Word: socialists
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...great extent the French and the other allies have reason to complain. The enormous U.S. deficits require extensive borrowing and keep money tight on both sides of the Atlantic; if they continue, they risk causing renewed world recession. The 3 West Europeans, including the Socialist Mitterrand government, also feel aggrieved because they are making rigorous efforts at fiscal austerity. As a percentage of national output, the projected U.S. deficit (6.3% of G.N.P.) is nearly twice as large as those of France, Britain and West Germany, and more than three times as great as Japan's. The rise in value...
...other hand, Mitterrand had domestic political motives for going public with his criticism. Before his government was forced into the current round of austerity measures, Mitterrand launched a program of Socialist pump priming, at a time when most other industrialized countries found it necessary to cut back. Result: domestic inflation is still 9%. With public support for the Socialists in France slipping badly, Mitterrand is using the U.S. as a convenient scapegoat...
Still, the Socialist government faced a continuing erosion of its authority because of a growing lack of conviction that its harsh economic medicine will work. Faced with a weak franc, record trade deficits and about 10% inflation, Finance Minister Jacques Delors last March imposed an austerity plan that was harsher than anything his conservative predecessors ever proposed. He chopped $7 billion in current spending, imposed a 1% personal income surtax and required each taxpayer to make a loan to the state equal to 10% of last year's income tax. The measures would diminish the purchasing power of virtually...
With the franc under pressure again, disagreement within the Socialist Party over economic policy is bubbling up publicly, adding to a general perception of governmental disarray. Disaffection is strongest among left-wing Socialists and some Communists. They argue that instead of meekly accepting painful austerity, the government should 1) withdraw from the European Monetary System, which links seven major European currencies; 2) correct the trade imbalance through protectionist import restrictions; and 3) concentrate on creating jobs. Jean Poperen, the party's deputy leader, last month charged that the government was losing its "popular support" and called for a return...
France is the furthest out of sync with other industrial nations. When Mitterrand's Socialist government came to power in 1981, it made the mistake of stimulating the French economy at a time when other nations were fighting inflation. As a result, the value of the franc began to fall, plunging 34% against the dollar during the past two years. That drop made France's imports more costly and thus worsened its inflation, now running at 9%. The French have gone heavily into debt trying to defend the franc in the currency markets, and last week they...