French election front-runner makes deficit pledge

January 26, 2012 - 11:15 AM
France Presidential Elections

French Socialist Party candidate for the 2012 presidential elections Francois Hollande, delivers a speech to journalists in Paris, Thursday, Jan. 26, 2012. The front-runner in France's presidential race is vowing if elected to bring the French state deficit under the European Union's 3-percent target in 2013 by slashing tax breaks for corporations and the rich. (AP Photo/Christophe Ena)

PARIS (AP) — The front-runner in France's presidential race vowed Thursday that if elected he'll bring the state's bloated deficit under the European Union's 3-percent target by next year by slashing tax breaks for corporations and the rich.

Socialist Francois Hollande said he was "in the same frame of mind" as U.S. President Barack Obama about the need to ask more of the wealthy at a time of hefty state-budget burdens and sluggish economic growth.

Laying out a 60-point program, Hollande said his tax plan could raise euro29 billion ($37.5 billion) in new income and help offset the cost of new initiatives to the tune of euro20 billion ($26.3 billion) to support jobs, public housing and health care.

"Those who have benefited from crazy pay levels will have to make an effort," he said, promising to raise the tax bracket for the highest earners to 45 percent and to cap tax breaks for individuals at euro10,000 ($13,000) per year.

Hollande's appearance at a Paris news conference put meat on the bones of his platform — mostly on economic issues — at a time when most polls show him with a comfortable lead over President Nicolas Sarkozy.

The conservative incumbent has not yet announced whether he will run for the two-round election in April and May, but nearly all political observers expect he will.

Hollande elaborated on a theme that he laid out at a campaign rally on Sunday, taking a pronounced leftist posture by announcing that his "real adversary in this campaign is the world of finance."

He also picked up a theme mentioned by Obama during his State of the Union address on Tuesday, when the U.S. leader spoke about how billionaire investor Warren Buffet pays a lower tax rate than Buffet's secretary.

"Obama said he wants the secretary of a billionaire to not have to pay more than the billionaire," Hollande said. "I want the same thing."

Hollande didn't mention Sarkozy by name, but implicitly targeted his tenure by citing a litany of gloomy French economic indicators and missed budget targets.

"And they want to give us lessons about budgetary responsibility?" Hollande said of Sarkozy's conservative government.

Sarkozy has staked his credibility on meeting a series of deficit-reduction targets and balancing France's budget by 2016 — a year sooner than Hollande's plan calls for.

In order to stay on track, Sarkozy's government was forced twice last year to introduce a raft of extra cuts.

France hasn't balanced a budget in three decades, and its deficit ran 7.1 percent of its GDP in 2010 — more than twice the legal limit of 3 percent in the 17-nation eurozone.

France's deficit is pegged at 5.7 percent last year and the country is committed to cutting it to at least 4.6 percent in 2012 and 3 percent in 2013, regardless of whether economic growth comes back.

Hollande also slammed economic forecasts of the government's 1-percent growth target this year as too rosy. He predicts 0.5 percent growth — much closer to independent forecasts from the IMF and World Bank.