You see it always and everywhere: President Javier Milei and his Economy Minister, Luis “Toto” Caputo, have made a strong, almost terminal, bet on super fiscal adjustment and zero deficit as if that pair of tools, actually just one, could become the great computer of the economy and of power relations within the economy.

Nothing elaborate or too new, rather abrupt, the key to the move is to use the money and tools of state power in line with the objectives of the Casa Rosada and, moreover, to apply them thoroughly, without being too careful or cautious. the methods and methods.

The game that remained appeared clearly January’s fiscal financial surplus which, including debt interest, was the first for that month since 2012. And we can see this above all from how the balance in favor of 518.4 billion dollars was achieved in little less than a flash: for starters, suffering a hit on public spending of a scale that has been unprecedented in the last 30 years and which alone explains the entire financial surplus.

They crossed paths, that’s the effect mixer of inflation and the direct sickles of the chainsaw in important matches. The most notable, voluminous and always within reach case was expressed in the actual 32.5% cut in spending on pensions and pensions, that is, a measure that in one fell swoop has eaten up a third of the already deteriorated purchasing power of a neglected sector among the neglected. There the government saved $885,000 million

Adjustment in pensioners

According to data from Iaraf, an institute specialized in the analysis of public accounts, the takeover also affected 80% of public investments, another classic of adjustments, of the Kirchnerist plans for Progress and Enhancement of Work and transfers from the nation to the provinces; to salaries of domestic state workers and energy subsidies, among other items. The sum of the parts here amounted to about $2 trillion, or about $2.38 billion at the official exchange rate.

Milei celebrated the result with a “Vaaaaaaamoooo Totò” dedicated, obviously, to Luis Caputo. And you concluded with a firm phrase: “The zero deficit cannot be touched”.

It is clear: if anything will have to be touched, it will be the resources that will go from the country to the provinces, including those that deal with essential activities, such as education and public passenger transport.

Actually, this is quite clear. Milei has already deactivated the fund that finances part of the salaries of provincial teachers, a package which in 2023 represented 333 billion dollars and which, in fact and as it fits into a K government, has benefited above all the province of Buenos Aires, left with 32% of the total.

Although he now faces some legal hurdles, the President will also move forward with abolishing the system that subsidizes automobile passenger transportation within the country. Attention is placed, once again, on national public spending and more precisely on the share of the 102 billion dollar pie that belongs to the resources managed by the Casa Rosada; Obviously the idea is for that part to disappear.

Since the hand comes and is felt everywhere, the adjustment He is still alive and well and wants to do more.

Caputo has just announced that from March the increase for pensioners will be 27.18%, i.e. in line with the formula applied and always behind inflation, questioned by everyone but at the same time in a functional point. . Arguing that the aim is to “protect the purchasing power” of pensioners, Caputo added to the measure a bonus of 70,000 dollars which will be applied between March and May.

The impact on consumption

It’s clear, without the need for cross-calculation, that this combination doesn’t even come close to making up for the 32.5% loss in purchasing power that the January hit hit pensions.

An exercise carried out by Iaraf specialists calculates that so that the minimum pension for March does not lose purchasing power compared to that of March 2023, the bonus that reinforces the increase should be 170,000 dollars and inflation should not exceed 3% monthly average in the period from March to May.

It is almost obvious that this is an unthinkable way out. And to continue, it is very probable, if not certain, that pensions and pensioners will continue to play their role as adjustment variables. As they famously were in the last Kirchnerist cycle.

And if it’s true The tandem Cristina Kirchner, Alberto Fernández and Sergio Massa left a minefieldLet’s say deliberately undermined, the Milei-Caputo tandem began with a currency shock which caused the official exchange rate to rise by as much as 118% and, in the same act, caused an inflationary shock which, measured by the INDEC indices, planted 51% between December and January. With the 15% for February estimated by consultants who have been following prices for some time, in three months we would be at 74%.

Without pretensions to assign blame, pure numbers, a report signed by Carlos Pérez, coordinating director of the Capital Foundation, puts the collapse in salaries into the picture. In short, he states that in December the real income of formal workers, i.e. registered and under parity, reached the lowest levels since the 2002 crisis and adds that private workers have accumulated seven consecutive years of decline.

There is everything in the battle being fought within joint ventures: from agreements for ten months that open already in the first month so that a bonus can come in, to mobile agreements linked to the movement of inflation and based on power. fire from each guild. Oil workers, oil workers, mechanics and food workers win.

At the borders of the system or outside the system, without basic or equal coverage, there are around 7 million informal workers who do not earn a single one by mistake: Pérez’s accounts say that they lost income by around 30% in December and which continued without gaining a head in January. These are wage earners with wages that represent just 50% of what those who are unemployed and who have long since entered the category of the poor earn.

Quite predictably, a direct consequence of this panorama is the decline in consumption: between 8 and 9 points below January in the first days of February, notes the specialized consultancy firm Scentia. And a generalized production collapse in December, say INDEC statistics: from 11.9% in industry and electricity, gas and water, to 8.5% in wholesale and retail trade and to 5.2 % in construction crowned the end of the last Kirchnerist cycle.

But put simply, it all looks much more serious than the picture of stagnation with inflation described by the government. It looks like one recession after another, unlimited prices, à la carte measures and a new twist in the ever-unequal distribution of income.

The question is whether super-tuning or total fine-tuning is a remedy capable of righting the ship and putting it on the path to progress or whether the point is, ultimately, to make a Custom status.