By Martin Armstrong

Argentina has posted its first budget surplus in 123 after President Javir Milei took office and demanded an abrupt halt to government spending. Governments worldwide should carefully take note.

Milei proudly announced:

“The deficit was the root of all our evils — without it, there’s no debt, no emission, no inflation. Today, we have a sustained fiscal surplus, free of default, for the first time in 123 years. This historic achievement came from the greatest adjustment in history and reducing monetary emission to zero. A year ago, a degenerate printed 13% of GDP to win an election, fueling inflation. Today, monetary emission is a thing of the past.”

Economic emissions should become a coined phrase as it is far more harmful than anything government is currently trying to conquer.

Argentina was forced to stop printing money back in 2022 after inflation surpassed 60% in July of that year, and their currency became utterly worthless. The central bank raised rates to nearly 70% to no avail as government continued borrowing. The problem with socialism is that they eventually run out of other people’s money. The government was spending over $6 million daily on social programs, but the poverty rate continued to rise, and around 57% of the working population could not find jobs. There were mass strikes since their money could not fund basic goods. Even if they could find employment, what incentive would the people have when the currency is worthless? Since they had no way to pay off their debt, the government simply continued to print more and devalued its own currency in the process.

Javir Milei was called a right-wing extremist for denouncing socialism and promising to curtail government spending and social programs. He understood that socialism COULD NOT WORK. It took President Javier Milei of Argentina a mere two months to push his nation into a surplus. The Economy Ministry declared that the government posted a $589 million surplus back in April, the first surplus in a decade. Milei referred to the government as “a criminal organization,” and recognized that the public sector needed to shrink as 341,477 people were on the government payroll when he took office.

Referred to as the “gnocchi” after the Italian pasta dish that is commonly served on the 29th of the month, the same day as payday, are the individuals in Argentina on the government payroll who do absolutely nothing. They were installed by politicians in exchange for favors. Critics claim he is firing at random, but the Milei Administration has assured the public that selecting those who will be laid off will be an “extremely surgical task, done so as not to make mistakes.”

Milei has already eliminated useless agencies such as the Ministry of Culture, Ministry of Health, Ministry of Labor, and Ministry of Social Development. In his words, Argentina is currently a poor country and cannot afford these departments that do absolutely nothing to improve the nation’s economic conditions. He has cut the Cabinet in half and no one has noticed a difference.

Milei removed price controls and devalued the currency by 54%. Transport and fuel subsidies were eliminated. It was noted that these measures would at first hurt PPP before the economy could begin to heal. Imagine inflation cooling in February at 276% — the situation was dire. The International Monetary Fund awarded Argentina a $44 billion credit program. The nation is beginning to stabilize very slowly, and it took decades of deteriorating economic conditions for someone to come in and clean house.

He has called his measures a form of “shock therapy” for Argentina’s economy. Milei agreed to devalue the nation’s peso from around 350 to 800 pesos per USD. He has eliminated quotas on imports and exports and removed the licensing that was difficult to obtain. There is a temporary rise in taxes for non-agricultural trade that brings it on par with industry standards. Transportation and energy subsidies have been eliminated.

Milei is the same man who stood before the crowd at Davos and criticized their glorification of socialism. “The main leaders of the Western world have abandoned the model of freedom for different versions of what we call collectivism,” Milei said to a hostile crowd at Davos. “We’re here to tell you that collectivist experiments are never the solution to the problems that afflict the citizens of the world—rather they are the root cause.”

Those in charge want us to believe that capitalism equates to greed while collectivism is seen as a form of social justice but, of course, requires the money of others. Free enterprise is under constant attack, and Milei is one of the only world leaders fighting for its existence. “Social justice is not just. It doesn’t contribute to the general well-being,” Milei said to Davos, citing that socialism is “intrinsically unfair” and forces the state to attack the people for taxes. “Can any of us say that they voluntarily pay taxes?” he asked the crowd.

He was once called the Donald Trump of Argentina. We can hope that Donald Trump will take swift action to reduce government spending. DOGE appointee Elon Musk congratulated Argentina’s president when news of the budget surplus broke. Unfortunately, America is too far in the hole to recover by slashing programs or cutting government. It would be a massive step forward but our deficit has been permitted to run wild for too long to be tamed.

From the Fraser Institute

By: Jake Fuss and Tegan Hill

Two federal cabinet ministers criticized the report because it “fails to properly acknowledge that CEBA was designed and delivered during a global pandemic.” Translation—taxpayer money can be mismanaged so long as it’s delivered quickly, and we can use an emergency as an excuse for wasteful spending

According to a new report by Canada’s auditor general, in another of example of mismanagement and waste during the COVID pandemic, nearly 10 per cent—or $3.5 billion—of the federal government’s Canada Emergency Business Account (CEBA) loans went to ineligible businesses.

The report said “the program was not managed with due regard for value for money” and the government “did not effectively oversee the CEBA program.”

In response, two federal cabinet ministers criticized the report because it “fails to properly acknowledge that CEBA was designed and delivered during a global pandemic.”

Translation—taxpayer money can be mismanaged so long as it’s delivered quickly, and we can use an emergency as an excuse for wasteful spending. Accountability to the public is evidently an afterthought.

Of course, this is only the latest revelation of Trudeau government mismanagement during COVID. The government spent huge sums of taxpayer money on expensive programs such as the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Response Benefit (CERB). But a substantial share of this spending was simply wasted.

For example, an earlier report in 2022 by the auditor general found that ineligible individuals received $4.6 billion in CERB payments and other benefits. Ineligible recipients included 1,522 prisoners, 391 dead people and 434 children too young to be eligible. And 51,049 employers incorrectly received $9.9 billion in wage subsidies even though they did not have a sufficient drop in revenue to be eligible for the subsidies.

The federal government also spent billions on Canadians who probably didn’t need the money. An analysis published in 2020 by the Fraser Institute estimated that $11.8 billion in CERB payments went to eligible young people (ages 15 to 24) living with their parents in households with at least $100,000 in income. And an estimated $7.0 billion in CERB payments went to spouses in families with at least $100,000 in household income.

COVID-related programs were not only poorly targeted, but many payments surpassed the level required to restore the regular income of many recipients. According to the auditor general, the lowest-income Canada Recovery Benefit (CRB) recipients could take in more money from government benefits than from working, and the program “represented a disincentive to work, which impacted some labour markets at a crucial time when the need for employees was trending upwards.”

The total costs of fiscal waste during COVID are difficult to nail down. But our 2023 study estimated that one in four dollars of federal pandemic spending was wasted. That amounts to at least $89.9 billion in total fiscal waste. For context, that’s roughly what the British Columbia government spends annually in its entire budget for health care, education, social services, infrastructure, etc.

Finally, because the Trudeau government borrowed money to finance its excessive and wasteful COVID spending, Canadians will pay an estimated $21.1 billion in debt interest costs (over a 10-year period) that are directly attributable to this fiscal waste.

The new report by the auditor general is the latest proof of mismanagement by Ottawa during COVID, to the tune of billions of dollars in waste. Unfortunately, the government continues to scoff at the bill it’s handed to taxpayers for the waste it produced.

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Tegan Hill

Director, Alberta Policy, Fraser Institute