Trump Is Borrowing Argentina’s Chain Saw. America Will Suffer.

Opinion|Trump Is Borrowing Argentina’s Chain Saw. America Will Suffer.

President Trump, Elon Musk and President Javier Milei of Argentina have formed a special bond. Mr. Milei was the first foreign leader to meet with Mr. Trump days after he won the U.S. presidential election. Mr. Trump has called Mr. Milei his “favorite president.” And Mr. Musk has been in close contact with Mr. Milei’s government reform team since the U.S. election in November, if not before. So it was no surprise to Argentina watchers that Mr. Trump began his term by blocking government cash flows and firing workers, exactly as Mr. Milei’s government started doing a year ago.

In recent months, Mr. Milei has been bragging about the “export” of his reform model. Governments should no doubt borrow good practices from one another. But it should give us pause that the United States, the world’s leading economy, is borrowing government reform techniques from Argentina, a nine-time serial defaulter and 100-year economic laggard. Mr. Trump, Mr. Musk and Mr. Milei may share the same anti-state rhetoric and use the same techniques, but they are taking their countries in very different directions.

Mr. Milei’s administration is restructuring Argentina’s government for good reason: failure. In the early 1900s, people used the expression “as rich as an Argentine,” and millions of Italians and Spaniards immigrated there in hopes of a better life. But soon after, populist, nationalist politics took hold. In 1946, the strongman Juan Domingo Perón took control and his party perfected the art of channeling government cash flows to its supporters. This game ended badly for Argentina, with the political machine demanding more and more money before every election, which led to overspending and a repeat cycle of boom, bust, devaluation and default — all the way until 2020. Argentina’s G.D.P. per capita, once among the world’s highest, is now a small fraction of Italy’s and of Spain’s.

This is the backdrop against which Mr. Milei ran for president, gleefully waving a chain saw at crowds of supporters. Unlike his Peronist predecessors, Mr. Milei didn’t blame aging generals and foreign lenders for the country’s ills. Instead, he told the truth. He said that Argentina’s government spent too much, forcing it to print more money, which in turn led to inflation and ultimately default. His solution was to cut the budget, and that is what he has done since coming into office, backed by a team of seasoned technocrats. He has earned many critics from his aggressive style of governance — often using decrees — but the same was done by the Peronists before him.

The centerpiece of Mr. Milei’s program has been to use his figurative chain saw to cut the budget by 5 percent of G.D.P. He achieved this by changing the pension payments formula, bringing cuts to public works and reducing utility and transport subsidies, among other measures. He brought down the government head count by about 35,000 jobs in 2024, cutting the work force by about 7 percent.

His fiscally laudable reforms have hurt. In February 2024, Mr. Milei more than doubled the price of bus and train ticket prices, while a utility price reform in June was estimated to hit middle-class families with a 155 percent rise in power bills. Unemployment rose from 5.7 percent to 6.9 percent between the third quarter of 2023 and the third quarter of 2024, and the percentage of the Argentine population living in poverty jumped 11 percentage points, peaking at over 50 percent in the first half of 2024.