The Debt Bomb

The American verdict arrived Monday, in the Wall Street Journal: France’s public finances are a “debt bomb.” On Tuesday the paper doubled down with an editorial called “France’s Bonfire of Inanities,” aimed at political leaders it says are “in denial.” The charge sheet, as the Journal tells it: the country hasn’t balanced its budget since 1974, and “all of this taxation alongside endemic overregulation is suffocating economic growth.” Bloomberg has piled on. For New York’s business circles, France has become the exhibit — the welfare state living beyond its means.

The numbers give the lecture its edge. France’s 10-year borrowing cost sits near 4.8 percent, higher than Greece’s — a comparison that would have been unthinkable a decade ago. The spread over German bonds is the widest since 2011. The euro has slid to its weakest level in seventeen months. And this is happening while America’s own 10-year Treasury yield touches 5.35 percent, its highest in 24 years. Nobody’s books look clean. France’s just look like the warning.

The French answer comes in two voices, and they don’t agree with each other.

On the French right, plenty of voices concede the diagnosis while rejecting the lecturer. Yes, the state is too heavy, spending must be cut — one leading presidential contender has floated 25 billion euros a year in cuts. But being told this by American editorialists, in the country that just hit its own record borrowing costs, lands badly. The prescription may be right; the doctor is suspect.

On the French left, the argument runs the other way: the debt is the price of a country that still funds its schools, its hospitals, its railways — and look at what underfunding buys you. The same week the Journal published its editorial, hundreds of thousands of students and teachers marched across France demanding more money for education. Footage of the protests ran under the American debt coverage. The left’s reading: that’s not the cost of the welfare state. That’s what happens when you starve it.

Both French camps, for once, share a reflex: irritation at being graded from across the Atlantic. Nobody in Paris disputes that the deficit is real. What’s disputed is who gets to name the disease — and who gets to write the prescription.

Meanwhile the bond market grades everyone impartially. It doesn’t read editorials. It reads budgets.