Economist Mathijs Bouman thinks The Donald and The Geert could learn something from Marine Le Pen.
It’s easy to come up with populist schemes. But how to pay for them? Donald Trump wants to lower taxes and invest in infrastructure at the same time. Geert Wilders is going to lower the state pension age, abolish the health insurance own risk element as well as lower income tax and halve vehicle tax. Meanwhile in France, Marine Le Pen wants to lower the state pension age, up benefits and lower income tax.
Lots of fun things for citizens and lower taxes is the message. Because money doesn’t grow on trees the creatives of the right have to resort to trickery to make things look affordable. Marine Le Pen’s Front National came up with the most creative trick of all: to print money and lots of it. But first: the optical illusions of The Donald and The Geert.
Trump, who has taken a good look at how Ronald Reagan used to handle things, managed to keep a straight face when he said that lower taxes and higher government spending are totally not mutually exclusive. Lower taxes are lucrative if they boost the economy and make tax evasion less of an attractive option.
The person who came up with this fairy tale is Art Laffer, the Hans Christian Andersen among economists, who said last year he had the utmost faith in Trump. But according to the calculations of the independent Congressional Budget Office Trump’s policies, like Reagan’s in the 80s, will lead to a public debt of massive proportions.
The PVV is keeping its programme well away from the financial scrutiny of the economic policy analysts at the CPB so the party has nothing to worry about on that score. The PVV website shows a party programme consisting of 1 A4 page dating to 2016 with a ‘financial paragraph’ containing the estimated costs and benefits of the proposals.
Bringing the state pension age back to 65 will cost €3.5bn, abolishing development aid, windmills, art and public tv will bring in €10bn. The final balance come to exactly zero. It’s quite a feat, especially since two expenses have not been factored in. The costs of quitting the EU and introducing a law to introduce binding referendums have been marked Pro Memorie, or we haven’t a clue.
Tip from Wilders to CFOs and treasurers in the land: include a couple of Pro Memories and you can balance the books whatever you do.
Le Pen’s optically enhanced budget is much more like it. She wants France to trade the euro for a new French franc. The French Central bank will then be placed under the direct authority of parliament after which the money presses can start printing. Benefits can go up and the pension age can go down because, pouf, the money goes straight from the Banque de France to the Élysée. It’s brilliant! Now why didn’t Trump and Wilders think of that.
This column appeared earlier in the Financieele Dagblad