A-Infos (en) France, OCL CA #351 - An Austerity Budget (ca, de, fr, it, pt, tr)[machine translation]

The state budget represents approximately EUR1.5 trillion, if we combine 
the state budget and the social security budget (they are neither the 
same 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
_________________________________________
A - I N F O S  N E W S  S E R V I C E
By, For, and About Anarchists
Send news reports to A-infos-en mailing list
A-infos-en@ainfos.ca
Subscribe/Unsubscribe https://ainfos.ca/mailman/listinfo/a-infos-en
Archive: http://ainfos.ca/en