public finances, candidate programs for examination

“Today is Christmas every day, with gift vouchers for everyone: Jean-François Husson, Senator LR of Meurthe-et-Moselle and general rapporteur of the finance committee, does not take off. For months this guarantor of budgetary orthodoxy has been warning against the dangerous drift of public finances. Two weeks before the presidential election, the campaign would seem more like a Lépine competition for tax cuts and new spending than a fiscal consolidation exercise.

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A debt of 3,000 billion euros

At the end of the five-year period, these are in any case in a disastrous state: in 2021 the public deficit stood at 6.5% of GDP and the public debt was close to 2,800 billion euros (with an increase of 700 billion in five years). In question, the increase in expenditure linked to the health crisis, but also the reduction of 50 billion euros in taxes over the entire five-year period. Concerned, the Court of Auditors estimated in January that € 9 billion in additional savings would be needed each year to reach the goal of a 3% deficit by 2027.

Period. The war in Ukraine has once again clouded the messages, leading the government to adopt new emergency measures, with an air of “whatever it takes”. It is difficult in this context to position oneself on anything other than short-term measures. In recent weeks the candidates have also multiplied the proposals in favor of purchasing power, accusing the executive of not going far enough, or on the contrary of “burn the cash register”.“In any case, it cannot be said that public finances are absent from the campaign. It is rather the credibility of the figures that leaves something to be desired “, esteems François Ecalle, president of Fipeco, an information site on public finances.

→ ARCHIVE. Presidential 2022: Compare candidate programs (immigration, education, family, etc.)

Incredible numbers

Unlike 2017, almost all the candidates have committed to presenting balanced programs, combining their new expenses with income or equivalent savings: 50 billion euros for Emmanuel Macron and Anne Hidalgo, just over 65 billion euros for Marine Le Pen and Éric Zemmour, 250 billion euros for Jean-Luc Mélenchon or even 42 billion euros for Valérie Pécresse (who plans to save in the same proportions). In this way, “Valérie Pécresse is the only one who wants to significantly reduce the deficit”, says Victor Poirier, director of publications of the Institut Montaigne.

The return of pensions

The main source of expenditure, pensions have made a notable comeback in the political debate, both as a savings reserve to be sought and as a new burden to finance. According to estimates, raising the legal retirement age to 64 or 65 for Emmanuel Macron, Valérie Pécresse or Éric Zemmour would lead to nearly € 10 billion a year by the end of 2027, while back to 60 defended by Marine Le Pen , Jean-Luc Mélenchon or Fabien Roussel could cost several dozen. Figures to handle with care.

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“In general, the estimates made by the campaign teams are as always very optimistic”, believes François Ecalle. Modernization of the state apparatus, elimination of administrative duplication, or even the fight against fiscal or social fraud… The programs are full of measures that allow (in theory) to bring billions back into the coffers. But the figures presented are sometimes perplexing. Precisely on tax evasion, Yannick Jadot, Marine Le Pen and Valérie Pécresse promise between 10 and 15 billion euros in revenue, when Jean-Luc Mélenchon hopes to collect 100 … As for the great promise of Valérie Pécresse to remove 150,000 seats of official, to bring in 15 billion euros, its feasibility remains hypothetical.

The risky gamble of 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 by modernizing and digitizing the administration: 15 billion euros are foreseen with the implementation of the electronic prescription and the Vitale e-card . Above all, the presidential candidate expects € 35 billion less in spending thanks to the return to growth and full employment.Our philosophy is very clear: encourage work to finance our social model “, strikes the LREM deputy for Val-de-Marne Laurent Saint-Martin, his treasurer of the campaign.

But for economists, making growth the alpha and omega of public policies remains a risky bet, especially in this period of geopolitical instability. “In reality, in order to restore public finances, we would have to make very strong and very unpopular political choices, consisting of drastically reducing our pension and health expenditure, or massively increasing taxes”, esteem Mathieu Plane, OFCE.

Controversial as they may be, the programs of Éric Zemmour, who wants to reduce social spending by foreigners by 20 billion euros, and Jean-Luc Mélenchon, who expects 150 billion euros of additional tax revenue by taxing the rich, are the only ones for support a real change of course. On the right, the majority of candidates are moving more towards tax cuts, with the main objective of taxes on production, which weigh on the competitiveness of businesses, and inheritance taxes, deemed illegitimate.

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

Change of perspective on debt

Beyond these differences of vision, it is certain that the health crisis, and its billions poured into the economy, have changed the perspectives on the sustainability of public debt. In their majority, the candidates are also in favor of a relaxation of the rules of the European Stability Pact, which requires states not to exceed 3% of the public deficit. Taking the lead, ecologist Yannick Jadot even presented a deficit trajectory “Excluding green shopping”.

“With the war in Ukraine, which led states to agree on the need to invest in their energy and military independence, even the supporters of greater budget flexibility have found arguments”, emphasizes the economist Éric Chaney.

→ ARCHIVE. Presidential 2022: Compare candidate programs (immigration, education, family, etc.)

Except that the subject of war is a double-edged sword. As long as interest rates are below the growth rate, we can say that debt is not a top priority. But if rates were to rise, states would be forced to take control of their deficits “, says Patrick Artus, research director at Natixis. With galloping inflation, the scenario is increasingly probable, and risks undermining the great electoral promises.

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