Switzerland’s “Debt Brake” Is a Role Model for Spending Control and Fiscal Restraint

April 27, 2014

I think Mitchell has the right of it: the root of the problem is government spending growing too fast, not deficit spending or even debt, per se. Maybe the Swiss solution is something we should look at. (Yep. The original article is about two years old. I ran across while cruising the Internet and thought it worth sharing, even at its “advanced age.”)

International Liberty

I’ve argued, ad nauseam, that the single most important goal of fiscal policy is (or should be) to make sure the private sector grows faster than the government. This “golden rule” is the best way of enabling growth and avoiding fiscal crises, and I’ve cited nations that have made progress by restraining government spending.

But what’s the best way of actually imposing such a rule, particularly since politicians like using taxpayer money as a slush fund?

Well, the Swiss voters took matters into their own hands, as I describe in today’s Wall Street Journal.

Americans looking for a way to tame government profligacy should look to Switzerland. In 2001, 85% of its voters approved an initiative that effectively requires its central government spending to grow no faster than trendline revenue. The reform, called a “debt brake” in Switzerland, has been very successful. Before the law went into…

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When Green turns yellow

February 4, 2012

All I can say is “yuck!

Just remember: it was for the environment, and so there just couldn’t be any bad consequences.


Question: Why is California screwed?

February 3, 2012

Answer: Over $2,000 per second.

Watch to see what I mean:

It’s called addiction. The legislature is addicted to spending borrowed money, and the people are addicted to the goodies bought with borrowed money.

And almost no one is willing to act like an adult.


Worried about our nation’s finances? Take Spenditol!

July 21, 2011

Here’s a clever ad from Concerned Women for America that hits at the irresponsible ways of Washington and correctly identifies the root of the problem — overspending — and does it in the right way: with satire.

I especially like the line about how popular “Spenditol” is.

via Dan Mitchell

(Crossposted at Sister Toldjah)


An easy way to balance the budget without tax increases

October 5, 2010

The current deficit of the United States -the difference between the federal government’s expenditures and its revenues- is roughly 1.3 trillion dollars, according to the Department of Commerce. That’s how much the government has to borrow in order to finance crucial services, such as Barbara Boxer’s research trips. Members of the Statist Democratic Party tell us that the only way to close this deficit is to raise taxes, whether through higher levies on “the rich” (the definition of which is rather broad) or some form of a value-added tax on top of everything else, or a combination of both.

Dan Mitchell of the Cato Institute calls “bull” on this. In this short video, he shows how one could easily balance the budget by doing something almost unheard of in Washington: showing some restraint.

In earlier years, even the minimal method Dan recommends would have been almost unthinkable, let alone eliminate whole departments of the government. But, if the elections next month and in 2012 turn out to be the true populist, anti-establishment wave that it seems to be building into, we may yet see some restraint at least in Washington’s wastrel ways.

(Crossposted at Sister Toldjah)


Evidence that big government hurts the economy

June 30, 2010

In this Center for Freedom and Prosperity video, Dan Mitchell provides graphic evidence that government growth beyond a certain point actually hurts a nation’s economic performance:

While Mitchell doesn’t explain why this is true (something he does in other videos), the reason seems clear: government spending is inherently wasteful as money is often diverted to sub-optimal, politically oriented  purposes (such as vanity airports and bridges to nowhere), and that money is not disciplined by market forces. In other words, national governments’ wasteful deployment of capital is not punished by those governments’ going out of business. Furthermore, this money is taken out of private hands and consequently is no longer available for productive uses such as investing, saving, and job creation.

That isn’t to say all government is bad. By providing open markets, the consistent rule of law, and a strong protection of property rights, government actually helps create the conditions for prosperity. Beyond that point, however, it becomes a parasite, sucking the lifeblood from its host, the private sector.

If Mitchell and other free-market economists are right (and I strongly suspect they are), then one of the best things the federal government could do would be to reduce federal spending from its current 40% of GDP to about 15-20 percent.  That, however, is something that will not happen under the Democrats, and I have to wonder if even a Republican government would have the courage to make the needed cuts, given all the political oxes that would have to be gored.

Probably not, until the national consensus itself changes. And that may not be as far off as you think.

(via International Liberty)


Scary: deficits, debts and unfunded liabilities

May 16, 2010

In this Center for Freedom and Prosperity video, Kelly McDonough gives a primer in the problems we face not just from deficit spending and public debt, but the horrendous amount of unfunded future liabilities (such as Social Security and Medicare) Washington has burdened us with:

Excuse while I crawl under my blanket to hide. Nailbiting