From The Wall Street Journal to The Economist, the English-language press has been vilifying the cost-of-living relief program that the Harris-Walz Democratic ticket has proposed as the cornerstone of their economic platform for the US presidential election. Two measures in particular have been the focus of criticism. These two measures are already in place... in France!
The first is a subsidy of up to $25,000 (€22,600) for first-time home buyers, subject to income limits. According to its critics, this measure would be a drain on public finances and would fuel real estate inflation, ultimately benefiting developers and sellers. In economic terms, this policy would be the equivalent of the French zero-interest loan (PTZ). However, the PTZ does not have the same conditions: it does not only apply to first-time buyers, it is reserved for high-demand areas and it is limited to new-build properties. Nevertheless, with current interest rates, a €40,000 loan over 20 years at 0% interest would result in savings of €20,000. The cost to public finances is expected to reach €1 billion by 2024.
The PTZ, which was created in 1995 by the Juppé government (of which French Prime Minister Michel Barnier was a member), has undergone numerous reforms, without ever disappearing. However, studies have shown its limitations. The vast majority (up to 85%) of beneficiaries would have bought a property anyway. A significant proportion of the subsidy is absorbed by developers, who raise prices. More worryingly, access to property with a PTZ has come, for many households, "at the cost of a geographical distance from city centers and increased social segregation" ("The Suburbanization of Poverty: Homeownership Policies and Spatial Inequalities in France," Laurent Gobillon, Anne Lambert and Sandra Pellet, Population, vol. 77, no. 1, 2022). A 2019 report by the Inspectorate General of Finance, which has since been buried, recommended not renewing the PTZ. However, these flaws have received little coverage in the French economic press, which, instead, often echoes the "employment concerns" of the construction lobbies every time the PTZ's continuation is threatened.
Enormous gift
Kamala Harris' second initiative, federal tax exemption on tips, is one that was first suggested by... Donald Trump. Trump's proposal aroused the interest of millions of tip earners, particularly those in the key swing state of Nevada and its "casino economy." Ever since Harris also began to support this proposal, criticism has grown stronger: it would be costly, unequal (since it would be reserved for just one segment of the population), unfair (to employees in the same workplace who do not have public-facing jobs and therefore do not receive tips) and would demonstrate that the Democrats are indulging in the same electoral populism that they criticize their opponent for.
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