Midi Libre deciphers the legislative programs: the face to face of the experts on the question of purchasing power

Marc Touati and Thomas Guénolé, two experts with different visions analyze the measures concerning purchasing power

Marc Touati, liberal economist, lecturer and essayist on one side; Thomas Guénolé, political scientist committed to the left, on the other. The proposals concerning purchasing power of the main candidates are the subject of a virulent debate.

Marc Touati: “Reducing the deficit is good for purchasing power”

Marc Touati believes that taxes should not be touched. MAXPPP – Delphine Goldsztejn

Saving purchasing power requires making very costly promises…

The Popular Front program will generate 280 billion euros in additional spending and, in the best case scenario, they will recover 40 billion euros in tax revenue, or create an additional annual deficit of 240 billion euros. rsquo;euros. We must remember that this year we are starting from a deficit of around 160 billion euros.

If the Popular Front carries out its policy we would have a deficit of 400 billion euros, it would be nightmarish with unimaginable consequences: mechanically, interest rates will increase, the burden of the public debt will explode, it will disrupt economic activity, therefore no more recession, less tax revenue…

Other programs are also expensive ?

The cost of the Renaissance program is 20 billion euros, that of the National Rally around 60 billion. The Republicans, it’s not clear, but around 12 to 15 billion. No program announces the reduction in the public deficit. In any case, this will increase the public debt…

Why is it important to reduce the public deficit ?

For our children, we leave a current public debt of 3,100 billion euros. Some say we don't care, but it's our children who will pay. But above all, today we pay 50 billion euros in debt interest charges each year. This money does not go to hospitals, to national education… hellip; Our policy is completely at odds with what needs to be done.

What are the consequences of increasing interest rates ?

Credits will be more expensive, real estate will collapse, massive unemployment following the recession will occur. Reducing deficits is not to please Brussels, it is first and foremost for the purchasing power of the French. What’s crazy is that no party can tell the French this truth. We were made to believe during Covid that the debt cost nothing, this is not true, today we have to pay.

Also read: "The issue of purchasing power is the one that will mainly decide voters" : Midi Libre deciphers the programs for the 2024 legislative elections

The Popular Front says it will renegotiate the debt ?

It is not as simple as that or France would have to banish itself from the Nations, that we would leave the Eurozone, but that would be an even more serious disaster scenario. We cannot cancel it. We need to look at what happened in Greece, which has a GDP 20% lower than in 2008.

Should we expect tax increases ?

Especially not because we are already number 1 in the world. We are at a historic peak. What I propose is to lower taxes to give purchasing power to households and reduce public spending to be credible. We've been doing the opposite for 50 years and we have to pay the bill.

The worst thing is that we increased the public deficit and this did not prevent a major political crisis as we are currently experiencing. We are playing a very dangerous game of having masked reality and I blame President Macron…hellip;

Will (and can the rich) flee the country if the new Popular Front is elected ?

It all depends on what you call rich. Most of the rich are no longer located in France and the few who remain will leave and as usual, those who will pay for expensive programs will be the middle class.

If there is no social and societal guarantee in the country, it's not just the rich who will leave, it will also be the upper middle class, companies…

Be careful, this does not mean that we should not distribute wealth better, distribute spending better, we need a big fiscal evening and rethink all of that. We must modernize France and save the savings of the French and save the economy in the same scenario we have launched France which was on the edge of the abyss into the precipice. 

Thomas Guénolé: "No program is cataclysmic"

For Thomas Guénolé, the French state is not bankrupt. MAXPPP – Christophe Morin

Most liberal economists criticize the NFP program…

Economists are divided into different schools of thought which determine their opinion on a party's political program. This ranges from the neoclassical economist very oriented towards budgetary rigor, lower taxes, competitiveness policy… to other schools of thought such as Esther Duflot, Nobel Prize winner in economics who finds that the economic program of the new Popular Front is very good. Just like Thomas Piquetti or Thomas Porcher.

There are imponderables, revenues to be found to finance projects ?

Listen to economists yes, consider them as sacred cows especially not. We need to compare points of view. Avoid considering that an opinion is gospel. I understand those who find the NFP's proposals unreasonable, but to say that it is impossible and that it will send us into the wall is objectively false.

Countries in Europe have a higher minimum wage than France and have not yet gone bankrupt. France under De Gaulle with Giscard as Minister of Economy blocked prices. In terms of economic policy, no program is truly formidable, none is totally cataclysmic. There are trade-offs, priority orientations.

The left wants to make the rich pay ? Is this possible ?

Yes if the source of enrichment occurs on French territory. If you cannot do this, it is because your legislation does not allow it and in this case you just need to review it.

What matters is not that the person is physically present in the territory but that their assets and their sources of profit are there. The next question is to know at what stage you tax. In my opinion, the closer you are to the source the better.

Is a big tax evening necessary ?

Yes, we have the work of Piquetti and Saez who come to the conclusion that the French tax system is fair up to the upper middle classes because it is progressive. And that it becomes unfair the closer we get to the ultra-rich. It would be reasonable for the system to be fair for all brackets. And this is a political choice of the Nation.

When someone tells you that it’s unthinkable, it’s just an opinion. There is no reason to close the field of possibilities and have a country that refuses to tax the richest because we believe in the trickle-down theory. But between communist theory and fair taxation there is a lot of gap…

Macron made a reform, and it's not stupid, by taking more from the capital of the richest and massively reducing the taxation of invested capital, which made it possible to see the arrival of Foreign investments. Afterwards, for voters, it is necessary to understand that the fair tax is always the one paid by the neighbor.

Can we lose interest in the public debt ?

We must clearly distinguish the electoral program from the government program. It is rare for an elected government to follow through on its promises when they are not funded. Today we do not have a problem of the amount of debt but that of a potential runaway interest rate, which is dangerous.

But the French state is not bankrupt or in default of payment. We have too high a volume of public spending. There is a balance to be found between three variables: increasing revenue (increasing taxes, canceling tax loopholes, taxing the richest…); reduce public spending.

And the third variable that we don't think about is innovation which allows us to gain productivity as with the appearance of the internet it 20 years ago or a new market created on which the whole world rushes like video games.

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