Swiss Delegation Join Murphy Institute to Examine U.S. Fiscal Crisis

Speakers divided over viability of American constitutional solutions, despite Swiss success

NEW ORLEANS, La. – On Thursday a Swiss delegation joined with the Murphy Institute of Tulane University for a revealing panel discussion on “Facing Public Debt.” Commemorating Albert Gallatin (1761-1849), a Swiss-American politician, panelists considered the viability of constitutional methods for controlling government debt, taxes, and spending.

Caludio Leoncavallo, director of the Swiss Consulate in Atlanta, opened the discussion and introduced the approximately 40 attendees to Gallatin’s life. An immigrant to the United States in his twenties, Gallatin became a congressman and the longest serving secretary of the United States Treasury.

Gallatin’s experience with American finances segued into the challenge at hand – the almost universal budget shortfalls and growing debts of the federal and state governments.

Werner Weber, deputy head of financial and economic affairs with the Swiss Embassy in Washington, D.C., explained “The Swiss Experience,” overcoming consistent government overspending. In Switzerland, tax rates are written into the constitution and difficult to change. Spending, however, was not restrained, and they sought to address that flaw with a “debt-brake” solution.

After rising debt in the 1990s, in 2001 the Swiss people overwhelmingly voted in favour of a financial management amendment to the constitution – Article 126. Werner explained the amendment’s mechanics and that it had been more successful than anticipated, perhaps too restraining. Even with the latest recession, Swiss national debt, at less than 25 percent of the economy, is now lower than it was in the late 1990s and early 2000s. Compare that to reported United Statesfederal debt of 94 percent of the economy, not accounting for unfunded liabilities.

Swiss Federal Debt: Total (Blue) and Relative to GDP (Red)

Source: Swiss Federal Department of Finance, FDF

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Fergus Hodgson is the capitol bureau reporter with the Pelican Institute for Public Policy. He can be contacted at [email protected], and one can follow him on twitter.

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