Socialist victor over Sarkozy promises a spending and tax onslaught.
France took a hard left turn yesterday with the election of Socialist Prime Minister Francois Hollande, the first socialist candidate to win the presidency in nearly two decades. The result, which had been forecast since Hollande’s narrow victory over incumbent Nicolas Sarkozy in the first round of voting on April 22, puts France on path of increased government spending and higher taxes even as the country’s debt climbs and its economy stagnates.
Hollande campaigned on a platform of class warfare, and all indications are that he will govern that way. While Europe's mainstream left parties have made peace with capitalism, Hollande remains an unreconstructed tax-and-spend socialist. Showing little regard for the country's debt problems, he has promised a government spending splurge to the tune of $26 billion over the next 5 years; this even as he improbably claims he will lower the deficit to 3 percent by next year. A self-confessed hater of the wealthy – “I don’t like the rich,” he once declared on television – he has also pledged to enact a confiscatory 75 percent income tax on the highest earners, as well as a separate "wealth tax" on assets and a bevy of new taxes on estates, banks and big corporations. Where president Obama has dressed up his redistributionist schemes in the guise of "shared sacrifice," Hollande is upfront about his intent to soak France's shrinking share of high-income earners. "If there are sacrifices to be made, and there will be, then it will be for the wealthiest to make them,” he announced in the days before the election.
While that message clearly resonated with Hollande's leftist supporters, a new war on wealth is the last thing France needs. The hard truth is that France has lost its competitive edge in recent years. Symbolic of the decline is France's rigid labor market, a persistently high rate of unemployment rate that stands at a 13-year high of 10 percent, and a yawning trade deficit that topped $91 billion last year. Debt is a major drag on economic growth. French public debt has spiked to 90 percent of the country's annual output, with the consequence that interest payments are now the second highest government expenditure after education. France’s finances are now in such perilous shape that in January the credit rating agency Standard and Poor's took the drastic step of stripping it of its triple-A rating. Against this bleak background, Hollande’s plans to penalize businesses and other wealth producers with crippling taxes is a disaster in the making.
The most charitable take on Hollande’s agenda is that it is a gimmick rather than a political roadmap. Some of his advisors have already said that the 75 percent tax, for instance, is mostly a “symbolic measure” that Hollande would not pursue once in office. But that is a dangerous gamble because Hollande and the Socialists could soon have a chokehold over French politics. Socialists already control all but one of France’s 22 administrative regions, and the upcoming June parliamentary elections may seal their majority status for some time to come. At that point, there would be few restraints on Hollande’s ambitions.
Among those ambitions is scuttling the German-led austerity plans aimed at getting Europe's spiraling debt under control. Hollande's election puts him on a collision course with German Chancellor Angela Merkel, who has been a leading voice for the sensible idea that Europe must change its free-spending ways, including cutting unsustainable public spending, if it is to get is fiscal house in order. Hollande represents the reactionary left's belief that a combination of more government borrowing and stimulus spending – the very ills that brought Europe to its current pass – will somehow rescue it from continent-wide economic crisis. Judging by his victory speech, Hollande does not intend to back down on this front. He used the occasion to declare that "Austerity can no longer be inevitable!" The same may well be said of the alternative: a continued pattern of government profligacy that has turned countries like Greece into economic disaster areas.
As well as jeopardizing much-needed economic reform, Hollande’s victory also forestalls a reckoning with the French election’s sleeper-issue: the growing problem of a culturally dislocated and increasingly radicalized Muslim immigrant community. That problem was highlighted most recently by the case of Mohammed Merah, a second-generation Muslim immigrant from Algeria who went on a grisly shooting spree in Toulouse in which he gunned down seven people, including soldiers and children at a Jewish day school. While the French left reflexively condemned any attempt to link Islam with the Merah's acts, ignoring the fact that he had called out "Allahu Akhbar" while slaughtering his victims, the issue was clearly on the minds of French voters, who responded by giving the far-right, anti-immigrant National Front a record share of the vote in the first round of voting in April. Marine Le Pen, the National Front's candidate, had decried Islamic radicalism as “green fascism,” a reference to Islam's dominant color.
Sarkozy tried to co-opt the issue in the final days of the campaign, calling for new restrictions on immigration, but those policies are unlikely to be revived in a Hollande presidency. To his credit, Hollande has opposed laws specially accommodating Muslims. He has vowed to enforce France’s ban against the burqa and promised to resist Muslim appeals for separate menus in public cafeterias as well as separate swimming hours in public pools for men and women. Still, the Socialist Party has drawn significant support from Muslim voters, and as such it’s hard to envision a frank discussion of Muslim integration becoming a part of the political conversation after Hollande's victory.
For Sarkozy, the defeat is a painful setback for a canny politician who once enjoyed record approval ratings. But his early support evaporated following a series of personal gaffes, most notably a divorce from his wife and a highly public courtship of supermodel Carla Bruni. Sarkozy is partly a victim of a poor economic climate, but he did not help his cause by pursuing a timid policy agenda that failed to live up to his campaign promises of bold economic reform even as it featured government spending nearly as lavish as what Hollande now promises. Disillusioned with Sarkozy's effective socialism, France must hope it fares better with the genuine article.
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