Javier Milei’s performance in Argentina’s mid-term elections has challenged a common belief in the social sciences – that most fiscal consolidations are followed by electoral defeats or cabinet turnovers. In democratic countries, the argument goes, voters punish the incumbent party at the ballot box when they are adversely affected by its austerity policies. Consequently, few democratic governments are able to successfully implement economic austerity and remain in office once their policies have been felt by the citizenry at large. Yet Milei imposed one of the harshest periods of economic adjustment in Argentina’s history and expanded his electoral support. How did he pull this off? As governments everywhere confront tightening budgets, his methods are worth examining.

The Argentinian president – who campaigned on an austerity platform two years ago and, upon taking office, implemented a series of ‘chainsaw’ economic policies, as he calls them – secured a resounding victory in October’s mid-term elections. His party, La Libertad Avanza, won over 40 per cent of the popular vote, earning 64 of the 127 seats at stake in the Chamber of Deputies, and 20 of the 24 Senate seats renewed, giving the president crucial legislative backing for his ambitious reforms in labour, fiscal policy, and pensions.

How has Milei managed to maintain popular support? A comparison with the country’s past austerity administrations suggests two possible reasons. First, while the president’s ‘chainsaw’ economic policies have cut into the real incomes of broad segments of the population and led to a stagnation of economic growth, they did so early on in his administration. After a harsh initial shock, the mid-term elections coincided with a rebound of the economy, potentially aiding the president’s electoral support. What’s more, a drastic reduction of inflation has worked to his advantage.

Since Argentina’s return to democracy in 1983, electoral support for a governing party during austerity has been rare. Only three presidents have deliberately introduced programmes designed to reduce government deficit by cutting public spending: Carlos Menem (1989-99), Fernando de la Rúa (1999-2001), and Mauricio Macri (2015-19). The first difference that arises with Milei’s austerity administration is that none of them campaigned on an explicit promise of fiscal contraction or ajuste. Menem ran on a populist Peronist message promising a ‘productive revolution’ and wage increases. De la Rúa pledged ‘growth without adjustment’. Macri campaigned on economic gradualism, emphasising ‘no chainsaw’ or sin ajuste. In all three cases, austerity arrived after the election victory was secured.

Of these ‘austerity administrations’, the most similar to Milei’s is probably that of Menem. Carlos Menem inherited a country with hyperinflation above 3,000 per cent in 1989 and, soon after taking office, imposed an emergency stabilisation plan: a public-sector wage and hiring freeze; subsidy cuts; privatisations; and a sharp devaluation of the currency. This economic shock was felt on the ground very early on. At the same time, Menem managed to reduce inflation to under 20 per cent by 1992. Riding this success, his party won the 1991 mid-terms and was re-elected in 1995 at the height of the convertibility boom, when inflation averaged three per cent and GDP grew about six per cent.

Argentina’s other austerity administrations lacked this kind of popular support. De la Rúa’s administration is perhaps the clearest example of austerity measures being followed by electoral defeat. De la Rúa took office in December 1999 during a period of deflation (-1.8 per cent) and recession. After a short attempt at moderate fiscal discipline, his government launched an aggressive consolidation plan in 2000, including tax hikes, wage and pension freezes, and public-sector hiring limits. Deeper cuts followed in 2001: one per cent reductions in wages and pensions under the Déficit Cero law. The October 2001 mid-terms were disastrous for the ruling coalition, which got barely 23 per cent of the vote, and, by December, the administration collapsed amid riots and the corralito banking freeze. De la Rúa was forced to leave the country by plane as social unrest reached a breaking point.

Though less drastic, Macri’s austerity programme also proved unsuccessful. Elected in 2015 with an inter-annual rate of inflation of about 26 per cent, he pursued a gradual fiscal path in the beginning of his administration, with sparse devaluation of the currency and utility-tariff hikes. Inflation barely eased to 24 per cent by the 2017 mid-terms, when his coalition (Cambiemos) won approximately 41 per cent of the vote – the best performance for a governing party since 1983. The turning point came in 2018, when capital outflows forced him to seek a US $57 billion IMF bailout and adopt strict austerity: more tariff hikes, wage restraint, and a zero-deficit target. By 2019, inflation had surged to 53.5 per cent, GDP had fallen by 2.6 per cent, and his popular support had plummeted.

Taking these precedents together, a pattern begins to take shape. Austerity seems to be politically viable under two circumstances: when the economic shock is felt early on the ground (the further away from mid-term elections, the better), and when the administration has inflation under control. Milei has internalised that lesson. His policies have sharply cut spending and subsidies, eroding real incomes – especially among public employees and retirees – and causing an early-2024 contraction. After an initial reduction in real wages (between November 2023 and April 2024, they fell by 14.9 per cent) and in GDP (the economy contracted 3.4 per cent in the first half of 2024), the economy appears to be entering a rebound phase that very nicely lined up with the timing of the mid-term elections. Real wages increased by roughly 15.4 per cent in May 2025. Early data for 2025 shows a similar trend for GDP: it expanded 5.8 per cent in the first quarter of 2025. Additionally, Argentina’s annual inflation fell from 211 per cent in December 2023 to 39.4 per cent by June 2025.

Why does reducing inflation pay off electorally? Taming inflation is so powerful because the stabilisation of prices that ensues is tangible for all sectors of society. Most citizens cannot easily evaluate whether a fiscal, regulatory, or trade policy benefits them directly – but they feel inflation in every purchase. Price stability, the opposite of inflation, provides an immediate and universal signal that the economy is improving and that the government is delivering results.

Consider a thought experiment: imagine you are an Argentine in your thirties and have two kids. When you were born in the early 1990s, ten pesos could buy several days’ worth of groceries. By the time you turned ten, it would barely cover a bottle of cooking oil; at 20, perhaps a single bus fare. Today, ten pesos is worth about one US cent – so little that shops no longer bother giving it as change; they round prices up instead. Over a single generation, the same nominal amount has lost virtually all its value. Each year, what you need to maintain your household rises faster than your salary, eroding your real income. You adjust constantly – cutting spending, changing habits, and losing confidence in the currency itself.

After more than three decades of chronic and incremental inflation, approximately 13.6 million Argentines – those now in their twenties and thirties, and thus old enough to vote – have seen prices fall for the first time in their adult lives during Milei’s first two years in office. This has no small psychological effect: for a generation accustomed to permanent price instability, even modest stabilisation represents a profound shift in expectations, trust, and everyday experience. The impact on their wallets explains their continued support for Milei’s platform. More generally, a historical perspective shows that presidents who combined fiscal adjustment with credible inflation stabilisation have been far better received by the public than those who implemented austerity without addressing inflation.