The French equivalent to our Social Security is one part of their system for handling health care, workers compensation and other social benefits. A detailed description of that system can be found here. It operates on a pay as you go basis, which requires budgeting for pensions as well as health care and other parts of their system. They face the same demographic concerns for their program that we face in financing Social Security and Medicare: the baby boom generation is coming, and pensions and health care costs will rise. Le Monde reports that Eric Woerth, the Minister of Labor, Solidarity and Civil Service in the center-right Sarkozy government, has released a report setting out the government’s plans to deal with this problem going forward. (in French, run it through Google Translate, or Babelfish.
The report begins by explaining the role of the pension system and the entire social protection program of which it is a part. It then lays out the principles which will guide the government’s response to the problem, thanks to Google Translate:
A society in which selfishness between generations has no place.
A society in which the French regain confidence in their retirement system.
A society in which the effort is distributed equitably.
A society in which age is redesigned for the seniors find their place in the world of work.
I think that last one means that age should not be the controlling factor in continuing to work. This explanation makes it clear that the government understands the role of pensions in the life of the French people, and intends to honor that commitment.
Solidarity, including intergenerational solidarity, is a critical component of the French political system. This idea is completely foreign in the US today. In the political war over health care, it was obvious that the Obama and Romney plans both depended on bringing young people into the health care insurance scheme, even though almost every individual young person would calculate the odds of needing insurance to be very low. Both systems require today’s young to subsidize the older people who do need health care. No one ever once pointed out that this is an entirely reasonable thing to do, if it means that those young people can count on the availability of the same care in the future. In fact, conservatives reject the concept of intergenerational solidarity. They insist that the young cannot count on anything from the government in the future, and have to figure out how to go it alone.
The French government proposes to deal with the coming demographic problem with two basic changes. First, they want to increase the age for eligibility. Currently the age is 60, assuming you have the requisite work history, with early reduced retirement even earlier. The justification for this increase is, in part, that many people have trouble finding a job in their 20s. The government thinks that people should work 40 or more years to achieve the full pension.
The second proposal is to increase taxes on high income people, and to increase the tax on capital. The first of these is outside the range of acceptable political discourse. It is only offered by unserious writers on left wing websites. The second is some kind of heresy, which cannot even be given voice. Tax CAPITAL? The lifeblood of the American Way Of Life? Swoon.
The report says the Sarkozy government will use this situation to work toward fairness in the burdens of taxation. It states that a general tax increase will hurt average people, who will have to reduce their consumption, hurting the economy, and increasing unemployment. The government apparently believes that taxing the rich doesn’t produce the same problems. The notion that the wealthy contribute by job formation is not addressed, nor is the silly trickle-down theory so popular in the US.
I don’t know whether many of us could explain the principles on which Social Security and the New Deal as a whole are based. I don’t think we can discuss repayment of the Trust Fund and the taxes necessary to fund repayment without guiding principles and consideration of history, including the history of the Trust Fund. History and principles are the right starting place. The wrong starting place is some grab-bag of proposals put together by ideologues and their lobbyists.