When he was elected President of France in 2017, Emmanuel Macron made two fundamental promises: one, he would make populism a thing of the past, making the National Rally a political non-entity; two, he would right France's troubled economy and finance. During his campaign, reports said he had been called "the Mozart of finance" by his colleagues at the investment bank Rothschild & Co.

As Macron heads into the lame-duck phase of his two-term presidency, how do these promises stand?

Well, the National Rally has never been stronger in terms of national vote share or number of elected officials.

And what about the economy?

Well.

Back when Macron shocked the French political world (and the world period) by calling early elections of the National Assembly, an insider in Macron's camp told us of the decision: “Whoever has to put together the next budget will have a bullseye painted on his head. Ratings agencies have downgraded us, the country is not ready for austerity, and local governments are bleeding red ink because the real estate market has been in a coma for two years. We may as well give the job to whoever wants it.”

The situation with the budget deficit is dire. Every insider we talk to tells us it's much worse than anyone thinks. The 5y yield of Greek government bonds is now below French ones.

France has an unstable cabinet with no parliamentary majority, even as it will be forced to push through tough austerity measures. Being already the highest-tax nation in Europe, it's hard to see how France could push its way out through tax increases, which may even be counterproductive by taking GDP and reducing growth. What about spending? Well, every big category of spending (apart from defense, but Macron has made some pretty ironclad commitments to NATO there) comes attached with very powerful interests.

The bottomline is this: the budget, and therefore economic and political, situation in France, is about to become very dire over the next 3-to-12 months.

"Very sad," you might think, "but what does that have to do with me, a policy professional living and working in Washington DC?"

Very fair question!

Only this: France's economy is too big to fail. If there is a run on French debt, there will be a run on French banks, which are the biggest in the world outside the US and China. If there is a run on French debt and French banks, and it is not stopped, then it becomes a good bet that the euro collapses. And if the euro collapses, the European economy collapses, and if the European economy collapses, the world economy collapses.

And if the world economy collapses, the policy agenda of the next Administration, whichever it is, and of the next Congress, whatever it is, goes out the window.

Oh, and did we mention the US deficit and debt are also out of control, and that interest rates on the US debt are also spiking up?

Just something we thought we'd put on your radar.

Policy News You Need To Know

#Chyna — Oh, and China's economy is slowing as well. Bloomberg: "China said it will give one-off cash handouts to people in extreme poverty before Tuesday, in a rare announcement of direct aid just a day after unveiling a sweeping program to stimulate the world’s second-largest economy."

#BigTech — Bloomberg has a good story on how Big Tech is leveraging the cash it has spent on Republicans to try to stop KOSA.

#FreeSpeech — You may know about the case of Penn Law Professor Amy Wax who was sanctioned for having the cumption to say politically incorrect things. Now the Washington Free Beacon's star reporter Aaron Sibarium, who has had outstanding coverage of all issues wokeness, has a new bombshell report: Penn tried to buy Wax's silence. To her credit she refused. To repeat what we wrote last time: universities that engage in this kind of un-American Stasi behavior have no business receiving taxpayer subsidies and tax exemptions.

#Mining — A bipartisan group of legislators have introduced the Critical Materials Future Act, which would seek to strengthen the US mining sector, which is suffering from Chinese overproduction designed to drive down prices to unsustainable levels. A key provision is to "establish a price support pilot program to offer U.S. mineral projects greater offtake and price certainty," so as to derisk mining investment projects.

#TaxPolicy — Interesting from the Hamilton Project: they point out that partnerships now represent almost 30% of all business income in the US, and that they now outnumber C corp. Under current tax law, partners are taxed directly on their share of the partnership’s income and activities; the partnership itself is not a separate taxable entity. Their idea is basically to tax partnerships like C corporations, which they believe might raise around $100 billion per year.

#Immigration — Senator Graham has introduced the Birthright Citizenship Act of 2024, proposing significant changes to birthright citizenship rules in the United States. The bill aims to restrict birthright citizenship by not granting citizenship to children of undocumented immigrants born in the US, preventing people on tourist visas from having their children obtain U.S. citizenship, and limiting birthright citizenship to children born to US citizens, legal permanent residents, and foreign nationals serving in the U.S. military. This seems like common sense legislation to prevent anchor babies. There is obviously a campaign angle, but it's good policy.

#Immigration — The President of Panama spoke at the UN General Assembly, and he spoke about immigration. Some choice quotes, via CIS' Mark Krikorian: "In Panama we have the new border of the United States, because Darien is the corridor travelled by those who seek in this country a better life. […] We are proud of being a country which connects myriad global trade routes, but we will not agree to be used as a transit point for illegal immigrants, because that brings with it social, human, and environmental costs for our territory. […] As they [illegal migrants] move through the Darien Gap they contaminate the region, leaving a trail of destruction and desolation in their wake, and it’s up to us to pick up, repair, and pay for all of that."

#Crypto — Semafor has an article on the Harris campaign's increasing courtship of the crypto industry.

Friday Essays

The most important essay this week by far has been "The Intelligence Age" by OpenAI CEO Sam Altman. The big ticket item is that he expects superintelligence—intelligence that goes way beyond even the most intelligent humans, and is able to keep improving itself—not only to be accomplished, but relatively soon: within 5 to 10 years. He acknowledges alignment risks and that some jobs will be lost, but fundamentally believes that this will usher in a new and almost utopic age.

The great Michael Brendan Dougherty has a long interview at NR with the brilliant and provocative historian Sean McMeekin. McMeekin, of course, is best known for his doorstopper Stalin's War, but he has written many other books, always thoroughly researched and taking a unique angle. His latest is titled To Overthrow the World: The Rise and Fall and Rise of Communism and it sounds like an excellent addition to his oeuvre.

Bari Weiss' The Free Press often has interesting content, and here's an article whose title should make it self-recommending: Inside America’s First-Ever Classical Jewish School.

Everyone on X is, of course, already apoplectic about Oren Cass's new essay in The Atlantic making the case for tariffs.

We are among a group of people who strongly suspect that string theory is a massive dead-end for theoretical physics. However, we also believe in giving voice to the opposition. Physicist Brian Greene has an essay in the Washington Post making the case for keeping at it with the theory that hasn't produced results since it was introduced some 30 years ago at least.