The fiscal problem if the economic policy objective is well-being

We illustrate our generic remarks with the case of France . Normally, the economic policy objective is the well-being of the population. In the case of France, increasing well-being today means in particular: Accelerating the energy transition by sharply increasing transition investments, so as to avert climate disruption; Raising the employment rate, which is abnormally low; Reducing income inequality and poverty. Economic policy should therefore be steered towards meeting these three objectives, which would give rise to increases in public spending or tax cuts that do not necessarily lead to an increase in GDP (the case with much investment related to the energy transition and some policies to reduce inequality and poverty; in contrast, policies to drive up the employment rate generate additional potential GDP). But tax revenues are linked to GDP: how then to carry out public policies that increase well-being if they increase the fiscal deficit without increasing the level of GDP?