Last weekend, the people of France took a sharp turn to the left, and the rest of Europe may be on the brink of rebuking its recent tack toward fiscal responsibility. With Sunday’s election of French Socialist leader Francois Hollande, France has leapt backward toward the policies that have helped sink the continent in a sovereign debt crisis. Disturbingly, the big government platform Hollande campaigned on is all too familiar to the American people, and if the United States is not careful, it could suffer the same fate as its European allies.
Hollande sailed to victory by appealing to an electorate dissatisfied with having to face necessary cutbacks, proclaiming that he is “proud to have been capable of giving people hope again.” That brand of hope called for a change from President Nicolas Sarkozy’s relatively conservative policies — in his first term, Sarkozy worked to reduce the number of public sector employees, eliminate the 35-hour work week, reform the university system and cut taxes.
Hollande, by contrast, promised to raise taxes on big corporations and wealthy individuals, implement a top rate tax of 75 percent, increase public spending by 20 billion euros, raise the minimum wage, hire 60,000 more teachers, and lower the retirement age from 62 to 60 for some workers. He says he is “president of the youth of France” and believes that government stimulus, not cutting spending, is the right way to achieve economic growth.
If you’ve been a student of President Obama’s presidency, much of this should sound familiar. President Obama came into office on a promise of hope and change, appealed to young Americans and promised renewed prosperity. His solution was more government spending to the tune of a near-trillion-dollar stimulus, a government-run health care plan, a bailout of government unions, and a call for higher taxes on wealthy Americans and corporations.
The difference between the United States and France is that the latter is much further down the path of a social welfare state. Hollande’s proposals are not a new direction, they’re merely a return to form. France is notoriously emblematic of the European way of life. As Daniel Hannan, a member of the European Parliament, describes in Why America Must Not Follow Europe, “Long vacations, paternity leave, a higher minimum wage, a short working week: What’s not to like? The trouble is that eventually the money runs out.”
In France, the money has indeed run out. The country’s public debt now stands at more than 80 percent of GDP, government spending is at 55 percent of GDP, the tax burden is equivalent to 42 percent of total domestic income, and it hasn’t balanced its budget since 1974.
The United States, unfortunately, is headed in much the same direction. As Heritage’s Federal Budget in Pictures shows, U.S. debt stood at 67 percent of GDP in 2011, but unless the United States controls its spending, its debt will surpass that of France, Italy and even Greece, hitting 187 percent of GDP by 2035. Spending on Medicare, Medicaid, the Obamacare subsidies, and Social Security will devour all revenues by 2045, and taxes are soaring past their highest levels ever. And as for the budget, the U.S. Senate hasn’t passed one in three years — let alone brought it to balance.
The world has seen what lies at the end of this road to perdition. Though France is a prime example of a country that is spending itself into crisis, Greece has already gone beyond that tipping point. The country’s debt has exploded, 21.8 percent of its people are unemployed, and among the youth, more are out of work than have jobs. In the face of belt-tightening measures that came as a condition of an EU/IMF bailout — which include public sector pay cuts and pension reductions — the country turned to open political revolt with violent riots in the streets. In elections this week, Greek voters rejected the political parties that support fiscal responsibility and instead turned toward the Radical Left.
If there is any bright spot in Europe’s far left turn, it came Friday in the re-election of Boris Johnson, the Conservative mayor of London. Johnson campaigned for tax cuts and eliminating public sector waste in the hopes of spurring job growth. But alas, France’s return to the deeply entrenched socialist policies could signal an end to the fiscally responsible measures that German Chancellor Angela Merkel has championed, leading to economic disaster.
Though Europe is an ocean away, the policies that are sinking the continent could have the same impact in the United States if replicated here. Endless spending has dire consequences, and if America is not careful, it could follow Europe’s path to economic ruin.
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