There’s little new in the budget battle roiling Rome—but when did that ever stop the European Commission? The mandarins of Brussels on Tuesday issued an unprecedented demand that Italy rewrite its bad budget in line with Brussels’ bad fiscal principles. The tangle contributed to a selloff in global equities.

The Commission wants Rome to deliver a budget deficit equal to no more than 0.8% of GDP next year, a commitment made by the previous Italian government. In theory that discipline should matter to an Italian government...