The state budget represents approximately EUR1.5 trillion, if we combine
the state budget and the social security budget (they are neither thesame fund nor the same funding). GDP in 2023 was EUR2.8 trillion. The
budget, including social security, therefore represents a little over
half of France's wealth. It inevitably has significant economic
consequences, regardless of the decisions made. Why are we talking about
an austerity budget? Not only do public spending and revenues weigh
heavily on the economy, but they also depend on it. Indeed, Parliament
votes (if the government is willing to let it vote, which, with the
intensive use of Article 49-3, is happening less and less frequently) on
tax rates. We can only guess at what these rates will bring in, as it
will depend on economic developments. Regarding Social Security, it's
the same thing. The social security contribution rate is fixed, but if
wages increase, so do revenues, and if unemployment increases or wages
decrease, revenues will decrease. Therefore, the budget is not neutral
with respect to economic developments, and at the same time, it is
economic developments that will determine revenues and part of the
expenditures.
Why do we talk about an austerity budget? If government spending
increases faster than its revenue, it means that it injects more money
into the economy than it takes in. It therefore promotes growth. If
government coffers are in surplus (which fortunately almost never
happens), it means that the government has taken in more money than it
has spent, and therefore has slowed growth, or in the current situation,
precipitated the crisis. From the moment the stated priority is deficit
reduction, regardless of the method used, we can talk about an austerity
budget, meaning that growth will inevitably take a hit, or rather,
currently, a recession is looming. Obviously, we can lose on both
counts. If the recession induced by budgetary austerity is too severe,
revenue will be lower than expected and spending higher than expected,
and therefore we will have both a recession and a worsening deficit.
This is a near certainty for the times to come.
Moreover, the very structure of revenues is not economically neutral.
Low-income households spend almost all of their income. The richest
households save or invest the majority. However, normally, it is
consumption that supports growth. If we want to revive an economy, a
priori the most effective would be to help low-income households,
provided that the economy is not too globalized (1). All tax policies in
recent decades have consisted of reducing taxes for the richest. Taxes
paid by businesses have also been reduced. The idea being that this
would encourage investment, which again promotes growth. Except that
large companies have clearly preferred to remunerate their shareholders,
who are already sufficiently wealthy, rather than invest in an uncertain
future. So the tax breaks have not translated into growth. Yet, it is
these tax gifts that are one of the main causes of the worsening deficit.
The structure of spending also plays a role. Clearly, the two current
priorities are aid to large corporations and savings for the poor. Since
aid to businesses is not conditional on anything, unlike social
assistance, businesses do what they want with it, for example, paying
owners. So here again, the direction of state spending is not conducive
to ending the crisis. Not to mention the financing of major harmful
projects, which also seems to be a priority (using France Relance to
finance nuclear power, for example). If we cut spending, it obviously
involves restricting public services. However, these services are not
limited to LBD shots fired by police officers and drones used for
external operations. Restricting public services means that essential
services such as health, education, mobility, etc., are gradually
ceasing to be free, at least for a minimum level of quality. Reducing
state spending therefore amounts to reducing the purchasing power of the
majority.
We were clearly told that we couldn't raise taxes, it was confiscatory
and bad for growth (really?) and that we had to limit spending and the
French had to make an effort. So, yes, it's an austerity budget. While
the forecast growth is stagnant, we're planning cost-cutting measures
that will put people out of work, that will reduce the outlets in a
certain number of markets, so the government is doing everything to
worsen the crisis. Obviously, we wonder why. Greed (as Marx said,
capitalists are ready to sell the rope to hang themselves), or would
some people have an interest in the crisis?
This famous deficit
The public deficit was 170 billion euros in 2024, or 5.8% of GDP. This
is as if someone earning 2,000 euros per month found themselves with an
overdraft of 112 euros at the end of each month. In fact, this deficit
would be greater without Social Security, which had a surplus of more
than a billion (a surplus in free fall since 2023). So, of these 171
billion euros in reality, the deficit of the central government (because
there are also local authorities) is 154 billion euros.
ATTAC estimates tax gifts to large companies and wealthy households
(gradual reduction of the corporate tax rate, production taxes,
implementation of the single flat-rate levy, replacement of the ISF with
a tax on real estate wealth (IFI)...) at 207 billion euros over the
period 2018/2023 (2). That's more than 41 billion a year of recoverable
public deficit... How much is the government looking for already?
In addition, at the same time, public aid to businesses has increased:
subsidies, loans, tax exemptions, social exemptions, tax credits, etc.
For example, the France 2030 plan (initiated in 2021) plans to mobilize
54 billion euros, the France Relance plan (it is not the same, it dates
from 2020) mobilized 100. The government itself recognizes that the
amount of this aid is very difficult to estimate. Indeed, they are not
all put in the same budget chapter, so everything must be taken again to
see which measure is used for what for what amount. A review of
expenditure by the General Inspectorate of Finance (IGF) estimates the
amount of aid paid in 2022 by the State and Social Security at 88
billion euros, through approximately 380 schemes. The amount of aid paid
by local public administrations is estimated at 7 billion euros in 2021
(3). That already makes 95 billion euros over one year... All this
without counting European aid. A note from the Court of Auditors (July
2023) estimates the cost of state aid to businesses to deal with the
crises of 2020 and 2022 at 92.4 billion euros. The document brings the
total financial support to 260.4 billion euros. We can see that we are
navigating in total uncertainty, but that the sums are downright very large.
Obviously, the effectiveness of all this is very rarely evaluated. And
it's not with the reduction in operating budgets of the services that
could be responsible for this evaluation that things are going to
improve. "The French administrative organization does not provide for
ministerial or interministerial bodies specifically responsible for
monitoring and controlling state aid to businesses (...). The French
system for evaluating public aid is therefore disparate and devoid of
any monitoring and control body." I couldn't say it better than this
parliamentary report published in... 1999! So it's not surprising that
there are forced layoffs after receiving aid, possibly for job creation.
It's perfectly legal.
The 2025 budget
The budget claims to reduce the deficit by 17.3 billion compared to
2024. Be careful, for 2024, this is not the projected deficit but the
actual deficit, which we remember was 40 billion higher than the
projected deficit; for 2025, this is a projected deficit that will
certainly be largely exceeded. Indeed, if the economic consequences of
this austerity budget, all in a global context that is uncertain to say
the least, turn out to be more dramatic than officially predicted by the
government (which claims it will straighten out France), the projected
revenues will collapse.
How does it intend to do this? A contribution will still be requested
from the largest companies (those with a turnover of more than one
billion) as well as a small effort from the richest (those earning more
than EUR20,000/month).
As we keep being told, in 2023, the top two items of public spending
were social protection spending (41.0% of public spending) and health
spending (15.6%). So, it seems logical to rein in spending on that side,
doesn't it? Well, yeah, but it's still a bit odd to chase spending in
the only fund that's in surplus (as we saw above)... Unless the idea was
to privatize health and social protection, or to attack an important
element of the standard of living of the exploited. This speech sets the
general tone of this budget. The pseudo-balance of this budget is to say
that we are asking for a contribution from the richest (but very small
and temporary) and that in exchange the less wealthy, whose social
security system is currently financially balanced, must tighten their
belts so that the others don't pay too much tax. And down with the
exploited, without any concern for consistency. For example, RSA
recipients will have to register as unemployed, but we don't want to
increase the budget of France Travail, which will have millions more
people to "welcome." So, the first feature of this budget is social
destruction. The more we assist the rich, the more the discourse must
convince us that those on benefits are the poor who cost us an arm and a
leg.
Then, the State tried to attack Local Authorities. The housing tax and
the business tax were abolished a few years ago, yet they were their
main source of income, along with the property tax. The State was
supposed to compensate, which is an effective way to limit the autonomy
of municipalities and departments. Your projects will be funded if they
have the approval of the Prefect. Now he finds it too expensive.
Finally, a lot of ministries are being cut with an axe: culture,
ecology, national education, health... The defense and interior budgets
are increasing, as is the justice budget, very slightly. Given the
foreseeable social consequences of this budget, this is understandable.
So in summary, firstly, this budget worsens the destruction of public
services. We have a lot of criticism to make of the public service,
which is first and foremost a repressive and normalizing apparatus, but
we must understand that what is being destroyed now is the product of
social conquests, and that this destruction represents a real amputation
of purchasing power and a worrying development for the future. Schooling
costs the State on average more than EUR8,000 per year per student. If,
to lower taxes, we transfer the cost to parents, how many will be able
to go beyond compulsory schooling? If we privatize while subsidizing the
private sector, what will be the ideological orientation of the
programs? Will it improve? The government proudly announces an increase
in the education budget, it just forgets to specify that it is lower
than inflation...
Secondly, when it claims to save on bureaucracy, it naturally does not
eliminate private jets, petits fours, or lavish receptions. On the other
hand, it closes or regroups services which are an obstacle (admittedly
timid) to the freedom to undertake through their action on ecology,
social safety nets, studies on the ecological and social impacts of
projects requiring subsidies...
Finally, shareholders' money is only touched cosmetically, just enough
to justify the vote of the PS, which in any case initiated this policy.
What future is taking shape?
It's always risky to embark on economic forecasts. But here, there's
still relatively little risk of error in predicting at least a
recession, layoffs, all with increasingly leaky social safety nets.
France has suffered less socially from COVID than other countries thanks
to its social protection. This is what the government is tackling.
One might dream that the crisis would at least slow the destruction of
the planet. The government thought of this before us, and is trying to
unravel the few safety nets in this area. And it has the police on hand
just in case. So not only will we be asked to tighten our belts to
remedy a deficit that will suddenly worsen, but we should also succeed
in having a decrease in growth while accelerating the destruction of the
planet.
Finally, of course, all of this is only possible with a worsening of
authoritarianism. Whether with purely military means, whose budgets are
increasing. Whether with ideological means, patriotism in these times of
the sound of boots, and racism and xenophobia, it always has a better
chance of working in times of crisis, and failing that, it monopolizes
the political scene.
We can only oppose it with our solidarity. Whether we are for or against
degrowth, it will be there for a part of the population. Perhaps this
could be the opportunity to prefigure a daily organization resistant to
this dark future. The defense of social protection requires solidarity
with immigration, firstly to remind us that it is a social conquest and
not a right linked to nationality, and secondly because immigration
contributes significantly to the balance of the system. And of course,
the fight against layoffs cannot allow itself to be weakened by racist
divisions.
Sylvie
Unless otherwise indicated, figures are taken from the INSEE website.
Notes
1. In this case, and this is what happened after 1981, the improvement
in purchasing power can result in an increase in imports rather than a
recovery.
2. The debt of fiscal injustice, Report 03/25, ATTAC and CADTM,
available free of charge on the internet
3. Government sources. Public aid to businesses: an inventory, La
documentation française, September 17, 2024, available free of charge on
the internet
http://oclibertaire.lautre.net/spip.php?article4476
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