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Francois Hollande Outlines Path To €30 Billion Deficit Slash

Francois Hollande has outlined his blueprint for taming the French budget deficit. No one is pleased.
By Amiel Ungar
First Publish: 9/11/2012, 6:04 AM

Francois Hollande
Francois Hollande
Reuters

During the 1980s, it took 3 years in power before the French Socialists reversed course from free spending egalitarianism to belt-tightening. It has taken Francois Hollande 4 months to do the same, following his election and the election of a socialist majority in the National Assembly.

Members of the French cabinet still try to avoid the A word – "austerity",  but in his televised speech Sunday night, Francois Hollande laid out his policy on how he would cut the deficit by a cool 30 billion euros.

€10 billion would be raised by taxing households --especially the more affluent households --another €10 billion would come from taxes on corporations, while the remaining €10 billion would be produced by spending cuts.

Responding to criticism that he had not been active enough, Hollande claimed that he could not do in 4 months what his predecessors had failed to do in 5 years or a decade. If the French president believed that by framing the deficit cuts as being financed primarily by the affluent he would succeed in keeping the left behind him, he was quickly disabused.

The leader of the Left Front, the former Socialist Jean-Luc Melenchon, was quick to call the policy austerity. Nathalie Arthaud, spokesperson for the far left Workers Struggle, called the speech good news for the French industrialists.

The two major contenders for leadership of the center-right UMP (Union for a Popular Majority), party secretary Jean-Francois Cope and former Prime Minister and front-runner Francois Fillon, criticized the speech. Cope said that he was "uneasy for France", claiming that he had heard nothing in the address that was going to fix the country. Fillon accused Hollande of being a president who, under the cloak of being methodical, was trying to conceal the policy disarray. "In reality, in 2 years we will be in a situation much worse than today's."

Marine Le Pen, leader of the National Front, mocked Hollande's interview and claimed that both the president and his predecessor, Nicolas Sarkozy, were powerless - except  that Sarkozy affected a "fired-up powerlessness" while Hollande had replaced it with a "limp powerlessness".

The French president did not connect his budget balancing with the European debt crisis. Perhaps he believes that mentioning the two together would prejudice the case against a new European treaty that would centralize financial decision-making and weaken the power of the national governments. To mention such a change when the government is announcing austerity, is not the best way of selling the treaty to the public.