailout for Milei as well as an economic one, and essentially leashing Argentina’s fate to Milei’s success. It’s a finance-based version of meddling in foreign elections. And if Milei does badly, as expected, the U.S. is on the hook for an even bigger bailout, **as Mark Dow explains** [link removed].

This kind of ad hoc support for a chronically mismanaged foreign economy, with no conditions or quid pro quos, is unprecedented. Markets were only moderately impressed. The peso rose 4 percent against the dollar. Argentine government bonds rose 7 percent. But austerity will continue.

Argentina’s latest crisis goes back several decades. The Peronist Party, representing a somewhat corrupt brand of left-populism, periodically gets elected. It typically runs deficits and tolerates high inflation, but promotes prosperity for Argentina’s working class. Eventually, the inflation crashes the economy. Then a right-wing party comes in with an austerity program. Milei is a whacked-out variant on this pattern.

It’s instructive to compare Argentina with its neighbor, Brazil. The Brazilian economy, led by the progressive Lula, is in excellent shape. GDP growth has been over 3 percent a year for the past three years. Inflation has been below 5 percent. And Brazil runs a trade surplus.

But Brazil, for reasons that have nothing to do with economics and everything to do with Trump’s embrace of far-right former President Jair Bolsonaro, now facing a prison term for an attempted coup, has been hit with a 50 percent punitive tariff, while Argentina is in line for tens of billions of U.S. dollars. Thus does ideology trump economics.

The U.S. has the resources to undertake a short-term bailout of Argentina, one that will address none of that country’s long-term structural problems made worse by faulty austerity policies and Milei’s Trump-style antics. Alas, there is no one to bail out the U.S.

**~ ROBERT KUTTNER**

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