public finances, PhD programs are under scrutiny

“Today is Christmas every day, gift certificates for everyone.» : Jean-Francois Husson, LR Senator for Meurthe-et-Moselle and General Rapporteur of the Finance Committee, did not take off. For several months, this guarantor of budgetary orthodoxy has been warning against dangerous drifting of public finances. Two weeks before the presidential election, the campaign will look more like a Lépin competition for tax cuts and new spending than an exercise in rebuilding public finances.

Debt of 3,000 billion euros

At the end of the five-year period, they are still in a catastrophic state: in 2021, the state budget deficit was 6.5% of GDP, and public debt was flirting with 2,800 billion euros (up by 700 billion in five years). . We are talking about an increase in spending related to the health crisis, as well as tax cuts of 50 billion euros over the entire five-year period. A worried Court of Accounts estimated in January that €9 billion would need to be saved annually to meet the 3% deficit target by 2027.

Ace. The war in Ukraine has again clouded the message, forcing the government to take new emergency measures with a ‘by all means’ air. It is difficult in this context to position yourself on anything other than short-term measures. In recent weeks, candidates have also multiplied proposals in favor of purchasing power, blaming the executive for not going too far, or vice versa “burn the box office”“In any case, it cannot be said that there are no public finances in the campaign. Rather, the reliability of the numbers leaves much to be desired.” evaluates François Ekal, president of Fipeco, a public finance information site.

→ FILE. Presidential 2022: compare candidate programs (immigration, education, family, etc.)

Incredible numbers

In contrast to 2017, almost all candidates made an effort to present balanced programs by balancing their new spending against equivalent income or savings: €50 billion for Emmanuel Macron and Anne Hidalgo, just over €65 billion for Marine Le Pen and Eric. Zemmura, 250 billion euros for Jean-Luc Mélenchon, or even 42 billion euros for Valerie Pecresse (who plans to save in the same proportions). Wherein “Valerie Pekress is the only one who wants to significantly reduce the deficit,” says Victor Poirier, director of publications at the Montaigne Institute.

Return of pensions

The main source of spending, pensions, has made a notable comeback in the political debate, either as a source of savings to be sought or as a new item of expenditure to be financed. Raising the statutory retirement age to 64 or 65 for Emmanuel Macron, Valerie Pecresse or Eric Zemmour is estimated to bring almost 10 billion euros a year by the end of 2027, while returning to 60 advocated by Marine Le Pen, Jean-Luc Mélenchon or Fabien Roussel could cost a few dozen. Figures must be handled with care.

→ ANALYSIS. Presidential elections 2022: pensioners at the center of the election campaign

“In general, the assessments of the propaganda team are, as always, very optimistic,” says François Ekal. Modernization of the state apparatus, elimination of administrative duplication, and even the fight against tax or social fraud … The programs are full of measures that allow (theoretically) to return billions to the treasury. But these figures sometimes make you think. Just about tax evasion, Yannick Jadot, Marine Le Pen and Valerie Pecresse promise between 10 and 15 billion euros in revenue, while Jean-Luc Mélenchon hopes to raise 100 … bring 15 billion euros, its feasibility remains hypothetical.

Risky bet on growth

Much more cautious than in 2017 on this issue, Emmanuel Macron, on the other hand, wants to be very confident in his ability to save money by modernizing and digitizing management: 15 billion euros are expected with the introduction of the e-prescription and the Vitale e-card. Above all, the presidential candidate expects €35 billion in spending cuts thanks to a return to growth and full employment.Our philosophy is very clear: encourage work to fund our social model.” hits LREM deputy for Val-de-Marne Laurent Saint-Martin, his campaign treasurer.

But for economists, making growth the alpha and omega of public policy remains a bold bet, especially in this period of geopolitical instability. “In fact, to clean up the public finances, we would have to make a very strong and very unpopular policy choice of drastically cutting our spending on pensions and health care, or drastically increasing taxes,” evaluates Mathieu Plain of OFCE.

As controversial as they are, the programs of Eric Zemmour, who wants to cut the social spending of foreigners by 20 billion euros, and Jean-Luc Mélenchon, who expects 150 billion euros of additional tax revenue from taxing the rich, are the only ones. advocate for a real change of course. On the right, most candidates lean more towards tax cuts, with a focus on production taxes that reduce the competitiveness of companies and inheritance taxes that are considered illegal.

→ FIND the results of the 2022 presidential election as soon as they are officially released, municipality by municipality

Changing Your View of Debt

Beyond these differences of opinion, it is clear that the health crisis and its billions poured into the economy have changed views on the sustainability of public debt. Most of the candidates are also in favor of relaxing the rules of the European Stability Pact, which requires states not to exceed 3% of the public deficit. Taking the lead, environmentalist Yannick Jadot even presented a scarcity trajectory. “excluding environmental costs.”

“With the war in Ukraine leading the US to agree on the need to invest in its energy and military independence, advocates for greater budgetary flexibility have also found arguments,” emphasizes economist Eric Cheney.

→ FILE. Presidential 2022: compare candidate programs (immigration, education, family, etc.)

Except that the war argument is double-edged. As long as interest rates are below growth rates, it can be said that debt is not a priority topic. But if rates were to rise, states would be forced to get their deficits under control.” says Patrick Artus, director of research at Natixis. With inflation rampant, the scenario becomes more and more likely and risks undermining great campaign promises.

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