Pass a law to stop government overspending

|
Andrew Winning / Reuters / File
A trader on the trading floor at IG Markets looks at his screen as Britain's Chancellor of the Exchequer, Alistair Darling, delivers his budget speech, in London March 24, 2010. Could a law be passed to keep government spending in check?

The government spends money like there is no tomorrow – mainly because it is not their money but ours. This is most clearly seen in the enormous deficit run over the last few years. What could we do to avoid these budget deficits in future? In democracies that have written constitutions, balanced budget amendments have been proposed and have succeeded. This could work well in Britain.

In 2009, the German constitution was amended to stop the federal and state governments from running budget deficits. The plan in Germany has been set over an eleven-year period. From 2016, governments won’t be able to run a deficit of more than 0.35% of GDP and from 2020 a deficit won’t be allowed to run at all. In America, 49 states have some form of a balanced budget provision (the exception is Vermont). In Oregon, the law forbids a state surplus of more than 2% of GDP. If there is one, anything above this threshold is refunded to taxpayers. The Federal government does not have a cap on its spending at all, but there have been various balanced budget proposed. This has been brought to Congress within the 1991-1992, 2001-2002 and 2005-2006 sessions. These have failed due to the difficulty to pass amendments, which needs a two-thirds majority in both houses in Congress and three-quarters of states ratifying it.

The UK, like the US Federal Government does not have a balanced budget amendment. Parliament can pass a law without a supermajority as an act of parliament, only needing a simple majority. If there was a balanced budget bill, it will need to be like the German amendment. It will need to phase out deficits over a period of time and by the end of the time allocated, the Chancellor cannot spend more than he gets in, just like a normal household budget.

Obviously, Parliament can repeal a law just as easily as it can enact it – but experience has shown that this can be quite difficult for governments. At the very least, the law would be a roadblock to deficit spending. By passing a law banning deficits, we may see our government finances being put into place.

Add/view comments on this post.

------------------------------

The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.

You've read 3 of 3 free articles. Subscribe to continue.
QR Code to Pass a law to stop government overspending
Read this article in
https://www.csmonitor.com/Business/The-Adam-Smith-Institute-Blog/2011/0329/Pass-a-law-to-stop-government-overspending
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe
CSM logo

Why is Christian Science in our name?

Our name is about honesty. The Monitor is owned by The Christian Science Church, and we’ve always been transparent about that.

The Church publishes the Monitor because it sees good journalism as vital to progress in the world. Since 1908, we’ve aimed “to injure no man, but to bless all mankind,” as our founder, Mary Baker Eddy, put it.

Here, you’ll find award-winning journalism not driven by commercial influences – a news organization that takes seriously its mission to uplift the world by seeking solutions and finding reasons for credible hope.

Explore values journalism About us