Spain Limits Debt

(Madrid, Spain) Here's a good idea.

Spain's main political powers agreed to amend the constitution Friday to make the government legally obliged to keep its deficit low, an effort to reassure financial markets that it will keep its troubled finances under control and not need a bailout.

The ruling Socialists and the opposition center-right Popular Party cut a deal after hours of frantic negotiations to propose a law under which, starting in 2020, the national deficit cannot surpass 0.4 percent of the country's GDP.

That threshold can be surpassed only in cases of natural disaster, economic recession or other extraordinary circumstances that will have to be declared formally by a vote in Parliament.

The constitutional amendment is expected to be voted on Sept. 2 in the lower house of Parliament, while the actual law is due to be passed by July 2012.

I'd suggest that limiting debt would be beneficial for the U.S. also.