My hat's off to President Milei of Argentina for his "Grillete Fiscal" proposal - literally, the "Fiscal Shackles". He wants to make sure that no future Argentinian government commits the same economic errors that have doomed the nation to half a century or more of economic fluctuations, fiscal irresponsibility, and near-bankruptcy.
Milei first unveiled the proposal in his characteristically entertaining style during a televised address to the Argentine people. The bill must still be approved by Congress, where his party, La Libertad Avanza, is expected to secure the support of allied parliamentary factions in both chambers.
Although Milei lacks a parliamentary majority of his own, his alliances have thus far proved remarkably resilient.
If enacted, the legislation would break with one of modern politics' unwritten rules: the assumption that governments can always buy votes with higher spending, higher taxes, and ever more debt. The business of burdening future generations and taxpayers with politically manufactured credit expansion would, at least for the time being, come to an end.
Milei's idea is straightforward: future Argentine governments should have their wings clipped before they are even able to take flight on another debt-financed spending spree.
The mechanism is equally straightforward. Should the federal budget remain in deficit for several consecutive months, Congress would be given a deadline to restore fiscal balance. Failure to do so would automatically trigger a U.S.-style government shutdown. Non-essential government activities would be suspended automatically—without further parliamentary debate or political horse-trading. The President, Vice President, cabinet ministers, state secretaries, and every member of both houses of Congress would receive not a single peso in salary until the budget is balanced once again.
Furthermore, all new spending would be frozen. No new contracts could be awarded, and no additional public employees could be hired. Even more striking, discretionary transfers from the federal government to Argentina's provinces would also be suspended.
At the same time, the law deliberately protects the state's core responsibilities. Pension payments, healthcare services, unemployment benefits, as well as the salaries of police officers, members of the armed forces, and correctional staff would remain fully exempt from these austerity measures.
There's more at the link.
I'd dearly love to see similar principles enshrined in US law. It would take years to achieve, because we'd have to pay down our enormous national debt first; but it would shackle the hands of future politicians, and stop them buying votes by enacting legislation for massive handouts to attract supporters. We'd also have to figure out how to keep essential functions (e.g. defense, etc.) going when we're savagely cutting back everywhere else.
There's also the question of what to do with the literally hundreds of millions of Americans (and others) who are dependent on government handouts to a greater or lesser extent. They'd have to be "weaned" over a period of time, to allow them to grow accustomed to the idea that nobody's going to pay them to live at taxpayer expense any longer. Expect civil unrest as a minimum; possibly riots to make the George Floyd/BLM brouhaha look like a Sunday school picnic . . . but it's still an attractive idea.
All those difficulties notwithstanding, unless we can enact some form of President Milei's program here, I can't see how our present system of government can survive in the medium to long term.
Peter
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