In a comment piece for FAZ, German Finance Minister Wolfgang Schäuble reiterates his call for an EU budgetary commissioner with powers to veto national budgets. He also suggests Europe should be a “multi-layered democracy: not a federal state…and yet more than a union of states with loose, weakly legitimised binding elements”.FAZ: Schäuble Irish TimesIs Schauble serious? Does he really think that national parliaments will agree to having the EU veto their budgets? And why does he think that politicians at the EU are competent to draft national budgets anyway? Furthermore, any sane person knows that, even if national parliaments did agree to allow the EU veto power over their budgets, it is highly unlikely that these same profligate parliaments will honor their promises.
Profligate national parliaments pass bloated budgets because they believe that the European Central Bank will monetize their debt. ECB President Mario Draghi has promised as much. So, these parliaments are behaving rationally. They know that they can escape the consequences of their profligacy, something that was impossible with national currencies. The real cause of Europe's burgeoning debt is not necessarily profligate national parliaments but the promise that the EU will backstop their debt. This is the fatal flaw in the European Monetary Union's structure.