Bested by the Surrender Monkeys

As if the U.S. wasn’t embarrassed enough when Standard & Poor’s downgraded its national debt, Americans also had to deal with the fact that France — home of those cheese-eating surrender monkeys! — maintained its sterling AAA credit rating. Granted, Europe is a mess, but next to the sexcapades of Italy’s Silvio Berlusconi and the labyrinthine domestic politics of Greece, France does come off looking pretty good. Now comes yet another indication that, as the U.S. Congress reaffirms its Trust in God and otherwise fiddles as D.C. burns, the Old World clings to a shred of reason that has escaped politicians in America. Agence France- Presse reports that Prime Minister Francois Fillon “on Monday unveiled tens of billions of euros in budget cuts and tax hikes to balance its budget by 2016.”

Whatever one thinks of Europe’s experiment with austerity — and Paul Krugman, among others, doesn’t think much of it — it’s hard to fault France for putting forth a plan that hews more closely to President Obama’s “balanced approach” than anything suggested by the tax-phobic GOP or the useless Congressional super-committee. Leaders here and across the pond share the disturbing illusion that countries can cut their way to prosperity (what Krguman calls the “confidence fairy“), but in addition to cutting government spending, raising the retirement age, and increasing France’s value-added tax from 5.5 to 7.0 percent, “corporate taxes will be temporarily raised by 5.0 percent on companies with annual turnover of more than 250 million euros.” That’s in sharp contrast to the U.S., where Republicans instead want to lower the corporate tax rate, and where lip service is still paid to the discredited idea that tax cuts actually increase revenue. For all I know, that sort of magical thinking occurs on the other side of the pond as well, but the BBC reports that “Mr Fillon said the goal was to produce a further 65bn euros of savings by 2016 in order to reduce the public deficit to zero.” The merits of eliminating the budget deficit, especially at a time when many economists would advise deficit spending, are up for debate, but at least France isn’t trotting out the same old malarkey about high taxes constraining growth or pretending that “budget savings” are the key to liberating the small business owner.

What really strikes me is the relative ease with which the French government is able to institute such measures. Again, my knowledge of the French parliamentary system is pretty limited, and I am probably missing many subtleties, but it seems a very different environment from the gridlock in Washington, D.C. The last decade has seen the traditional benefits of divided government evaporate; instead of encouraging compromise or allowing one party to check the other’s dominance, the partisan split has prevented the passage of even basic legislation. When a Democratic president clashes with a Republican House and an empowered Republican minority in the Senate, disaster aid is thrust into limbo and the FAA shuts down. It’s no way to run a government, and it makes France’s parliamentary system look sort of appealing. President Obama is more likely to sprout wings and fly than convince Congress to raise the corporate tax rate, yet Fillon and Sarkozy are able to do so with the stroke of a pen and some grumbling from the left. That there is any grumbling at all is a sign of how liberal even the most conservative of European politicians remain. The Guardian’s Philip Marliere takes issue with France’s austerity plan, writing:

Let’s face it: if France has deep deficits, it is not because it is “living beyond its means” but rather because of the numerous tax cuts that successive governments have made over the past 20 years. Reduction in income tax has fundamentally benefited the richest . . . .

Even a plan that raises taxes on large corporations — a plan proposed at a news conference at which Fillion characterized executive pay as “frankly indecent” and called on business leaders to freeze their salaries — is criticized for imposing too heavy a burden on the poor. Marliere’s point, that an increase in the VAT falls disproportionately on people with lower incomes and “aims to make the poor pay for the banking system mess and goes to great lengths to protect the rich,” is well taken. Yet if a similar austerity plan were proposed in the U.S., it would be dead on arrival. The heads of Grover Norquist’s minions of Congress threaten to explode whenever tax increases are so much as mentioned. The plan Marliere condemns as too conservative for France would be too liberal for America.

Perhaps most telling is one French newspaper’s contention, quoted by Marliere, that the latest austerity measures aim to “send a strong signal to the credit rating agencies.” From where I sit in the U.S., what is amazing is that France was able to send a signal at all. When this country faced the specter of a similar downgrade in August, Congress could barely get its act together to raise the debt ceiling. The result? Standard & Poor’s now has less confidence in U.S. treasury bonds than in whatever debt instruments the French government is peddling these days. It’s quite an ego blow for the world’s largest economy.

For all its drawbacks, I wouldn’t trade the three-branched government established by our founders for a French-style parliamentary system. The government outlined in the Constitution has served the U.S. pretty well for the past 200 years. But there is nevertheless something sadly wistful in the observation that France may now be a more politically put-together place than America.