Sarkozy in Maine

Economics will be on the minds of both Presidents Bush and Sarkozy as they meet this weekend at the Bush family retreat here on the East Coast. Mr. Sarkozy, who is on vacation, may spend some time taking in the beauty of Maine, especially its "lights" — the storied lighthouses along the rocks. But to the Frenchman such beacons probably also symbolize the shining growth of the U.S. private sector this past decade. The American model is so bright it may show the path to improvement even in places as shadowy and faraway as France.

That's ironic. In reality the incremental encroachment of the public sector upon the private takes places in corners of even the most free nations. As it happens, no corner of America demonstrates that more than this corner. Maine is a veritable France among states.

Herewith a few morsels for George and Nicolas to chew on with their lobster.

Taxes: a big issue for France. As he gazes out over the driftwood Mr. Sarkozy will be deciding whether France can stand a new value-added tax. Maine is a taxer extraordinaire. Its top income tax rate, which kicks in at a salary low enough to apply to a Washington County logger, is 8.5%. And capital gains are taxed at the income tax rate, even for that logger. The Tax Foundation in Washington ranked Maine number two in terms of state and local burden for 2007. (Neighboring Vermont was first, our own Empire State, third.) New Hampshire, where Mr. Sarkozy spent the earlier part of his holiday, was the mirror opposite, 49th in the same ranking.

Public sector: France's is also a Sarkozy concern. The Agence France Presse reports, for example, le President noting, reasonably enough, "that the number of public workers can be reduced in exchange for productivity gains." The Maine Heritage Policy Center, a new and influential market-oriented think tank, notes that one in three of the dollars received by the average Maine worker comes from federal, state, or local coffers — in Medicare money, unemployment cash, Social Security, you name it. For at least one county, Washington County up north, that same figure is more than half. As Sun columnist Diana Furchtgott-Roth notes in a column nearby, Congress is currently debating the expansion of the State Children's Health Insurance Program, or SCHIP. But as a study by J. Scott Moody of the Maine think tank demonstrates, the Maine experience is that SCHIP causes trouble. In the Pine Tree State the program in its current more limited form has driven out private insurance companies by passing costs on to them.

Levels of compensation for state and local employees in Maine are also revealing. A second Maine Heritage report shows that the average state employee makes 32% more than his private-sector counterpart, $51,000 versus $38,600. State job benefits on average are worth more than double that which the fellow in the private sector receives. Such benefit gaps were wider in Maine than in all but four other states (One is Oregon, another vacation destination for Europeans).

Economic growth: most important of all. As the Bush family's migration pattern has demonstrated, Maine hasn't been much of a magnet for the country's entrepreneurs . The Bushes may summer in their gray-shingled compound on Walker's Point, but they made their fortune in places like Midland, Texas — in a state without an income tax. In per capita income, Maine ranks 34th, whereas New Hampshire, which also has no income tax, is number seven.

In fact, it's a good thing Mr. Sarkozy also spent some time in Wolfeboro, N.H., — and that he did it in the home of a Microsoft millionaire. The New Hampshire-Maine contrast is an object lesson for someone at as crucial a decision point as the French president. Come to think of it the difference between the two states might be something the Assemblee Nationale would want to take in as well. Summer ends early Down East, but not tourism. We're sure Maine, New Hampshire, and, heck, the rest of New England, would love to host the French lawmakers this fall. They could stop in to study charts at free-market think tanks, and they'd be just in time for leaf peeping season.