Nicolas Sarkozy proposes debt-limiting constitution
As Europe desperately attempts to stave off a complete economic collapse precipitated by the fiscal irresponsibility of the Greek government -- possibly to be followed by the Italian, Spanish and Irish governments -- French President Nicolas Sarkozy has reiterated his commitment to limiting France's public debt.
Sarkozy is prepared to go so far as to amend France's constitution. The propsed amendment would require any French government that runs a deficit to commit to a five-year plan to balance the budget and pay off the debt.
"Without budgetary adjustment, our growth and our social model are threatened," Sarkozy explained. "That is what lies behind the decisions I have presented."
Not only is Sarkozy proposing to constitutionally mandate fiscal responsibility, he's also moved to set a strong example. His government will reduce France's deficit to 6% of its Gross Domestic Product in 2011, and to 4.6% in 2012.
"From 2011 onwards, we will rigidly strengthen spending controls, we will not allow ourselves any generalized rises in taxes, we will go at the pace of the economic recovery and will pursue reforms that will put growth back on its feet," Sarkozy announced. "It's not austerity, nor is it laxity, but responsibility."
Sarkozy is apparently prepared to be as tough as he needs to be with the kind of spending reductions necessary to make his fiscal reforms possible. Overall spending on health insurance will be limited to 3% of GDP in 2010. That's reduced from 3.3% in 2009.
Sarkozy is likely responding to pressure from German Chancellor Angela Merkel for other countries to adopt measures similar to Germany's balanced budget law.
The cuts will be difficult to make in a country with a traditionally high unemployment rate, but Sarkozy's promised constitutional commitment to lower taxes could, in time, lead to the kind of economic growth necessary to reduce that historical trend.
France's example will be one for the rest of Europe to follow -- if they can only get a grip of the Kanellos' of the militant left.