My response to Sarkozy’s RFP

Yesterday, Nicolas Sarkozy made an RFP (request for proposals) on how to reduce the French budgetary deficit and the French public debt.

“Ces messages volontairement apaisants sur les déficits, distillés lundi au moment où les Français s’inquiètent pour l’endettement du pays, n’empêchent pas Nicolas Sarkozy de promettre, pour l’an prochain, une vraie réflexion sur la situation des finances publiques. De 3,4 % en 2008, le déficit public devrait en effet passer à 8,5 % l’an prochain. Or, la France s’est engagée auprès de Bruxelles à le ramener sous la barre des 3 % en 2013. Nicolas Sarkozy a confirmé lundi la tenue d’une conférence nationale sur les déficits, qui aura pour objectif de «débattre de propositions pour sortir de la spirale des déficits et de l’endettement». Priorité affichée : la maîtrise des dépenses publiques. Excluant une nouvelle fois tout relèvement des impôts, Nicolas Sarkozy a indiqué que les intérêts du grand emprunt seraient «immédiatement gagés» par des économies d’un montant équivalent dans les dépenses de l’État.”

My proposals are:

A) On the French budgetary deficit:

1) The French government should abolish the following expenditures (the resulting savings are stated in the right column and denominated in € millions):

Foreign aid € 2 264
Subsidies for Mayotte, Saint-Pierre-et-Miquelon and Wallis and Futuna € 24 750
Reserve funds spent on castles € 70
Fishermen € 310
The Elysee Palace’s excess budget (68 of 100 mn EUR PA) € 68
Half of administration spending € 1 249
Ecological vehicles € 1 000
The Elysee Palace’s spending increase € 3
EU contributions € 18 700
Renewable EPs € 700
Subsidies for the film industry € 500
Half of pension spending € 2 490,50
Protestant pastors  
Excess ministerial officials  
Ministerial cabinets (which are not needed)  
Excessive salaries of ministerial officials  
Wine spending by the Elysee Palace  
Half of party spending by the Elysee Palace € 0,50
Presidential salary increase (2008) € 0,14
An excessive number of ministries*  
New LGV lines and TGV trains  
 Total excluding protestant pastors € 64 255,14 

*The forementioned proposal to abolish exquisite ministries means that several duplicative or connected ministries should be merged to reduce their budgets and the number of their officials. This means that:

1) The Ministry of Environment (MEEDDAT) should be merged with the Ministry of Countryside and Territorial Planning (Ministere de lEspace rural et Aménagement du territoire) and the Ministry of Food, Agriculture and Fishing;

2) The Ministry of Finances (MINEFI) should be merged with the Ministry of the Budget;

3) The Ministry of Higher Education should be merged with the Ministry of Culture.

Thus, the number of ministries would be reduced from 15 to 11.

The total resulting savings are unknown. The total known savings amount to €64.255 bn, which is almost enough to balance the 2009 budget of the French government (which includes a €70 bn deficit). The other savings would certainly be sufficient to balance the budget. Thus, the French government would stop growing the public debt. Additionally, the French government should abolish all special retirement schemes, raise the retirement age from 60 to 67,  reduce the number of civil servants to the 1973 level, and abolish cantons and nonmunicipal arrondissements. The Elysee Palace should reduce the number of its employees by 50% from the Sarkozy-planned level, to ca. 500 employees. To stimulate the economy, the French government should institute the Contrat de Premiere Embauche, abolish 1st May as a state holiday, and abolish the 35-hour-limit on how long employees can work, so that the economy will rebound and produce additional revenue.

These savings would not eliminate the public deficit, however. The public deficit is a broader term than the budgetary deficit of the French government and includes the budgetary deficits of entitlement programs, local governments, and state-owned corporations. All these organizations must be restructured and their budgets must be balanced. The number of regions should be reduced from 26 to 23 by merging Basse Normandie with Haute Normandie and Alsace with Lorraine, as well as merging Bourgogne with Franche-Comte.

B) The public debt

France’s current public debt is €1489 bn. It could be reduced by 10% immediately if the French government privatized all the corporations it owns and lists on the Parisian Bourse (the revenue: €102 bn in 2010 euros) and sold all the palaces it owns and doesn’t classify as not-for-sale (the revenue: €38 bn in 2006 euros).

It could earn additional money by selling:

1) The state-owned corporations that are not listed on the Parisian Bourse (SNCF, RFF, France Televisions, La Poste, and its shares of the Dexia bank);

2) French lignite reserves (the revenue: $196.68 bn);

3) French uranium ore reserves;

4) State forests;

5) Palaces classified as not-for-sale (e.g. the Domaine de Marly, the Domaine de Souzy-la-Briche, the Rambouillet Palace, Fort De Bregancon, Hotel Beauvau, and Palais d’Alma);

6) 30 of 61 Presidential limousines;

7) All 7 Presidential scooters;

8) Exquisite train stations (e.g. the Clichy-Levallois train station and the Paris-Bercy train station); and

9) The rails from unprofitable railroad lines (which should be closed);

10) All shares owned by the Caisse Des Depots.

The fact that Sarkozy (the man who, as Budget Minister, presided over record budgetary deficits (each of which exceeded 5% of GDP)) cannot balance the budget or reduce France’s public debt (which has increased by 20% since he was installed as President) did not surprise me. He’s an incompetent president. He should listen to me.

The italic text was added to this post after 16th December 2009.


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