The European national parliaments are capable of full blown fiscal policy, given funding. The problem is the formula. 1/4 the output gap distributed half by GDP share and half by income share (so long, of course, as price stability, defined of course as 5% or lower, is maintained), would avoid the moral hazard of filling deficits.

There is nothing wrong with limiting the ability of individual members of a confederation to run individual deficits, provided that the confederal government is empowered to generate deficits for block transfers to the confederation member countries.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.