The Trump administration announced Wednesday that it is extending a $20 billion currency swap line to Argentina among other measures to stem economic uncertainty and a rapidly devaluing peso. These provisions were announced after President Javier Milei’s libertarian party suffered a series of political reverses, including losing an important regional election in the province of Buenos Aires in early September. “We stand ready to do what is needed to support Argentina and the Argentine people,” Treasury Secretary Scott Bessent wrote in the announcement on X.

The bailout is desperately needed by Milei and his allies, who have been struggling politically in recent months. After an utterly triumphant 2025, in which he was able to completely reverse Argentina’s inflationary spiral and pass important laws deregulating the Argentine economy, privatizing a number of important government-owned corporations, and cutting taxes despite having only a tiny minority in both houses of the Argentine congress, Milei’s project has begun to run into some serious snags.

Milei’s movement, despite its indomitable first year, was always a fragile one. His party, La Libertad Avanza (LLA), holds just 6 of 72 seats in the Senate and 38 of 257 in the Chamber of deputies. With its coalition ally Propuesto Republicano (PRO), it could barely muster a third of the votes in either chamber. Nearly all of the administration's governance and policymaking has taken place through executive action—both by the promulgation of presidential decrees, which give Argentine presidents the power to make, amend, and repeal all but a select number of laws, and by the liberal dispensation of the presidential veto.

Both of these mechanisms are subject to legislative action; presidential decrees can be overturned by a vote of both houses, and vetoes can be overridden in a similar manner. But Milei was almost always able to cobble together just enough votes to avoid having his decrees voided and his vetoes ignored, and to pass laws where his presidential powers were not competent. The Peronist opposition—heavily fractured after the shock loss to Milei in the presidential election and oppressed by their previous president’s complete failure to control the economic situation and later Milei’s popularity and evident success in tamping inflation to manageable levels—was able to put up no effective resistance.

With a combination of the liberal application of executive power and an ad hoc legislative bloc of demoralized and cooperative opposition politicians, Milei was able to embark on his program of dramatically liberalizing the Argentine economy. Much of his plan for economic recovery rested on two key initiatives: first, eliminating the budget deficit and creating a sustainable fiscal and monetary policy for the nation, and second, drawing in foreign direct investment to create economic growth and employment.

This program was always going to be somewhat painful for Argentines. Putting the economy on a sustainable, non-inflationary footing meant cutting welfare and government subsidies for food, housing, utilities and other necessities—widely employed by Peronist governments—dissolving a significant number of government posts, and privatizing bloated and unproductive state-owned corporations (which result in additional job losses as companies cut costs to regain profitability). Nearly everyone suffered some kind of immediate loss in government welfare payments or employment.

To offset that pain, Milei relied on a new flow of foreign direct investment into Argentina—a real possibility, since Argentina’s capital controls had made outside investment in the country almost impossible. Under the currency control regime of the preceding Peronist government of Alberto Fernandez, businesses could not easily repatriate their profits, or even easily convert them into dollars to protect them from Argentina’s rapid inflation. Why invest money into a country that does not even allow you to withdraw your earnings?

That approach takes time to yield results, however—factories and offices are not built overnight. Poverty has decreased significantly, after an initial spike when benefits were cut, and economic growth has been strong, but unemployment and underemployment remain high, and the public is showing signs of impatience. The timing could not be worse for Milei and company.

The Peronist opposition, after a demoralizing 2025, has finally begun to feel its way to something like an effective political message. An outstanding feud between the partisans of Cristina Kirchner, former president and a strident left-wing populist, and the more technocratically oriented Axel Kicillof, governor of the province of Buenos Aires, has largely ended after Kirchner was convicted of corruption and prohibited from running for office. That consolidation was only deepened after Kicillof’s forces managed to pull off a surprising and convincing victory in the Buenos Aires provincial elections—which was another devastating loss for Javier Milei, who had framed the election as a referendum on his government going into the midterm legislative elections in late October.

The newly effective Peronists have been aided by a number of missteps and scandals on the libertarian side. Milei’s involvement in cryptocurrency came back to bite him in March, when he made a post promoting a crypto coin called $LIBRA. When Milei’s fans began pouring money into the coin—which, according to the president, would be used to fund small businesses in Argentina—the coin’s creators pulled the rug, sold their stakes, and walked away with millions. The entire thing had been a scam, and Milei and members of his close circle, especially his sister Karina, were suspected of having profited from the affair.

But the $LIBRA scandal is small potatoes compared to the most recent eruption. In late August, journalists published an audio recording of the head of Argentina’s disability agency that detailed a corruption scandal where a government contractor for pharmaceutical supplies would charge a markup for its products and kick back a portion of the proceeds to members of the Milei administration, including Karina Milei. There are a number of questions about the provenance of the recordings, and no material evidence of the bribery operation alleged in the recordings has yet been discovered, but the publication of the allegations released a wave of anger leading into the Buenos Aires provincial elections and midterm elections.

Milei also alienated a number of important allies and collaborators in the provinces who had supported him in 2024 by refusing to release funds from the national government for local infrastructure projects. He argued that the funds could not be released as part of his program to maintain the budget surplus and pay down the national debt, but frustrated governors stopped instructing their allies in Congress to vote for Milei’s proposals.

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The combined effect of a revitalized opposition, political scandals, and alienated former allies has been a complete route of Milei’s political program in the national legislature. In 2024, Milei won 119 out of 179 votes in the Chamber of Deputies. In 2025, he has won only 29 out of 81 votes—and most of those victories were early in the year. Between June and September, in both houses of Congress, Milei and LLA have lost a devastating 83 percent of legislative votes—overturning presidential decrees, overriding presidential vetoes, and passing laws that directly impinge on Milei’s project of maintaining a balanced budget.

This political weakness threatened a financial rout, as investors became nervous over the continued viability of Milei’s economic reforms. A looming run on the peso threatened to become a self-fulfilling prophecy: Nervous investors pulling out of the country just before the midterm elections could create a rapid economic crash and thus defeat for Milei and his allies at the ballot box. The United States’ intervention hands the country, and Milei, a vital lifeline by shoring up the currency and debt markets with the full faith and credit of the mighty American economy, enough to prevent any rapid unravelling of the country before October.

But Javier Milei is still a relatively popular president, and his party remains the favorite for the midterms next month. Even an underperformance will lead to a much greater presence for LLA in the Argentine Congress, a badly needed backstop for Milei’s political program and Argentina’s economic recovery.