Never mind Angela: Why aren’t we debating the idea of a debt brake here?

Mammy lays down the law. Again.

Mammy lays down the law. Again.

The latest story doing the rounds is the idea of us amending our constitution to restrict borrowing as a quid pro quo for getting a reduction in our IMF rate. All well and good. But why aren’t we discussing this idea for ourselves, as a good way of running our country regardless of how Brussels or Berlin think?

Surely one of the key ingredients of our economic downfall has been the Spending Junkies that are our politicians, men and women who just can’t help themselves when it comes to spending other people’s money. Imagine the effect of a constitutional amendment that not only restricted borrowing, but actually limited the size of the budget, and forced politicians who wanted to spend to go and find the funding from existing resources. Sure, the social partners and the politicians wouldn’t like it. But the people who pay tax might.

And before some people go off on a bender condemning this as another “typical right wing” proposal, ask yourself who pays for all this stuff. The rich pay some of it, but ordinary workers pick up most of the tab, reducing the amount of money they have to put food in front of their kids. Politicians perceived as right wing (Step forward FF and the PDs) have been just as guilty of blowing other people’s cash as the left. Just look at benchmarking. Or PPARS. Or eVoting. All money pissed away by a nominally centre-right government. This isn’t ideolgy. This is how a reasonable family manages its budget. 

2 thoughts on “Never mind Angela: Why aren’t we debating the idea of a debt brake here?

  1. I disagree. A bar on spending increases operated over the last ten years would have meant that we now would have a much smaller gap in revenue, and would need less “shock therapy”.

  2. I really don’t see the point in this.

    Ireland, for example, would have been fine under such a system up until the crash, and it’s an illusion to pretend that we wouldn’t be. Ireland’s problem wasn’t borrowing, or even really spending – it was that our tax base was (1) overly dependent on certain areas (AKA too narrow) and (2) too small to support the level of spending we had. Were such a constitutional bar in place in, say, 2002, it wouldn’t really have affected Irish government policy until 2008ish. So it’d be pointless in our case.

    More importantly for future cases, sometimes the best idea is to borrow and to spend, in order to stimulate the economy. It wasn’t a good idea for Ireland recently, nor for the UK, but it arguably was for the US. A constitutional bar on “excessive” borrowing limits the choices of policymakers in responding to problems.

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