Fiscal Responsibility Bill

Senator Sean Barrett has been working away in the Seanad on a fiscal responsibility bill to interlock with our other EU/IMF commitments. The government has responded to Senator Barrett’s bill here, it’s worthwhile having a read of this together with the contributions by Karl and Colm on this site.

Author: Stephen Kinsella

Senior Lecturer in Economics at the University of Limerick.

7 thoughts on “Fiscal Responsibility Bill”

  1. If the state only spent what it raised in taxes and paid off its debts wouldn’t that be best for everyone?

    I’m trying to understand why state debt is seen as desirable for any nation.

    If you want to spend on large projects then shouldn’t the state either save up or just print the money? Why give money to bankers?

  2. @ Chris: “If the state only spent what it raised in taxes and paid off its debts wouldn’t that be best for everyone?”

    No. Politicians have a mandatory need to spend ‘future incomes’. If they could not do so, they would not be electable! 🙂

    “I’m trying to understand why state debt is seen as desirable for any nation.”

    Its not. But it is most desirable for those who are legally entitled to create unlimited (almost) credit and loan it out, and watch as it compounds nicely. Just a few problemos with this, as we now find out. 8)

    “If you want to spend on large projects then shouldn’t the state either save up or just print the money? Why give money to bankers?”

    Opps. This is heretical stuff. You are now a suitable case for treatment.

    Brian.

  3. There are a few concepts that are ignored or fudged by Irish Gov’ts.

    The first is the need for rigorous cost benefit analysis.

    The second is that a project be for the greater good of the country as a whole.

    The third is that the gov’t should not engage in any activity that can be done cost effectively by the private sector.

    Billions have been frittered away on micro projects that show little or no return on investment even in the parish immediately involved.

    We have quangos up the ying yang largely to provide well paying sinecures for the politically well connected.

    The professional silos are as high as ever and the population at large cannot be asked to be less greedy as the greediest get greedier.

    Deeply embedded in the culture is the politicians with their hands out for “campaign contributions” also known as supporting the “cause”, in return for favours.

    Most people would not find it difficult to add twenty more anomalies to the list.

  4. @MyHy: There are many, many ‘anomalies, out there. But when you think of the time it took to get ‘here’, then I presume; “They are all to precious to be thrown out!”

    I draw the line here: “The third is that the gov’t should not engage in any activity that can be done cost effectively by the private sector.”

    It has been my experience, and I suspect of many taxpayers as well, the so-called private enterprises, in all developed economies, are nothing more than a bunch of Olli Twist tit-suckers (tit as in; taxpayers: other than themselves, you understand).

    OK. If PE want to do stuff; NO subsidies, no tax breaks, no write-offs, no interest relief, etc., etc. Constitutional prohibition on Gov deficits for day-to-day expenses, and, an unfettered, constitutionally protected Ombudsman. You will not see a PE within a light-year of Kildare Street. Paddy Power odds: 100 to 1 on.

    Until our politicians have a “Come to Jesus” moment, none of them will bite down and mandate state income from all taxes = state expenditures.

    “21” We have several million deficit addicts in this state! 8)

    Cheers,

    Brian.

  5. When I say can be done cost effectively by the Private Sector I mean exactly that, no subsidy or grant, either under the table or over the table.

    I have no illusions about the honesty of the private sector. I am a firm believer that what can be gamed will be gamed.

    There are gov’ts that borrow responsibly, the Irish gov’t in this present round did not have a clue about what the cost would be. Stupidity, lack of competence, group think as in we cannot all be wrong and a strong motivation to keep the gravy train on the track was what led to ruin.

    Presently what will lead to more trouble is the depth of denial as to the source of the problem, anybody but the Irish is the consensus. The first step in problem solving is to identify the problem accurately. Pointing fingers at all and sundry, randomly will get us nowhere.

  6. @Senator Sean Barrett

    Delighted to see that you are in favour of making regressive fiscal policy design or implementation un-constitutional.

    Looking forward to this element of the upcoming referenda.

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