Erasing Sarkozy: François Hollande Legislates His Predecessor’s Policies Into Oblivion

A revised deficit-cutting budget bill passed by France's ruling leftists Thursday effectively repeals all major reforms undertaken by former President Nicolas Sarkozy, virtually erasing virtually all his economic policies.

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Laurent Rebours / AP

French president Francois Hollande greets spectators on the finish line of the 18th stage of the Tour de France in Brive-la-Gaillarde, France on July 20, 2012.

Nicolas Sarkozy was once hailed for a reformist drive  to modernize and stimulate France‘s economy. So, has any of it survived his failed re-election and relegation to the club of France’s one-term presidents (current membership: two)?

Not much. On Thursday night, France’s leftist parliament passed a rash of tax hikes intended to generate new revenues required to meet its budget deficit targets. For all intents and purposes, however, that action represented a near systematic reversal of Sarkozy’s main policy achievements. Not surprisingly, opposition conservatives are howling at the ruling Socialists for taking the legislative eraser to Sarkozy-era reforms, decrying on economic and ideological grounds that kind of solution to France’s debt-borne crisis and sluggishness.

The legislative moves came as part of the passage of a wider bill seeking to address an enormous short-fall in budget funding discovered by an audit of state accounts ordered by Socialist President François Hollande immediately after his election three months ago. The result: Socialist leaders hit the “delete” button on virtually all major Sarkozy reforms.

The most symbolic reversal was the decision to resume taxing overtime pay—and putting an end to state subsidies used to finance that exemption. That marks the end to Sarkozy’s cornerstone legislation seeking to coax people to increase their disposable income–and boost business productivity—by working extra hours for de-taxed pay. “Work more to earn more” had served as the political potent slogan of Sarkozy’s successful 2007 presidential campaign, in which he promised to deliver increased economic activity, revenue, and wealth through liberalizing labor reform.

In reality, the innovation did little to lift employee income, and cost the state over $30 billion in subsides. Moreover, critics contend, the measure inspired companies to avoid hiring new workers from among the unemployed, and instead compelled existing staffers to work longer hours that—thanks to state underwriting—were suddenly cheaper for employers.

“It cost ($6 billion) a year without doing much for economic activity and growth,” government spokesperson Najat Vallaud-Belkacem told France Info radio Thursday.

The leftist airbrushing of Sarkozy policies didn’t stop there. Others repealed a law adopted by the right earlier this year that cut salary-based charges that employers finance, shifting those costs to the general public in the form of a value-added tax increase. The leftist majority also approved a hike in taxes on the assets of wealthier people that Sarkozy lowered in August, 2007, part of a host of similar cuts denounced by the left as favoring the affluent and businesses. After the Socialist action on Thursday, France’s richest household will see their wealth taxes rise from 14% to a wallet-frightening 143%.

There’s more. Another portion of the revised budget bill passed Thursday imposes a one-off supplementary tax on households whose assets surpass $1.3 million. Even members of Hollande’s Socialist cabinet were upfront about the moves. How else can it be described than soaking of the rich?  “This exceptional contribution is a harsh effort being demanded from those who can afford to make it,” commented junior budget minister, Jérôme Cahuzac.

The privileged classes may have been dunned but there is no populist dancing going on in streets. The bill passed Thursday—which will now clear routine legislative procedures before becoming law by August—makes good on Hollande’s campaign promises to enforce social “justice” by making the rich shoulder their share of France’s pain. But the French public is aware that the squeeze on fatter wallets won’t forestall pressure on more meager pocketbooks. Indeed, conservatives argue that overturning Sarkozy’s de-taxation of overtime is less a raid on corporate coffers than it is an inhibition for people to work for more income by way of overtime in the first place. According to Laurent Wauquiez—whose multiple cabinet roles under Sarkozy included secretary of state for employment—the overtime tax revision will immediately reduce incomes of 9.5 million employees by as much as 7%. “François Hollande knowingly lied about overtime,” Wauquiez said on France Info Wednesday. “The law before us is exactly the opposite of what he said during the campaign, (when) we were told only businesses will pay the cost. Ninety percent of that charge will in fact go to employees.”

Not surprisingly, Socialist government officials contest that analysis. They also maintain that conservatives are poorly positioned to dispense lessons in social equity, given the dismal state the right has left France. In fact, Sarkozy’s own government started pulling back some of the president’s beloved reforms in mid-2011, when the euro and debt crisis threatened to infect France and send Paris’ borrowing costs to unsustainable levels.

44 comments
TroyDButler
TroyDButler

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sheldon_bang
sheldon_bang

In France we have a big problem : a lot of people who used to vote socialist doesn't accept capitalist economy . Furthermore the Socialist Party is the party of civil servants . They know nothing in firms, industry, only through the trade unions (communist, leftist, ..)

The last IMF director, D Strauss Kahn is the father of the 35 hour-week !

ClytamnestraDunge
ClytamnestraDunge

@sheldon_bang 

in a time when work is sparse a 35-hours week is still too long. 4-day workweeks are better: more people have a job and so there's less need for welfare.

LoudRambler
LoudRambler

 I really think that Sarkosi's idea about not taxing overtime is stupid.

 How can government control overtime? Put a clock meter at each and every workplace? What stops me from hiring someone for 8 hours, claim he worked for 12 hours, and cut taxes by, essentially, cheating? 

 Income is, essentially, income.

 What's worse, where this stupid idea that working longer hours increases productivity? Productivity is a measure of output per hour worked - no matter how many people work, and whether it is overtime or not. 

 That Sarkosi's reform was really dumb.

ClytamnestraDunge
ClytamnestraDunge

@LoudRambler @LoudRambler
especially in f.i. the creative industries people typically only have so much good ideas per day. it doesn't matter if they write those ideas down in 5 hours, or that they stall for 10 hours. their overall output will still pretty much be the same.

there's also the issue of people getting tired after long work-days or using 'free time' for education and other stuff that will increase their productivity.

that're just some of the reasons why countries with lots of parttime-workers tend to have much higher productivity-per-workhour.

so really, a powerhungry boss might like the sight of his underlings slaving away in front of him, trying to outdo each other in worked hours. but if he's interested in the success of his company than a very different management-style is in order: focusing more on actual output than on timeclocks.

Firozali A.Mulla
Firozali A.Mulla like.author.displayName 1 Like

Germany has emerged as one of the biggest

beneficiaries of the European financial crisis. While other countries in

17-country group that use the euro have battled against investor fears that

their economies are buckling under the pressure of too much debt, Germany has

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for investments. The bond markets have demanded that countries such as

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amid worries over their sluggish economies and creaking government finances.

Such high interest rates will burden these countries' state coffers for years

to come. Financially healthy Germany, meanwhile, has secured billions of

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in the past two years and, with quarter-on-quarter GDP growth of 0.5 percent,

prevented the eurozone a whole from sliding into recession in this year's first

quarter I thank you Firozali A.Mulla DBA

harrykuheim
harrykuheim

I can't wait for Romney to eradicate all of Obama's Marxist, PC, idiotic ideas, and Tzars.

Colonel_Green
Colonel_Green like.author.displayName 1 Like

"Tsar" or "Czar", not "Tzar".  A term that has been in use by presidents for 30+ years, despite what FOX News may have told you.

Glarx McFloob
Glarx McFloob like.author.displayName 1 Like

English speaking media and right-wingers constantly talk about France as if it were some sort of basket-case banana republic destined for inevitable collapse under the weight of all those Socialist policies.

Funny, France seems to consistently rank amongst nations with the highest standards of living anywhere on Earth. Unlike... oh, say, the United States? Which repeatedly ranks amongst the worst of the developed world in healthcare, education, gun violence, quality of life, and almost everything else one can think of?

Yeah. Sure. You lot enjoy those perverted corporate 'freedoms' you consistently strive for and which most of you can't afford to exercise.

charles551
charles551

but is it a sustainable lifestyle?

rahonavis
rahonavis like.author.displayName 1 Like

Has been for decades, and is just as likely to survive the current financial crisis as the US system.

Swan_Longview
Swan_Longview

"France’s richest household will see their wealth taxes rise from 14% to a wallet-frightening 143%." Is this correct or a typo?

Swan_Longview
Swan_Longview

"France’s richest household will see their wealth taxes rise from 14% to a wallet-frightening 143%." Is that statement correct or a typo?

Colonel_Green
Colonel_Green

I don't think you can tax someone for over 100% of their income.

Kaddrius
Kaddrius

"But the French public is aware that the squeeze on fatter wallets won’t forestall pressure on more meager pocketbooks."

Indeed.  By going after the weathy first, François Hollande is astutely heading off trouble from strike-prone unions, whose members will be next in line to feel the effects of government retrenchment.  They will surely decry any effort to reign in their gold-plated benefits by engaging in what has in the past often looked like nothing less than insurrection.

There are larger issues at play here, including the precarious state of the Euro, and the need for continued support from a financially sound Germany.  Chancellor Merkel will have a much easier time getting agreement to keep using Germany as the backstop to the entire EU bank system if the #2 economy in the area works - led by a socialist no less- on getting its house in order.

amasiam
amasiam like.author.displayName 1 Like

We have seen what the policies of the conservatives / neoliberals have done. Now we will see if the policies of the socialists, are any better.

yodadog
yodadog

How many times does history have to repeat itself....?

sk8dog
sk8dog

The opposite of poverty isn't wealth, it is justice. And the opposite of wealth isn't laziness, it is lack of access.

Samian
Samian

If only Obama could erase Bush's policies instead of perpetuate them.

AugustineThomas
AugustineThomas

Yea if only the bloodsucking government wasted more of our money so we're even more afraid of it so it can threaten to put us in jail more if we don't perpetuate the parasites!

romano71
romano71

What parasites? People who would be living on the streets if it wasn't for unemployment, to which I may add, they made contributions to have access to while they were working? Or the other parasites are the children who are provided with Medicaid? Or the families that are given food stamps? Those parasites? I rather feed them all than allow you and your kind to keep 2% more of your income. I bet you are a "good" Christian, aren't you? Like "good" and "Christian" were not an oxymoron!

worleyeoe
worleyeoe

If the Dems get their way, this is exactly what's about to happen. And the Dems are now doing exactly what they decried the Repubs for doing last year holding America hostage over the debt ceiling. Now it's class warfare taxes for the rich.

brianmc3113
brianmc3113 like.author.displayName 1 Like

It's not like the rich aren't cheating (see: LIBOR scandal and the thousands of financial executives in prison right now .... and of course their are the ones that keep getting awaqy with it) to get their wealth, or to keep it growing .......

See how that works?  If conservatives can imply that everyone on welfare is a criminal and lazy, then liberals can say every financial executive is cheating and a blood sucking leach ...... bring on the war!  Luckily we can get all sorts of assault weapons and body armor whenever we feel like it these days ....

worleyeoe
worleyeoe

EVERYONE has to give up something.

No zero tax liability, no earned income credit, tax social security (it's just a government run 401k / pension), phase out the child tax credit over four years, and make a serious dent in corporate tax loopholes and credits.

And, government has to get smaller, meaning pay, benefits and job cuts. It's been going on now for five years at the local and state levels, so it's time for the federal government to pay the piper. Again, the prudent health care reform approach would have been to prove costs could be cut before expanding coverage.I would support Ron Paul but he's an ideologue. So, Ron, you want to cut $1,000,000,000,000 out of the federal budget in the first year? Really? And you wonder why you're such a long shot. Great overall plan, brother, but you need to ease up on the cool-aid.Take care!

brianmc3113
brianmc3113 like.author.displayName 1 Like

All good points and a good discussion ... I guess the biggest problem I have about health care is that I can't reconcile using the current capitalist system (or even the system before obamacare) for our health when the doctors won't let the people that can't pay for their care or have no insurance go untreated ..... I mean, isn't the main reason insurance companies continuously raise premiums and the hospitals charge $28 for an aspirin because they are "covering the uninsured" in the first place?I mostly didn't mind McCain (he picked the wrong running mate though, speaking of idealogues) except for the glaring fact that he was an integral part of the Samp;L scandal and he has always been big on bailing out the airlines, and he seemed to be caving to the pressure from the far right about certain laws regarding "morality."  I do think he would have done better across the aisle though as far as legislation is concerned.  I guess I just want to see a sense of fairness again (i.e if you're going to cut back on welfare because you want to stop "paying welfare recipients to have kids," then you need to be fair and get rid of the child tax credit as well (which basically "pays everyone to have kids").  Get rid of corporate welfare like bankruptcy protection ..... I think if you are going to reap the spoils in profits when you do well, you should also take the hits when things go bad without whining for a bailout or a tax break.

worleyeoe
worleyeoe

Mitch McConnell is not running for POTUS.

Grover Norquist is an a-hole.

Any fiscal conservative that thinks the budget deficit can't be closed by raising taxes in addition to spending cuts is an idiot. The question is how are taxes to be raised and by why ratio to budget cuts. Real tax reform is the answer. I'm not even sure if Grover supports tax reform.

Obama's is clearly a socialist ideologue. He knows he can't create the change he wants in 4-8 years, but he knows his presidency will greatly determine how things play out over the coming decades. If he could pass an Amnesty Bill, he would do it in a heart beat, because he knows it would solidify the left leaning of this country. His passing health care reform is also a clear sign. He wants us dependent on the government. He has done nothing of substance to make government smaller and more accountable.

Why isn't Obama trying harder to implement policies that help private business create jobs? #1. He wants government to create jobs. #2. He wants to raise taxes on small business, which will be a job killer. He squandered his mandate on health care instead of passing reforms that would create jobs. He doesn't want the economy to improve, because that would alleviate our dependency on the government.

But I'm under no illusion that Romney will do the things that are necessary to make a run at changing the structural problems with our economy. The less he talks about what specific things he'd do, the less likely he's going to be successful. And if he picks a VP other than Ryan, he has no intention of putting forth a real plan to eliminate our budget deficits over a reasonable 7-10 year period.

America's problems will be solved by people that push for down the middle change using compromise as the catalyst. Obama and Norquist are ideologues. America has no room that these types of people. McCain would have been a vastly superior  president for no other reason than he's not an ideologue and knows how to compromise.

brianmc3113
brianmc3113

Also we have to remember it takes 2/3 of a majority to make any serious changes to the way our govt. operates, and we haven't had that since the last amendment was passed.  There are plenty of democrats causing problems too, but the only people I ever see "crossing party lines" these days are democrats.  I would love to hear an instance where the opposite was true, thoiugh, if you could find one ....

since we won't have any real change regardoing the economy with either party, I would rather vote for the party that is not trying to legislate their own twisted version of morality to make people think they are actually doing something.

brianmc3113
brianmc3113

The problem I have with Obama being an idealogue is the facts just aren't there to support that theory.  He ran on change (I know hope was in that slogan too, but most of us realists concentrated on the change part).  The majority of this country wanted that change because they (we) were tired of the same old song and dance, perpetuated by both parties over time (the repeal of the Glass-Stegall Act by all ut a handful of politicians on both sides should have been that red flag.  The biggest problem I have with the idealogue type label is I remember the words coming straight from Mitch McConnell saying he would do everything in his power to block anything Obama tried to accomplish.  I also remember Grover Norquist and his no tax pledge (hardly a compromise friendly stance).

http://www.mediaite.com/online...     

Sadly, Barry Goldwater not only saw the hi-jacking of the republican party by right wing extremist evangelicals, he was very clear in making his warning ...

http://churchvstate.org/about/...   

He saw exactly what was coming, and the religious right (an oxymoron if you ask me .... they should be called the religious hypocrites) has done more damage to this country than good. 

worleyeoe
worleyeoe like.author.displayName 1 Like

My bad. I can be slow at times picking up on subtle sarcasm. I hope it doesn't come down to what you're joking about. But I do have my doubts. America is extremely polarized, and it's unlikely to get better anytime soon, especially with our Greece moment arriving sooner than most people realize.

I often wonder what things would be like if McCain had been elected. Widely considered to be a maverick, I believe he would have brought America together more, which is the exact opposite of what Obama has done.

We need more politicians that are down the middle. One of the reasons I like Romney is that he's considered to be a great negotiator and not an ideologue like Obama. It will be extremely interesting once Obama is out of office and to hear people inside his administration to expound on what it was like working under him. Again, I have my doubts about his willingness to listen to his advisers and to change course if needed, which is something I think McCain is well capable of doing.

Our problems aren't going to be solved by the fringe elements of either party.

Take care!

brianmc3113
brianmc3113 like.author.displayName 1 Like

I thought that WAS the point I was making, (about conservatives and liberals being basically just 2 sides of the same coin).  I was being sarcastic, which I thought was obvious considering my last sentence.

worleyeoe
worleyeoe

Um, bro, the REAL problem is enforcement. Maybe in Europe, they'll show themselves to be a lot less lenient than we have. For example, how many of the fat cats that creating these bad loan programs and committed fraud have been prosecuted and sent to jail?

And Clinton started that one through his support of ACORN. Bush let it continue and then it fell into Obama's lap. Why hasn't Obama used the Justice Department to put people in jail? It has been his responsibility to do so.

So to sit here and act like the whole lot of them aren't cut from the same mold is a joke, one that is full of hypocrisy.

Niegol
Niegol like.author.displayName 1 Like

shah... those rich people paying 14% taxes you mean? Oh, except over the 100 BILLION dollars they've hidden away in a secret taxhaven bankaccount (thats Mitt btw).

Or the wealthey 1% whose income went up by 20% over the last 10 years, while everyone elses income went down due to an economic crises they were involved in starting (that was just before they got theit million dollar bonusses for running a bank into the ground and needing tax dollars to bail them out)?

Are those the ones whose taxbreaks you are defending? Those Republican introduced Bush era taxbreaks which Obama wants to discontinue?

Seems they can take quite good care of themselves to me...

Dont get me wrong, the government needs to be lean and efficient in doing the tasks required of it. Ie, not grow into a mama-state which guzzles up mountains of cash to perpetuate itself.

But the funding for essential government spending and reducing the deficit and national debt can come for a significantly greater part from those who have more than plenty. Dont tell me that Warren Buffet paying less tax than his secratary is a good thing, its simply wrong.

worleyeoe
worleyeoe

@rahonavis:disqus I would agree 100% with your point. They're all crooks and hypocrites. But, I'll give Boehner a slight edge, because he's at least trying to cut a deal to do something about our deficits. Obama simply wants to pervade class-warfare to put funding towards PPACA BUT HE WON'T COME OUT AND ADMIT THAT THIS IS WHAT THE ~$68B TAX HIKE IS FOR.

Here's my biggest problem with Obama. He's not serious about creating jobs. He spent his political capital on health care, not creating jobs. He knowingly used this approach in order to get re-elected. He now has 30 million people in his pocket via free or heavily subsidized health care. And the recent information about how his economic council has not met in such a long time versus his 100 fund raisers and vacations are just sickening. At least W went cold turkey and gave up golf for the remainder of his term after 9/11.

The universal health care goal is noble and good, but we simply can't afford this right now. A better approach would have been to pass reforms that were shown to cut health care costs and THEN brought more people on board. My gawd, people, health care is bankrupting this country. Does anyone honestly think PPACA isn't going to cost more money, adjusted for inflation, five to seven years from now, when it's fully implemented?

And you're URL is hardly an indictment of the TF's information, especially what I've posted above, which would be very hard to fudge around. It's straight forward historical numbers not forward looking assumption as to the article that you posted from Krugman.

Krugman, are you kidding me? If he had is way, we'd be printing money left and right, not doing a thing to fix the structural problems of our economy.

rahonavis
rahonavis

How do you figure Worleyeoe?  

Last week, House Speaker John Boehner said he would not permit another increase in the country's legal borrowing limit without a larger amount of spending cuts and reforms approved in tandem. 

http://money.cnn.com/2012/05/2... 

That's from this May, not last summer

 Its the GOP that is pushing the debt ceiling button again.

http://articles.latimes.com/20... 

Oh and I would be careful about trusting the tax foundation as a non-partisan source given that one of their current directors is a former Texas Republican congressman (BIll Archer), a former director (till 2008) was chairman of Bush's council of economic advisers. They had a former Reagan Budget director (and failed republican candidate), a Koch industry director who also worked for Americans for prosperity (Wayne E. Gable) and a couple of ex-Mobil people. That does not mean they are wrong necessarily, but means that you should treat their findings as you would any other partisan think tank, not as you would a truly non-partisan group.

Oh and their math has been highly criticized by everyone from Paul Krugman http://krugman.blogs.nytimes.c...

to other tax groups. http://www.cbpp.org/cms/?fa=vi...

worleyeoe
worleyeoe

You, sir are horribly incorrect. I'm attaching a very important URL that you should review:

http://taxfoundation.org/sites... 

The most important table is on page 8. Compare the top 1% versus the bottom 50%.

And more importantly, you completely dodged the main point of my post. Here, let me restate it for you.

The Dems are about to hold the American people hostage over raising taxes on the wealthy just like the Repubs did last year over the debt ceiling. Again, this is such unspeakable hypocrisy that it boggles the mind. America is $16,400,000,000,000 in debt, which is growing by $1,400,000,000,000 every year.

And to top it off, the Repubs offered a debt increase deal that was attached to closing tax loopholes that the Dems walked away from. And what did we get? Sequestration or mandatory cuts. Nice!!! Let's see how that turns out.

We need REAL TAX REFORM, not indiscriminate tax class-warfare just to fund PPACA.

worleyeoe
worleyeoe

Well at least in terms of the tax cuts, that's exactly what may happen. The Dems decried the Repubs for holding America hostage last year over the debt limit. OMG, and exactly what are the Dems trying to do over the Bush tax cuts? Hold America hostage. Either increase taxes on $250K and above or everyone becomes whack a mole. The hypocrisy is mind boggling. And what exactly does Obama plan to do with the ~$68B? Apply the money to ObamaCare funding, which is something NO ONE is talking about. By the time Obama finishes his 1st four year term, he will have added nearly $7,000,000,000,000 to the national debt. In eight years, Bush only added a little more than $4T.

Brooks Parsons Jr
Brooks Parsons Jr

Once again, an educated journalist who should know better feeds American ignorance with the improper use of the term "disposable income".  Contrary what many think, "disposable income" is not left over money one can spend on luxury.  "Disposable income" is money that must be disposed of on rent, utilities, insurance, mortgage, etc.  After all the essential bills have been paid, what's left over is "discretionary income" - income one can spend at one's discretion.  I don't correct people when I hear it in conversation, but when a respected magazine that is supposed to represent the best of American journalism, and by extension the best grammar and usage practices, I feel someone must speak up.

Ed
Ed like.author.displayName 1 Like

Dumb! Anyone, left or right, that blanketly, across the board, discounts another's hard work is a fool.

f_galton
f_galton

This is economic suicide.

worleyeoe
worleyeoe like.author.displayName 1 Like

In France, the U.S. or both?