Many on the liberal left wish we were more like Europe. In one sense, I agree: As Mitchell shows in the linked post, if we had the spending cap Switzerland employs, we wouldn’t be stuck in this fiscal morass.
Originally posted on International Liberty:
I greatly admire Switzerland’s “debt brake” because it’s really a spending cap.
Politicians are not allowed to increase spending faster than average revenue growth over a multi-year period, which basically means spending can only grow at the rate of inflation plus population.
Theoretically, taxes could be hiked to allow more spending, but that hasn’t happened. The Swiss are very good about voting against tax increases, so the politicians don’t have much ability to boost the revenue trendline.
Since the debt brake first took effect in 2003, the burden of government spending has dropped from 36 percent of GDP to 34 percent of economic output – a rather remarkable achievement since most other European nations have moved in the wrong direction.
As part of my self-serving efforts to promote Mitchell’s Golden Rule, I’ve been advocating for spending caps in the United States, and I’ve favorably cited legislation proposed by…
View original 593 more words