Saturday, June 12, 2010

Welcome to Europe: The Land of the Peer-Reviewed Budget

Peer reviewed budgets a threat to fiscal sovereignty

As British Chancellor of the Exchequer George Osborne prepares to deliver his first budget, a pecular process has gotten underway.

Osborne is preparing to send his budget to Brussels, Belgium, to be peer-reviewed by the European Commission and other European Union Finance Ministers.

The purported goal is to ensure that EU countries are fiscally responsible. The current cause celibre for this process is to pressure EU countries to cut government expenditures and eliminate deficits. The raison d'etre for this is at least partially the economic crisis engulfing Greece, and threatening to spread to other EU countries like Spain, Italy, Ireland and Portugal.

The peer review process is controversial in Britain, and rightfully so.

While the current puprose underlying this peer review process should be pleasing to fiscal conservatives, there is an underlying danger in this process that no conservative government -- the one in which George Osborne currently serves as Chancellor included -- should tolerate.

Today, the mission is to fight deficits and enforce conservative fiscal responsibility across Europe. This is much easier with conservative governments in power in Britain, France and Germany.

However, a shift in this state of affairs -- should left-wing governance return to France and Germany -- would change this process drastically. Rather than pressuring governments to follow a course of fiscal conservatism, the admonitions issued by EU Finance Ministers could instead become fodder for left-wing forces within any government that pursued such a course.

Today, the budget peer review process favours conservatism. But it could quite easily be used to coerce governments into the spendthrift policies so often imagined by the far left.

It's as much a threat to individual sovereignty as is crushing levels of public debt, and should not be acquiesced to.

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