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Economy

ORIGINAL FRENCH ARTICLE: Le « poison » du déficit de la Sécu…

by Yves Housson

The “Poisonous” Social Security Budget Deficit

Translated Tuesday 13 September 2011, by Gene Zbikowski and reviewed by Bill Scoble

The shortfall in Social Security system income caused by unemployment is minimized by the French Cour des comptes (UK equivalent: the National Audit Office, US equivalent: the General Accounting Office).

The September 8 publication of the annual report of the Cour des comptes occasioned a dramatic presentation of the situation of the French Social Security accounts. The total deficit for the year is a record 29.8 billion euros, having tripled in two years. Simultaneously, the cumulative debt of the Social Security system has continued to balloon and stands at 136.2 billion euros. Didier Migaud, the president of the Cour des comptes, described the deficit and debt as an “anomaly,” saying that “the long-term existence of our system of social protection” is threatened. We are supposedly hooked on “debt dependency,” which “has in reality become poison for the Social Security system,” and the top priority is said to be a “treatment for the addiction.” Hence the Cour des comptes recommends “setting a tight calendar to return to a balanced budget.” It recommends, above all, “intensified control of social expenditures, notably health insurance.” The report targets expenses for medicines and for hospitals – in particular teaching hospitals – and the conditions for 100% reimbursement of health care costs.

Although the Cour des comptes is described as an independent institution, its diagnosis is controversial. Didier Migaud emphasizes the “structural nature” of the deficit, describing it as “a French specificity.” (In other words, the Social Security system spends too much money, or spends it poorly.) “Less than half of the deficit of the general insurance plan” can be blamed on the economic crisis, according to the Cour des comptes, which in fact minimizes the key question of income, even though it notes that a margin of maneuver can be obtained by acting on the “social tax loopholes.” Didier Migaud points out that the Social Security system has run a deficit “just about every year for the past thirty years.” True enough … ever since the development of mass unemployment in France. Let’s not forget that the creation of 100,000 jobs represents about 1.5 billion euros in annual income for the Social Security system. And the system has also run a deficit ever since downward pressure on wages (including the portion of wages earmarked for social security contributions) has reduced labor’s share in the wealth produced annually in France by ten percent .


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