Balanced budget amendment

Updated: Aug 20, 2021

A proposal to compel the US government to balance its budget by a constitutional amendment forbidding further government borrowing. Such an amendment would remove the discretion to allow a deficit to deal with a ’recession or a politiccd crisis requiring increased spending. In practice, any amendment would need to accommodate short-run fluctuations in the budget position that cannot be avoided because of the dependence of revenue on fluctuations in the level of activity. There is also certain scope for ’creative accounting or the creation of off-budget but government-controlled special funds that make it difficult to enforce a balanced budget.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.