New President Francois Hollande's socialist government took over in France this week and wasted no time in implementing his leftist agenda.
Hollande campaigned on a "growth package," as opposed to the austerity measures being endorsed — imposed, the Greeks would say — by Germany, specifically by Chancellor Angela Merkel, who, perhaps as a goodwill gesture to the new president, agreed to a $162 billion eurozone stimulus package.
The president will have no problem enacting his domestic agenda. European news agencies are calling Hollande's mandate "an unprecedented lock" on the French government.
Of the National Assembly's 577 seats, Hollande's Socialist Party controls 280 — plus another 34 if you count two smaller allied parties. That's more than enough for the 289 needed for a majority. Socialists had a similarly strong performance in local elections.
Hollande immediately proposed, as promised, a 75 percent tax on incomes higher than $1.26 million and higher taxes on big banks and oil companies. He is also asking the assembly to increase the inheritance tax, the payroll tax and create a new 3 percent tax on dividends.
After a long battle, predecessor Nicolas Sarkozy's government gently raised the retirement age from 60 to 62, effective in 2018. Hollande will leave it at 60.
The previous government did away with the mandatory 35-hour workweek but Hollande's government will restore it. Both the lower retirement age and the short workweek were intended as job-creation measures by a previous socialist government, but the unemployment rate steadily climbed to a 13-year high of 10 percent and is expected to rise slightly more.
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Hollande says he will scrap a planned increase in the sales tax but has endorsed, as a gesture to workers, a largely symbolic 2 percent increase in the minimum wage. He will impose a budget freeze across most of the government, except for the departments of education, justice and interior. He plans to hire 60,000 new teachers while cutting the rest of the government workforce through attrition.
(There's been a jump in prices of London real estate, a traditional haven for wealthier French when socialist governments are in power.)
France badly needs economic growth, which is near zero — 0.4 percent, to be precise. The tax increases are unlikely to change that.
With Hollande in office, there is now a clear contest between whose economic prescriptions are the more effective: his or Merkel's.