The Importance of Donald Trump’s Argentinian Friend

What happened?

Since Donald Trump won the presidency on November 5^th , he has made several key nominations.

They include a nomination of Secretary of Homeland Security, Secretary of Health and Human Services, Attorney-General, and Secretary of Defense.

But the biggest announcement wasn’t for an ‘official’ government department at all. It was the creation of the Department of Government Efficiency (D.O.G.E.).

However, it’s important to know that despite the name, it won’t be a federal government department at all. Instead, it will be an advisory committee. In charge will be the world’s richest man, Elon Musk, and former Republican party presidential candidate, Vivek Ramaswamy.

Why it matters

So, what does Donald Trump’s Argentinian friend have to do with this?

It’s because the friend in question is Javier Milei. He’s president of Argentina. Milei became president in December 2023. He won on a platform of scaling back government spending and tackling his country’s crippling inflation problem.

And as it happens, last week Milei was at an event at Donald Trump’s Mar-a-Lago property in West Palm Beach, Florida. He met with Trump and had a photograph taken with Elon Musk.

But getting back to Argentina, so far, Milei’s plan looks like it’s working.

After the first six months, his government had halved the number of departments. And by cutting government spending, the government went from having a spending deficit to having a spending surplus.

In other words, it spent less money than it brought in through taxes — something it hadn’t done for more than 12 years.

And as for inflation, it was trending higher before Milei’s election, and moved even higher during the early months of his administration. But since May, the inflation rate has dropped and is heading lower.

This is important because the policies implemented by Milei have a strong resemblance to those proposed by president-elect Donald Trump. That is an attempt to cut government spending and cut inflation.

How it Affects You

Right now, the U.S. runs an annual budget deficit of $2 trillion. That means the government spends $2 trillion more each year than it brings in with taxes.

To make up the shortfall, the government must borrow money. That explains why U.S. federal government debt is around $36 trillion. America’s government is living beyond its means.

The problem facing any attempts to cut spending is what to cut? Around two-thirds of the government budget is non-discretionary spending: Medicare, Medicaid, Social Security, and other welfare programs. Add Defense spending and interest on the debt, and that all accounts for 94% of government spending.

So, if the Trump administration makes the cuts it promises to make, it will have to come from what many see as the ‘untouchable’ areas mentioned above. That may seem scary for many people.

But spending cuts could result in greater efficiency for government departments and a lower burden for taxpayers. In which case, in the long-run that would provide an economic boost at a time when many believe the current economic cycle is nearing its end.