Balanced Budget And Spending Limitations

The proposal to amend the Constitution with a balanced budget requirement is no longer a notion appealing only to a philosophical minority. The economic trends and political temper of recent. times have made it an issue with tremendous popular appeal. The pressure from the public, the states, and some of its own members will force Congress to confront this issue.

Criticizes government spending policy, budgeting methods, and expenditures, calling for a constitutional amendment to curb inflation and limit federal spending

Expenditures and revenue limitation proposals link Federal spending and taxation to some measure of economic performance, such as the rate of economic growth or percentage levels of GNP or national income. The report presents this issue brief reviews, the various approaches to balance the budget and to impose spending limitations offered as constitutional amendments’ in the 97 congress.

State budgets in the United States played a significant macroeconomic role in the 1970s and 1980s, and the level of cyclical responsiveness was affected by the severity of statutory and constitutional fiscal restraints. Moving from no fiscal restraints to the most stringent restraints lowered the fiscal offset to income fluctuations by around 40 percent. Simulations indicate that a reduction in aggregate fiscal stabilizers of this size could lead to a significant increase in the variance of aggregate output.

This book analyzes the states' experience with balanced budget requirements and extrapolates lessons for a federal amendment. The author's focus is not on the wisdom of cutting the federal budget deficit, but rather on the role and effectiveness of these requirements in achieving budgetary balance.