Reaching the Limit

“Between inflation [and] retirement . . . the limit has already been reached,” said Nicolas, a nuclear technician who’d come to protest in Paris last month with around twenty of his coworkers in the Union Syndicale Solidaires (SUD). He isn’t alone in thinking this. From outside the country, Macron’s position looks shaky and diminished, with warnings from even the conservative business press that this situation represents the end of his domestic agenda, or even the obsolete nature of the Fifth Republic’s presidentialist model. But Macron has no intention of stopping now. France’s pavements may groan with millions of protesters, but he’s already set his eyes on the next prize.

On March 13, the economy minister Bruno Le Maire told radio network Franceinfo that the government was making progress on its budget proposal for 2024, according to the business paper Les Echos.  “[It will] represent several billion euros in savings,” Le Maire said.

The legislative package has three targets in its crosshairs: social spending, so-called “brown expenses,” which consist of fossil fuel–related expenditures, and aid to businesses.

The cuts represent an acceleration of an austerity campaign that Macron has been pursuing since he was elected. At a rally against the cost of living last November, France Insoumise MP Marianne Maximi, who represents a district in Puy-de-Dôme, in central France, had already denounced the 2023 budget as “a large return of austerity in our country.”

“The result,” Maximi said, “is €11 billion in budget cuts. . . . It’s the second-most austerian budget in the past two decades.”

What this meant concretely, Maximi explained, was a major negative impact on local services: school cafeterias, libraries, public pools, and heating in schools.

“Children are cold, and they will continue to be,” she said.

France Insoumise wouldn’t vote for the 2023 budget, Maximi finished, because “austerity kills.”

“They’re going to continue closing beds in hospitals, in the middle of a crisis!”

Already under the conservative president Nicolas Sarkozy, from 2007 to 2012, some 37,000 hospital beds were cut. His successor, François Hollande, cut a further 10,000. Then in Macron’s first five-year term starting in 2017, despite the coronavirus pandemic and a lockdown justified by a critical lack of hospital beds, the government cut a further 21,000 of them.

Macron’s austerity policies are, indeed, not so new. France Insoumise leader Jean-Luc Mélenchon called his 2017 budget one that fit well for the rich, and wrote that his 2020 budget “looted the state.” But during the exceptional economic crisis provoked the pandemic, some of Macron’s cost-cutting ambitions were curtailed by necessity to prevent a full-scale collapse of the economy. Macron’s agenda sought to contain the crisis by implementing a fiscal policy that was widely, if deceptively, known as “whatever it costs.”

Today, all those temporary half-measures — like anti-inflationary checks and grants to stabilize the cost of petrol and fuel — are on the chopping block. Last fall, Gabriel Attal, the minister of public accounts, announced that the era was over. “We’ve passed from ‘whatever it costs’ to ‘how much it costs,’” he said in an interview with Le Parisien.

Corporate Welfare, Social Cuts

Since January, Le Maire has been reviewing the government’s spending. Now the contours of the new budget are taking shape. This spring, there’s a week of meetings planned between ministers to work together on reducing public spending.

But an advisor to France Insoumise told Jacobin that in reality, the lion’s share of Macron’s reductions to public spending will come at the expense of social programs. They explained how any talk of reducing “brown expenses” is an illusion — and cutting aid to businesses isn’t likely either.

In theory, reducing these “brown expenses” would take the form of closing a series of tax loopholes. But a government working group, composed primarily of pro-Macron MPs, has already been put together by the Finance Ministry to work on a piece of legislation for green industry. Their bill should be presented in the next few weeks. That group, the France Insoumise advisor said, determined that it would be “counterproductive and premature” to go after tax credits on brown expenses. It’s unlikely, the France Insoumise advisor concluded, that cuts in spending will come from this.

As for the notion that the government would cut spending on aid to businesses, the advisor was equally skeptical. Since Macron became president, they said, aid to businesses had exploded — indeed, it’s risen by €80 billion since 2017. The trend was present even before the pandemic, between 2017 and 2019, when expenditures rose by €30 billion.

Éric Berr, an associate professor at the University of Bordeaux, echoed this analysis. Berr, who’s also the codirector of the Department of Economics at the Institut La Boétie — France Insoumise’s think tank — told me that Le Maire’s latest announcements follow the same logic of the government’s stability program. That’s a document that the government sends to Parliament and the European Commission every year detailing their plan to reduce the deficit.

“Their objective is to reduce the public deficit . . . [to below] 3 percent of GDP by 2027,” Berr explained. That’s the deficit goal that the EU sets for its member states.

At the same time, the government’s program for reducing this deficit rests solely on increasing GDP growth, with the option of raising taxes excluded completely.

Quite the contrary, Berr said — their goal is to cut taxes. “So if they want to reduce the public deficit, and at the same time reduce taxes, there will have to be a high impact on social spending.”

The rule on keeping the deficit under 3 percent of GDP “has no scientific reality . . . no economic foundation,” Berr explained. “The figure was invented by counselors of François Mitterrand in the beginning of the ’80s,” Berr said.

Mitterrand was elected in 1981, with an ambitious social program (including reducing the retirement age from sixty-five to sixty) that would no doubt increase the deficit. So he asked his counselors to give him a rule which he could use to explain away ministers who came to him asking for increased spending. The deficit was already around 2 percent of GDP, so they decided on 3 percent, says Berr. When the Maastricht Treaty founding the European Union was signed in 1992, Mitterrand’s rule became an economic norm in the bloc.

Inflated Promises

The government’s plan to harmonize its budget with this norm, then, is based entirely on promoting growth.

But, the France Insoumise advisor told me, “[their] hypothesis of growth [is] inflated.” In 2023, the government predicts growth to be 1 percent of GDP, a figure the advisor says the government knows is wrong — and they’ve already revised it down once from 1.3 percent. The Bank of France’s estimate is that growth will reach just 0.6 percent this year.

Missing these goals will mean that the deficit will continue to increase — unless, that is, there are significant cuts to spending. The result? “An unprecedented austerity.” Without precedent, and without end. With no new growth in sight, and no prospect of new taxes, to decrease the deficit will require instead that “each year austerity will have to be more difficult than the last.”

That will come as good news to the International Monetary Fund and the Council of Europe, who, Berr explains, have celebrated the government’s latest move to raise the retirement age. For these liberal economic supranational organizations, its so-called reforms are “a sign of good faith . . . that France is a ‘good student,’ which will reduce the deficit.”

“It’s nothing new though,” Berr said.  “Just the continuation of what they’ve been saying since the beginning.”

Berr thinks that Le Maire’s announcement is meant to reassure finance that, in the face of the current social movements, France’s government will “stay the course.”

That course, he said, means “lowering taxes, reducing the public deficit . . . [and] reducing public spending.”

Part of sending that signal, Berr says, could be a whole raft of laws on the way, including one being prepared by the minister of labor to change the employment market, or another targeting unemployment insurance.

It’s all part of a long-running ideological project by Macron and the EU “to restrain state action,” Berr says.

In a 2019 interview with the investigative journalist Marc Endeweld in Le Vent Se Lève, Endeweld explained how Macron’s long-running goal has been “to liquidate the postwar compromise, allegedly to reconstruct something [else].”

In reality, though, Endeweld found that Macron has no alternative.

Instead, we’ll continue to hear Macron talk about “‘adapting’ . . . in the name of Europe!  And in the name of ‘efficiency!’”

That means three things are coming: cuts, cuts, and more cuts.