On Tuesday I made some predictions about the potential US credit default. Obviously I was wrong as they managed to get themselves together sufficiently to agree to pay the bills they already agreed to pay. Now we have the fun time of waiting three months until they have another showdown and do the whole thing one more time. Huzzah and such. I guess in retrospect my error was not in listening to opinion polls enough. The Republicans took such a beating in polls regarding the shutdown and default that they desperately needed to get out and were willing to give up their crusade against Obamacare. Perhaps had both parties been equally affected we would have seen my vision come to pass, but now we will never know.
In Canada on the other hand Harper is planning to introduce legislation that would make running deficits impossible. I am hugely in favour of mandatory balanced budgets but I don't think this tactic is actually going to work. Any government willing to run a loss can just repeal the law anyway and apparently the legislation is going to have built in loopholes for times of economic downturn. I am not convinced that codifying the rational assumption that deficits are only temporary passes to get past crises is useful because of course we shouldn't have been running deficits all those years and of course the government would have found a way around it if they could.
We just have a fundamental problem that they are the government. Any rule that is put in place to prevent them from racking up debt like removing their ability to issue bonds at all is something they can decide to ignore, change, or remove. I feel like we need something absurd for it to actually work, something along the lines of "If the government runs at a loss or passes an unbalanced budget parliament is dissolved, an election must occur, and every currently sitting member of the ruling party is banned from federal public office for life and forfeits all pensions and other compensation." The only thing that might actually work to stop them being irresponsible is to hit them where it hurts: Get them in the pride, or the wallet if pride won't work.
Realistically they are all going to do what governments have always done. They will rack up debt foolishly and either have their financial system collapse, inflate their way out of debt, or just default and tell everyone to suck it up. Until the populace at large completely gets behind the necessity of a balanced budget it won't happen, and that means being willing to defund your favourite government program to make it happen. I am not holding my breath.