balanced budget amendment

In November 2011, the Austrian coalition government tried to amend its constitution and introduce a German style Schuldenbremse ("debt brake"). This would have forced the government to reduce its debt level to 60% of gross domestic product (GDP) by 2020.{{cite web |url= http://www.euractiv.de/oesterreich/artikel/sterreich-die-schuldenbremse-quietscht-005620 |title=Österreich: Die Schuldenbremse quietscht |trans-title=Austria: The debt brake squeaks |first=Herbert |last=Vytiska |work=euractiv.de |date=15 November 2011 |access-date=1 July 2014|language=de}} However, the government failed to gain a two-thirds majority in support of the constitutional amendment. Another attempt was made in October 2019, which was also unsuccessful.

Local and regional authorities in Denmark are not allowed to run deficits and must always balance their budgets. There is no such rule for the national government, which has no limits on debt beyond the common rules of the European Union.{{Cite web |url=https://www.oecd.org/denmark/40140008.pdf |title=Budgeting in Denmark |author=Jón Blondal, Michael Ruffner |work=OECD Journal on Budgeting – Volume 4 – No. 1 (2004) |access-date=2020-05-02}} Danish debt is very low in international comparison and stands at 33% of GDP in 2019.{{Cite web |url=https://www.statista.com/statistics/318659/national-debt-of-denmark-in-relation-to-gross-domestic-product-gdp/ |title=Denmark: National debt from 2014 to 2024 in relation to gross domestic product |access-date=2020-05-02}}

Article 34 of the Constitution was amended in 2008 to include the objective of balancing the public sector accounts. In 2012, France passed a new law (2012–1403), creating the independent High Council of Public Finances, giving it the responsibility to report on the sustainability and deviation from planned targets of public spending.{{cite web |url= http://www2.assemblee-nationale.fr/decouvrir-l-assemblee/role-et-pouvoirs-de-l-assemblee-nationale/les-fonctions-de-l-assemblee-nationale/les-fonctions-legislatives/l-examen-parlementaire-des-lois-de-finances |title=Fiche de synthèse n°40 : L'examen parlementaire des lois de finances |trans-title=Summary document Num. 40:Parliamentary examination of the finance bill |first=Exurbis67 |last=VExurbis67 |work=assemblee-nationale.fr |date=16 May 2014 |access-date=19 July 2016|language=fr}}

In 2009, Germany's constitution was amended to introduce the Schuldenbremse ("debt brake"), a balanced budget provision.{{cite web |url=http://miscellaneous-economic-ramblings.blogspot.co.uk/2009/06/germanys-schuldenbremse.html |title=Germany's 'Schuldenbremse' |author=Thomas |work=Miscellaneous economic ramblings |date=22 June 2009 |access-date=1 July 2014}}{{Citation|last1=Busch|first1=Dörte|title=Budget Preparation and Forecasting in the Federal Republic of Germany|date=2019|work=The Palgrave Handbook of Government Budget Forecasting|pages=71–87|editor-last=Williams|editor-first=Daniel|series=Palgrave Studies in Public Debt, Spending, and Revenue|publisher=Springer|language=en|doi=10.1007/978-3-030-18195-6_4|isbn=978-3-030-18195-6|last2=Strehl|first2=Wolfgang|s2cid=211406237 |editor2-last=Calabrese|editor2-first=Thad}} This applies to both the federal government and the Länder (German states). From 2016 onwards, the federal government was forbidden to run a structural deficit of more than 0.35% of GDP. Since 2020, the states have not been permitted to run any structural deficit at all.{{cite web |url= http://www.ft.com/cms/s/4e63cb22-5e8b-11de-91ad-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F4e63cb22-5e8b-11de-91ad-00144feabdc0.html&_i_referer=http%3A%2F%2Fmoslereconomics.com%2F2009%2F06%2F22%2Fgerman-balanced-budget-law-pending%2F |title=Berlin weaves a deficit hair-shirt for us all |first=Wolfgang |last=Münchau |work=Financial Times |date=21 June 2009 |access-date=1 July 2014}}{{cite web |url= http://www.forexlive.com/blog/2010/05/17/update-germany-to-push-for-eurozone-balanced-budget-rule-ft/ |title=Update: Germany To Push For Eurozone Balanced Budget Rule |work=foreXlive.com |date=17 May 2010 |access-date=1 July 2014}}{{cite web |url= http://moslereconomics.com/2009/06/22/german-balanced-budget-law-pending/ |title=German balanced budget law pending |first=Warren |last=Mosler |work=moslereconomics.com |date=22 June 2009 |access-date=1 July 2014}} The Basic Law permits an exception to be made for emergencies such as a natural disaster or severe economic crisis. The Federal government also used off-budget funds (Sondervermögen) to circumvent the brake rule.{{sfn | Murau | Thie | 2022 | p=451}} The debt brake has been criticized for low flexibility.{{cite journal | last=Hayo | first=Bernd | last2=Neumeier | first2=Florian | title=The debt brake in the eyes of the German population | journal=International Economics and Economic Policy | volume=13 | issue=1 | date=2016 | issn=1612-4804 | doi=10.1007/s10368-015-0323-1 | pages=139–159}}

In 2011, Italian Prime Minister Silvio Berlusconi promised to balance the budget by 2013, and a balanced budget amendment to the Constitution of Italy was added in 2012 with an overwhelming parliamentary majority, under the following Monti government.{{cite web |url= https://www.reuters.com/article/italy-budget-senate-idUSL5E8NKDKR20121220 |title=Italy parliament approves balanced budget law |first=James |last=Mackenzie |work=Reuters |date=20 December 2012 |access-date=1 July 2014}} Under the amended Constitution, deficit spending can still take place in the event of emergencies, but only if authorized by a majority of the entire membership in both houses of Parliament. In practice, the term "emergency" has been loosely interpreted, and Parliament has always authorized the borrowing of new debt; Italy has not yet had a balanced budget since the passage of the amendment.

Poland's constitution (adopted in 1997) caps the public debt at 60% of GDP – the government cannot take on any financial obligations that would cause that limit to be exceeded.{{cite web |url= https://pl.wikisource.org/wiki/Konstytucja_Rzeczypospolitej_Polskiej/Rozdzia%C5%82_10 |title=Konstytucja Rzeczypospolitej Polskiej: Rozdział 10 |trans-title=The Polish Constitution: Chapter 10 |work=pl.wikisource.org |year=2014 |access-date=1 July 2014|language=pl}} To ensure this level is never breached, Poland has a self-imposed debt threshold of 55% of GDP, and the government must take action to balance the budget once this level is exceeded.{{cite web |url= https://blogs.wsj.com/emergingeurope/2011/02/09/polish-government-debt-yields-nearing-critical-level-central-banker-says/?mg=blogs-wsj&url=http%253A%252F%252Fblogs.wsj.com%252Femergingeurope%252F2011%252F02%252F09%252Fpolish-government-debt-yields-nearing-critical-level-central-banker-says |title=Polish Government Debt Yields Nearing Critical Level, Central Banker Says |first=Marcin |last=Sobczyk |work=The Wall Street Journal |date=9 February 2011 |access-date=1 July 2014}}

In 2013, the Slovenian parliament approved a balanced budget amendment to the constitution that came into force in 2015.{{cite web |url= https://blogs.wsj.com/emergingeurope/2013/05/24/slovenia-moves-to-restore-investor-confidence/ |title=Slovenia Moves to Restore Investor Confidence |first=Leos |last=Rousek |work=The Wall Street Journal |date=24 May 2013 |access-date=1 July 2014}}

In 2011, the Spanish Parliament proposed a law amending the Spanish Constitution to require a balanced budget at both the national and regional level by 2020. The law states that public debt cannot exceed 60% of GDP, though exceptions would be made in case of a natural catastrophe, economic recession, or other emergencies. The changes will also require the government to stick to EU annual deficit limits of 3% of GDP.{{cite web |url= http://www.elmundo.es/elmundo/2011/08/23/espana/1314089107.html |title=Zapatero y Rajoy pactan reformar la Constitución para limitar el déficit |trans-title=Zapatero and Rajoy agree pact amending the constitution to limit the deficit |work=El Mundo |date=23 August 2011 |access-date=1 July 2014|language=es}}

The Swedish government is obliged to run a budget surplus of at least 1% of GDP on average over a business cycle. In 2019, this goal was temporarily lowered to 0.33% of GDP. The overall debt must not be above 35% of GDP. This rule includes all levels of government, including local authorities.{{cite web |url= https://www.government.se/government-of-sweden/ministry-of-finance/central-government-budget/the-fiscal-policy-framework |title=About the Swedish fiscal policy framework |work=Swedish government |date=18 July 2018 |access-date=2 May 2020}}

After years of rising deficits and debt in the 1990s, Switzerland's citizens adopted the debt brake as a constitutional amendment in 2001. The rule was implemented starting in 2003. It states that each year, the budget must be in balance, adjusted for economic conditions. This adjustment is made by multiplying expenditures by a cyclical factor (the ratio of trend real GDP to expected real GDP), thus either allowing for deficits during recessions or forcing lawmakers to have surpluses during booms. Essentially, the rule calls for structural balance in each year and absolute balance over the course of a business cycle. So if lawmakers want to have expansionary fiscal policy during recessions, they need to pay for it by saving up during good economic times. The rule did initially allow for "extraordinary spending" if a qualified parliamentary majority approved, but recent changes have made this spending count as normal expenditures.{{cite web |url= http://crfb.org/blogs/swiss-version-balanced-budget-amendment |title=The Swiss Version of a Balanced Budget Amendment |work=Committee for a Responsible Federal Budget |date=11 June 2010 |access-date=1 July 2014}}{{cite web |url= https://tile.loc.gov/storage-services/service/ll/llglrd/2016591729/2016591729.pdf |title=Switzerland: Implementation of Article 126 of the Swiss Constitution – The "Debt Brake" |work=Law Library of Congress |date=June 2016 |access-date=7 November 2022}}

Every U.S. state other than Vermont has some form of balanced budget provision that applies to its operating budget.{{Cite web |date=January 2024 |title=What are state balanced budget requirements and how do they work? |url=https://www.taxpolicycenter.org/briefing-book/what-are-state-balanced-budget-requirements-and-how-do-they-work |access-date=2024-09-18 |website=Tax Policy Center |language=en}} The precise form of this provision varies from state to state. Indiana has a state debt prohibition with an exception for "temporary and casual deficits," but no balanced budget requirement. The governor is not legally required to submit a balanced budget, the legislature is not required to approve appropriations that are within available revenue, and the state is not required to end the year in balance.{{cite web |url= http://www.ncsl.org/research/fiscal-policy/state-balanced-budget-requirements-provisions-and.aspx |title=State Balanced Budget Requirements: Provisions and Practice |work=National Conference of State Legislatures |year=2014 |access-date=1 July 2014}} An unusual variant is the Oregon kicker, which bans surpluses of more than 2% of revenue by refunding the money to the taxpayers. State balanced budget requirements do not apply to state capital budgets, which generally allow states to use their debt capacity to finance long-term expenditures such as transportation and other infrastructure.National Association of State Budget Officers, "Capital Budgeting in the States" accessible at {{cite web |url=http://www.nasbo.org/sites/default/files/pdf/Capital%20Budgeting%20in%20the%20States.pdf |title=Archived copy |access-date=2014-10-21 |url-status=dead |archive-url=https://web.archive.org/web/20140820150126/http://www.nasbo.org/sites/default/files/pdf/Capital%20Budgeting%20in%20the%20States.pdf |archive-date=2014-08-20 }}

There is no balanced budget provision in the U.S. Constitution, so the federal government is not required to have a balanced budget and Congress usually does not pass one. Several proposed amendments to the U.S. Constitution would require a balanced budget. Most of these proposed amendments allow a supermajority to waive the requirement of a balanced budget in times of war, national emergency, or recession.

The Articles of Confederation and the Perpetual Union had granted to the Continental Congress the power

: to borrow money, or emit bills on the credit of the United States, transmitting every half-year to the respective States an account of the sums of money so borrowed or emitted

And, with this as a model{{cite web |url= http://press-pubs.uchicago.edu/founders/documents/a1_8_2s2.html |title=Article 1, Section 8, Clause 2: Records of the Federal Convention |work=The University of Chicago |year=2000 |access-date=1 July 2014}} Article I, Section 8, Clause 2 of the Constitution grants to the United States Congress the power

: To borrow money on the credit of the United States;

At the time that the Constitution came into effect, the United States had a significant debt, primarily associated with the Revolutionary War. There were differences within and between the major political coalitions over the possible liquidation or increase of this debt. As early as 1798, Thomas Jefferson wrote:

I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government; I mean an additional article taking from the Federal Government the power of borrowing. I now deny their power of making paper money or anything else a legal tender. I know that to pay all proper expenses within the year would, in a case of war, be hard on us. But not so hard as ten wars instead of one. For wars could be reduced in that proportion; besides that, the State governments would be free to lend their credit in borrowing quotas.{{citation |chapter=Jefferson, Thomas; Letter to John Taylor of Caroline, November 26, 1798 |title=The Writings of Thomas Jefferson |volume=10 |editor1=Lipscomb |editor2=Bergh |chapter-url=http://etext.virginia.edu/Jefferson/quotations/jeff1340.htm}}

(Although Jefferson made a point of seeking a balanced budget during the early years of his administration, he seems to have later reversed himself in purchasing the Louisiana Territory. He made no exception for war, but rather saw the requirement of maintaining a balanced budget as a salutary deterrent.)

The issue of the federal debt was next addressed by the Constitution within Section 4 of the Fourteenth Amendment (proposed on June 13, 1866, and ratified on July 9, 1868):

: The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligation, and claims shall be held illegal and void.

One of the earliest Balanced Budget Amendment proposals presented in Congress was that of Senator Millard Tydings, who introduced Senate Joint Resolution 36, a resolution in support of a Constitutional Amendment that would have taken away some of the flexibility the U.S. Treasury had accrued with respect to debt management by proposing to prohibit appropriations in excess of revenues in the absence of a new debt authorization and require that any new debt be liquidated over a 15-year period.{{cite web|date=August 22, 2019|title=A Balanced Budget Constitutional Amendment: Background and Congressional Options|url=https://fas.org/sgp/crs/misc/R41907.pdf|url-status=live|archive-url=https://web.archive.org/web/20210211081627/https://fas.org/sgp/crs/misc/R41907.pdf|archive-date=February 11, 2021|access-date=July 7, 2021|publisher=Congressional Research Service}}

On May 4, 1936, Representative Harold Knutson (R-Minnesota) introduced House Joint Resolution 579, resolution in support of a Constitutional Amendment that would have placed a per capita ceiling on the federal debt in peacetime.House Joint Resolution 579, 74th Congress, 2d session; reproduced in Report 105-3, 105th Congress, 1st session, February 3,

1997, pp. 3–7.{{cite web |last=Istook |first=Ernest |url=http://www.heritage.org/Research/Reports/2011/07/Considering-a-Balanced-Budget-Amendment-Lessons-from-History |archive-url=https://web.archive.org/web/20110718043913/http://www.heritage.org/Research/Reports/2011/07/Considering-a-Balanced-Budget-Amendment-Lessons-from-History |url-status=unfit |archive-date=July 18, 2011 |title=Considering a Balanced Budget Amendment: Lessons from History |work=The Heritage Foundation |date=14 July 2011}}

Article V of the Constitution specifies that if the legislatures of two-thirds of the states apply to Congress for a constitutional amendment by means of an amendment-proposing convention, then Congress must call that convention. A total of 44 states have submitted applications for a balanced budget amendment, at some time in the past.{{Cite web | url=http://www.foavc.org/StateApplications/Amendment_Subject.htm | title=State Applications by Amendment Subject}} However, they were not outstanding simultaneously as some have expired or been rescinded. As of 27 December 2016, there were 28 outstanding applications according to the Balance Budget Amendment Task Force which advocates for such an amendment.{{cite web |url= http://bba4usa.org |title=Balanced Budget Amendment Task Force |access-date=27 December 2016}} On 24 February 2017, Wyoming became the 29th state to call for a convention to pass a balanced budget amendment.{{cite web |url= http://www.prwatch.org/news/2017/03/13229/koch-brothers-bankroll-constitutional-convention |title=Kochs Bankroll Move to Rewrite the Constitution |author=Alex Kotch | publisher=Center for Media and Democracy | date=23 March 2017 | access-date=1 May 2017}}

{{further|United States public debt}}

Unlike the constitutions of most U.S. states, the United States Constitution does not require the United States Congress to pass a balanced budget, one in which the projected income to the government through taxes, fees, fines, and other revenues equals or exceeds the amount proposed to be spent. This has led to deficit spending and the creation of a national debt. Except for a short period during the presidency of Andrew Jackson since its inception the United States federal government has always been in debt.

Gross debt includes both public debt and Intragovernmental holdings—money borrowed from federal funds such as Medicare and Social Security.

Fiscal years 1940–2009 GDP figures are derived from 2010 Office of Management and Budget figures which contained revisions of prior year figures due to significant changes from prior GDP measurements. Fiscal years 1950-2010 GDP measurements are derived from December 2010 Bureau of Economic Analysis figures which also tend to be subject to revision. The two measures in Fiscal Years 1980, 1990 and 2000-2007 diverge only slightly.

Deficit spending resumed under Richard Nixon, who had become president by the time that the 1969 surplus was known. Nixon's advisors chose to fight inflation rather than to maintain a balanced budget. Nixon was famously quoted as saying, "We are all Keynesians now," with regard to the budget deficit that his administration began to accumulate during years of mild recession. He also imposed the first peacetime wage and price controls, mandatory petroleum allotments, and many other features of a planned economy.

With the distractions of the Watergate scandal and the budget deficit relatively small, however, most criticisms were sidelined until the administration of Jimmy Carter. During Carter's presidency, the term "stagflation" enjoyed widespread use as the economy stagnated even among increased inflation rates. This economic situation had been previously unheard of in the United States where increasing prices and wages had generally been seen during times of economic growth. Republicans began to make much mention of "Democratic deficits" and proposed the Balanced Budget Amendment as a cure.

During this time period, many liberal Democrats began to call for a Balanced Budget Amendment, including Governor Jerry Brown of California, who ran for president against Carter in 1980, and then-Congressman Paul Simon, who, upon his election to the U.S. Senate, would write the version of the amendment that came closest to passing.

The 1980 presidential election gave the presidency to Republican Ronald Reagan and control of the Senate to the Republicans. With President Reagan's support, passage of the amendment started to seem more possible. On August 4, 1982, the United States Senate introduced and debated Joint Resolution 58, an Amendment to the United States Constitution requiring for each year's Federal budget that "total outlays are no greater than total receipts" without three-fifths majority vote of both houses. Joint Resolution 58 passed in the Senate{{Cite web|date=September 1982|title=Balancing the Federal Budget and Limiting Federal Spending: Constitutional and Statutory Approaches (page 1)|url=https://www.cbo.gov/sites/default/files/97th-congress-1981-1982/reports/doc28-entire_0_0.pdf|website=Congressional Budget Office Archive}} but was defeated in the House of Representatives, falling 46 votes short of the 2/3 majority needed.{{Cite web|last=Istook|first=Ernest|title=Considering a Balanced Budget Amendment: Lessons from History|url=https://www.heritage.org/budget-and-spending/report/considering-balanced-budget-amendment-lessons-history|archive-url=https://web.archive.org/web/20170518222209/http://www.heritage.org/budget-and-spending/report/considering-balanced-budget-amendment-lessons-history|url-status=unfit|archive-date=May 18, 2017|access-date=2020-08-25|website=The Heritage Foundation|language=en}} The amendment's backers, far from despairing, said that it was needed more than ever. They began a plan to make an "end run" around Congress, for the U.S. Constitution also allows two-thirds of state legislatures to petition for a convention to be called for the purpose of writing proposed amendments to the Constitution, a procedure which has never happened under the Constitution; the Constitution itself was created by the original constitutional convention of 1787. Much of this effort was initially organized by the National Taxpayers Union and its president at the time, George Snyder, a former Majority Leader of the Maryland State Senate.{{cite news |url=https://www.nytimes.com/1981/03/06/us/constitutional-amendment-drive-on-balanced-budget-pushed-anew.html?scp=1&sq=Constitutional+Amendment+Drive+on+Balanced+Budget+Pushed+Anew&st=nyt |title=Constitutional Amendment Drive on Balanced Budget Pushed Anew |first=Adam |last=Clymer |newspaper=The New York Times |date=6 March 1981}} Many people were appalled at the concept; some constitutional scholars suggested that such a body could not be limited to its ostensible purpose and could largely rewrite the Constitution, perhaps removing or reducing the Bill of Rights, a fear that backers described as being totally groundless, since any proposed changes would still have to be approved by three-quarters of the states, which would presumably doom any attempt to end basic constitutional freedoms.

Detractors also noted that there was no mechanism in place by which to select delegates to any such convention, meaning that the states might choose to select them in a way which tended to subvert democracy. Backers also produced their own constitutional scholars stating that limiting such a convention was perfectly constitutional, that it could be limited to whatever purpose the states had called it for, and that states would be free to select the delegates to represent them, as was the case in 1787.

Perhaps motivated by the number of state legislatures calling for such a convention approaching the required two-thirds, and recognizing its inability to make sufficient cuts on its own initiative to balance the budget, Congress responded in 1985 with the Gramm-Rudman-Hollings Act, named for its Senate sponsors, which called for automatic cuts in discretionary spending when certain deficit-reduction targets were not met. This act soon became a convenient target for opponents of all stripes, who blamed it for government failing to meet perceived needs, for not abolishing the deficit, and anything else that might be wrong with government. When it began to affect popular programs and was partially overturned in the courts, it was first amended to postpone the strength of its effects until later years, and then repealed in its entirety.

President George H. W. Bush, in part to help ensure Congressional support for the Gulf War, agreed to turn back on a campaign promise of no tax increases, reportedly in part because he saw disaffection from his conservative base due to the looming deficit.{{Citation needed|date=November 2007}} In his rhetoric to defend the idea of a balanced budget amendment, Bush likened the U.S. government to a household.{{Cite journal|last=Saas|first=William O.|date=2018-05-04|title=The Econo-Rhetorical Presidency and the U.S. Fiscal Situation|journal=Advances in the History of Rhetoric|volume=21|issue=2|pages=131–146|doi=10.1080/15362426.2018.1474046|s2cid=158182281|issn=1536-2426}}

Deficit spending continued but was no longer much of an issue until the presidential bid of Ross Perot during the 1992 presidential election. Perot made the deficit, and his plans to eliminate it, the major issue of his campaign, along with his protectionist plans to reduce and then eliminate the trade deficit. Many supporters of the Balanced Budget Amendment flocked to the Perot camp. Despite winning a substantial number of popular votes, Perot failed to carry a single state (zero electoral votes). He eventually faded from the political scene and when appearances were made, focused more on the trade deficit issue.

President Bill Clinton did not support a constitutional amendment, but in his 1992 campaign, he called for balancing the budget through ordinary fiscal policy. He came into office facing a large deficit. Clinton signed into law the Omnibus Budget Reconciliation Act of 1993, which attacked the deficit by raising taxes. Beginning with the 1998 budget year, during his second term, the federal government ran a yearly budget surplus through FY 2001. During the Clinton administration, there was an official surplus of $419 billion during fiscal years 1998, 1999, 2000, and 2001.

However, it has been argued that this official balanced budget only constituted a surplus in the public debt (or on-budget), in which the Treasury Department borrowed increased tax revenue from intragovernmental debt (namely the Social Security Trust Fund), thus adding more interest on Treasury bonds. In effect, the four year alleged 'surplus' was only in public debt holdings, while the National Debt Outstanding increased every fiscal year, the lowest being a $17.9 billion deficit in FY2000.{{cite web |url= http://www.craigsteiner.us/articles/16 |title=The Myth of the Clinton Surplus |first=Craig |last=Steiner |work=craigsteiner.us |date=31 October 2007 |access-date=1 July 2014}}{{cite news| url=https://www.wsj.com/articles/SB124277530070436823 |title=Why Government Can't Run a Business |first=John Steele |last=Gordon | author-link= John Steele Gordon |date=21 May 2009 | work=The Wall Street Journal}}{{cite web|url=http://www.c-spanarchives.org/clip/3666049 |title=Clip: Senate Session |work=C-SPAN Video Library |year=2014 |access-date=1 July 2014 |url-status=dead |archive-url=https://web.archive.org/web/20120925171829/http://www.c-spanarchives.org/clip/3666049 |archive-date=25 September 2012 }}{{cite web |url=http://usgovinfo.about.com/library/weekly/aa101500b.htm |title=Surplus? US Debt Pushes $6 Trillion: Debt vs Deficit |first=Robert |last=Longley |work=about.com |year=2014 |access-date=1 July 2014 |archive-date=May 16, 2013 |archive-url=https://web.archive.org/web/20130516155435/http://usgovinfo.about.com/library/weekly/aa101500b.htm |url-status=dead }}{{cite web |url= http://www.cbpp.org/cms/index.cfm?fa=view&id=1654 |title=Would Using the Budget Surplus for Tax Cuts or Entitlement Expansions Affect Long-Term Social Security Solvency? |first1=Kilolo |last1=Kijakazi |first2=Wendell |last2=Primus |work=Center on Budget and Policy Priorities |date=13 March 1998 |access-date=1 July 2014}}{{cite news| url=https://money.cnn.com/2008/08/20/news/economy/social_security_election/index.htm?cnn=yes | work=CNN | first=Jeanne | last=Sahadi | title=The only way to fix Social Security | date=August 20, 2008}}{{cite web |url= http://mises.org/daily/542 |title=The Surplus Hoax |first=Hans F. |last=Sennholz |work=Mises Daily |date=3 November 2000 |access-date=1 July 2014}} Meanwhile, Government Sponsored Enterprises (GSEs) such as GNMA, FNMA and FHLMC continued to borrow and spend an extra $543.6 billion over and above their previous 3 years. GSE debt instruments are classified as US Government Securities, but are not officially part of the Federal Debt total.Submitted by John BuckFEDERAL RESERVE STATISTICAL RELEASE FRIDAY JUNE 8, 2001 – FLOW OF FUNDS ACCOUNTS OF THE UNITED STATES – FLOWS AND OUTSTANDINGS FIRST QUARTER 2001/ PAGE 7, D.2 BORROWING BY SECTOR – FEDERAL GOVERNMENT / PAGE 78, L.124 GOVERNMENT SPONSORED ENTERPRISES-GSEs.

In 1995, the Republican-led Congress immediately engaged in a battle with President Clinton culminating in a vetoed budget and a brief shutdown of the Federal government. Despite negotiations disagreement remained on the pace of spending cuts. Ultimately Republican concessions differed little from what was attainable without shutdown.{{cite news |url=http://voices.washingtonpost.com/fact-checker/2011/02/lessons_from_the_great_governm.html |archive-url=https://web.archive.org/web/20110513213153/http://voices.washingtonpost.com/fact-checker/2011/02/lessons_from_the_great_governm.html |url-status=dead |archive-date=May 13, 2011 |title=Lessons from the great government shutdown of 1995-1996 |first=Glenn |last=Kessler |newspaper=The Washington Post |date=25 February 2011 |access-date=1 July 2014}}{{Citation| last = Pizzigati| first = Sam| title = Greed and Good: Understanding and Overcoming the Inequality That Limits Our Lives| publisher = The Apex Press| orig-year = 2004| year = 2004| pages = 450–51| url = https://books.google.com/books?id=__CeOQcE8GsC&q=Clinton+%22tax+increase%22+1994+election&pg=PA450| isbn = 978-1-891843-25-9}}{{Citation

| last = Spitzer| first = Eliot| author-link = Eliot Spitzer| title = The Republicans' Economic Triumph| newspaper = Slate| date = 7 February 2011| url = http://www.slate.com/articles/news_and_politics/the_best_policy/2011/02/the_republicans_economic_triumph.html| access-date = 19 November 2011}} One provision of their "Contract with America" campaign document, the brainchild of Newt Gingrich who would later become Speaker of the House, called for a balanced-budget amendment.{{cite web|title=REPUBLICAN CONTRACT WITH AMERICA |publisher=United States House of Representatives |url=http://www.house.gov/house/Contract/CONTRACT.html |access-date=19 November 2011 |url-status=dead |archive-url=https://web.archive.org/web/19990427174200/http://www.house.gov/house/Contract/CONTRACT.html |archive-date=27 April 1999 }} In 1995, such an amendment passed the House of Representatives and came within one vote of passing the Senate.{{cite news|date=7 February 2005|title=Deficit Worries Threaten Bush Agenda|newspaper=Washington Post|url=https://www.washingtonpost.com/ac2/wp-dyn/A3261-2005Feb6?language=printer|access-date=21 August 2012}}{{Dead link|date=July 2022 |bot=InternetArchiveBot |fix-attempted=yes }}{{Cite book|last=Blyth|first=Mark|title=Great transformations : economic ideas and institutional change in the twentieth century|year=2002|isbn=978-1-139-08723-0|pages=198|oclc=1004656756}}

In his final State of the Union address, Clinton said the United States should continue to balance its books and pay off the debt.{{cite web |url= http://www.presidency.ucsb.edu/ws/index.php?pid=58708 |first=William J. |last=Clinton |title=Address Before a Joint Session of the Congress on the State of the Union |work=The American Presidency Project |date=27 January 2000 |access-date=1 July 2014}}

A recession, tax cuts and increases in military and other spending have eliminated late 1990s-era surpluses. Both the deficit and debt grew to the largest in U.S. history. In fiscal years starting September 30, 2002, and ending September 30, 2004, the deficit increased nearly 50%.

By 2008, the last full year of George W. Bush's presidency, the deficit had almost doubled again, for the first time exceeding $1 trillion. As a result, during the administration of President George W. Bush, the gross debt increased from $5.7 trillion in January 2001 to $10.7 trillion by December 2008,{{cite web |work=United States Department of the Treasury, Bureau of the Public Debt |date=December 2010 |url=http://www.treasurydirect.gov/NP/BPDLogin?application=np |title=The debt to the penny and who holds it |access-date=16 January 2011 |archive-date=April 18, 2011 |archive-url=https://web.archive.org/web/20110418203433/http://www.treasurydirect.gov/NP/BPDLogin?application=np |url-status=dead }} rising from 57.0% of GDP to 74.5% of GDP.

By the end of 2008, a large reduction in tax revenues caused by the Great Recession and the cost of federal stimulus spending began contributing to a rapidly increasing deficit. Responses to the crisis from both the Bush administration—the bank bailouts and economic stimulus of late 2008—and more stimulus spending in the first months of the Obama administration grew the deficit further. By the end of 2009, the national debt reached a record $11.9 trillion. The Congressional Budget Office estimated in March 2009 that under the Obama administration public debt would rise from 40.8% of GDP in 2008 to 70.1% in 2012.United States Congress, Congressional Budget Office (March 2009). [http://www.cbo.gov/ftpdocs/100xx/doc10014/03-20-PresidentBudget.pdf "Table 1-1: Comparison of Projected Revenues, Outlays, and Deficits in CBO's March 2009 Baseline and CBO's Estimate of the President's Budget."] A Preliminary Analysis of the President's Budget and an Update of CBO's Budget and Economic Outlook, p. 2. Congressional Budget Office [website]. Retrieved January 17, 2011. Gross debt did rise to 84.5% of GDP at the end of Fiscal Year 2009 and to 93.5% of GDP at the end of the fiscal year 2010. (Gross debt includes both public debt and intragovernmental holdings – money borrowed from federal funds such as Medicare and Social Security.)

During the 2011 US debt ceiling crisis, some Republicans supported a bill that would avert the crisis by raising the debt ceiling, but with an increase that would not take effect until a balanced-budget amendment was approved by both houses of Congress and submitted to the states.{{Cite web

|title = Text of Joint resolution proposing a balanced budget amendment to the Constitution of the United States.

|publisher = GovTrack.us

|url = https://www.govtrack.us/congress/bills/112/sjres10/text

|access-date = 2015-10-23}}{{Cite news | last = Matthews | first = Dylan| title = New balanced budget amendment, not the same as the old balanced budget amendment| newspaper = The Washington Post | date = July 7, 2011| url = https://www.washingtonpost.com/blogs/ezra-klein/post/new-balanced-budget-amendment-not-the-same-as-the-old-balanced-budget-amendment/2011/07/07/gIQAJ9N11H_blog.html}} In addition to balancing the budget, it would also impose a constitutional limit on federal spending as a percentage of gross domestic product and would set a supermajority requirement on tax increases. The Budget Control Act of 2011, which resolved the debt-ceiling crisis, required Congress to vote on a balanced-budget amendment in the near future. In addition, it stated that once a balanced budget amendment was sent to the states, the debt ceiling would be automatically increased by 1.5 trillion (this would be in addition to the initial debt limit increase of 2.1 trillion (from 14.294 to 16.394 trillion)).

On November 18, 2011, the House of Representatives voted down a balanced-budget amendment that would not have imposed a supermajority requirement on tax increases.{{cite web| last = Millhiser| first = Ian| title = Rep. Paul Ryan Votes Against Balanced Budget Amendment Because It Doesn't Ruin The Constitution Enough| publisher = ThinkProgress| date = November 18, 2011| url = http://thinkprogress.org/justice/2011/11/18/372492/rep-paul-ryan-votes-against-balanced-budget-amendment-because-it-doesnt-ruin-the-constitution-enough/| access-date = 2011-11-20}} House Rules Committee chair David Dreier (R-CA), who had voted for the amendment in 1995, announced that he had changed his mind about the need to amend the Constitution, in light of the success in balancing the budget in the late 1990s.{{cite web

| last = Millhiser| first = Ian| title = Key GOP Committee Chair To Vote Against Balanced Budget Amendment| publisher = ThinkProgress| date = November 17, 2011| url = http://thinkprogress.org/justice/2011/11/17/371614/key-gop-committee-chair-to-vote-against-balanced-budget-amendment/| access-date = 2011-11-20}}

There is substantial agreement among economists that a strict balanced budget amendment would have adverse effects. In times of recession, deficit spending has significant benefits, whereas spending cuts by governments aggravate and lengthen recessions. In 2003, approximately 90% of the members of the American Economic Association agreed with the statement, "If the federal budget is to be balanced, it should be done over the course of the business cycle, rather than yearly."{{cite journal |last1=Fuller |first1=Dan |last2=Geide-Stevenson |first2=Doris |date=Fall 2003 |title=Consensus among Economists Revisited |journal=Journal of Economic Education |volume=34 |issue=4 |pages=369–87 |doi=10.1080/00220480309595230 |jstor=30042564 |s2cid=143617926}} Weighted by confidence, 99% of U.S. economists surveyed by IGM in 2017 agreed that a balanced budget amendment would not reduce economic output variability in the United States, and 53% agreed that it would not substantially decrease the borrowing costs of the federal government.{{Cite web |title=Balanced Budget Amendment |url=https://www.igmchicago.org/surveys/balanced-budget-amendment/ |access-date=2022-04-24 |website=www.igmchicago.org}}

Economist and public choice scholar James Buchanan was a prominent advocate for a balanced budget amendment.{{Cite journal|last=Biebricher|first=Thomas|date=2016|title=Neoliberalism and Law: The Case of the Constitutional Balanced-Budget Amendment|url=https://www.cambridge.org/core/journals/german-law-journal/article/neoliberalism-and-law-the-case-of-the-constitutional-balancedbudget-amendment/1F2A9551F1C211F0F94A63F3F948C4E5|journal=German Law Journal|language=en|volume=17|issue=5|pages=835–856|doi=10.1017/S2071832200021489|s2cid=232176483 |issn=2071-8322}}{{Citation|last=Buchanan|first=James M.|title=The balanced budget amendment: Clarifying the arguments|date=1997|work=Constitutional Political Economy in a Public Choice Perspective|pages=117–138|editor-last=Rowley|editor-first=Charles K.|publisher=Springer|language=en|doi=10.1007/978-94-011-5728-5_5|isbn=978-94-011-5728-5}} In U.S. politics, Republicans tend to advocate for balanced budget amendments, whereas Democrats oppose them.{{Cite news|last=Appelbaum|first=Binyamin|date=2011-07-17|title=Politicians Can't Agree on Debt? Well, Neither Can Economists|language=en-US|work=The New York Times|url=https://www.nytimes.com/2011/07/18/us/18econ.html|access-date=2020-05-17|issn=0362-4331}} Lobbying organizations supporting the balanced budget amendment include: Balanced Budget Amendment Task Force, the American Legislative Exchange Council, and Citizens for Self-Governance.{{cite news|last1=Wines|first1=Michael|title=Inside the Conservative Push for States to Amend the Constitution|url=https://www.nytimes.com/2016/08/23/us/inside-the-conservative-push-for-states-to-amend-the-constitution.html|access-date=28 September 2017|work=New York Times|date=August 22, 2016}} The Center for Budget and Policy Priorities has argued that constitutional balanced budget amendment would pose serious risks.{{cite web | title = Constitutional Balanced Budget Amendment Poses Serious Risks | publisher = Center for Budget and Policy Priorities | date = July 16, 2014| url = http://www.cbpp.org/research/constitutional-balanced-budget-amendment-poses-serious-risks | access-date = 2016-07-01}}

The amendment has been called "political posturing" because its proponents use it to position themselves as supporters of a balanced budget but without specifying which unpopular tax increases or spending cuts they would support to reach that goal.{{Cite news| last = Dodge | first = Catherine |author2=Laura Litvan | title = Republicans Pushing Budget Balance Won't Deliver Details on How| publisher = Bloomberg L.P. | date = July 18, 2011| url = https://www.bloomberg.com/news/2011-07-18/republicans-pressing-for-a-balanced-budget-fail-to-deliver-details-on-how.html}} For example, Robert Bixby of the anti-deficit Concord Coalition called the amendment "an avoidance device." Economist Dean Baker has noted that if the federal government were to run budget surpluses with the US still experiencing a large trade deficit, the economy would, in the absence of economic bubbles, shrink and experience rising unemployment. Without significant devaluation of the US dollar, he has stated, the federal government necessarily has to run budget deficits to offset trade deficits or there will be high unemployment.{{cite web|url=http://www.thedemocraticstrategist.org/strategist/2014/01/baker_fiscal_policy_the_long-t.php|title=Baker: Fiscal Policy, the Long-Term Budget, and Inequality|last=Baker|first=D.|date=27 January 2014|website=The Democratic Strategist|access-date=30 January 2014}}

It has been argued that such amendment would likely be unenforceable. Among other reasons, the standard budgetary process in the United States operates with projected figures. There is no way of knowing ahead of time whether the budget would end up unbalanced in any fiscal year before that fiscal year is over. While the Congress may be mandated by the amendment only to pass balanced budgets, this could be easily circumvented by inflating revenue projections or routing spending through off-budget channels. Balanced-budget amendment proposals often contain an exemption for emergencies such as being in the state of war. It could be envisioned that the Congress would simply declare the country in a perpetual state of war, year after year, just to avoid the necessity of politically costly spending cuts or tax increases.{{cite web|url=http://www.thefiscaltimes.com/Columns/2010/08/27/Balanced-Budget-Amendment-a-Bad-Approach.aspx#page1|title=Balanced Budget Amendment a 'Phony' Deficit Solution}}

The Hong Kong Basic Law stipulates that the government must keep “the expenditure within the limits of revenues in drawing up its budget” and “avoid deficits”.{{cite web |url=https://www.basiclaw.gov.hk/en/basiclawtext/chapter_5.html#section_1 |title=Basic Law of Hong Kong, Article 107 |access-date=3 May 2020 |archive-date=April 7, 2020 |archive-url=https://web.archive.org/web/20200407102936/https://www.basiclaw.gov.hk/en/basiclawtext/chapter_5.html#section_1 |url-status=dead }} Debt to GDP in Hong Kong was 42.4% in 2019.{{cite web|url=https://www.ceicdata.com/en/indicator/hong-kong/government-debt--of-nominal-gdp |title=Hong Kong SAR, China Government Debt: % of GDP |access-date=3 May 2020}}

• Keynesian economics
• Deficit spending
• Golden Rule (fiscal policy)
• European debt crisis

{{reflist|2}}

{{Reflist|group=lower-alpha}}

• {{cite journal | last=Murau | first=Steffen | last2=Thie | first2=Jan-Erik | title=Für eine Ausstattung des Energie- und Klimafonds mit Kreditermächtigungen (In Favor of Endowing the Energy and Climate Fund with Borrowing Powers) | journal=Wirtschaftsdienst | publisher=Walter de Gruyter GmbH | volume=102 | issue=6 | year=2022 | issn=1613-978X | doi=10.1007/s10273-022-3215-3 | pages=449–455 | language=de | url=https://link.springer.com/content/pdf/10.1007/s10273-022-3215-3.pdf}}

• {{USBill|97|sjres|58}}, proposed Balanced-Budget-Amendment approved by the U.S. Senate on August 4, 1982
• {{USBill|104|hjres|1}}, proposed Balanced Budget-Amendment approved by the U.S. House of Representatives on January 25, 1995
• [https://web.archive.org/web/20110725002722/http://politisite.com/2011/07/19/h-r-2560-cut-cap-and-balance-act-of-2011-full-text-112th-congress-2011-2012/ H.R.2560 – Cut, Cap, and Balance Act of 2011 (Full Text)], proposed Cap-and-Balance-Budget Amendment approved by the U.S. House of Representatives on July 19, 2011
• [http://www.compactforamerica.org/ Compact for America], streamlined Article V balanced budget amendment approach via interstate compact
• Cato Institute's [https://web.archive.org/web/20060622192900/http://www.cato.org/pub_display.php?pub_id=1346 Policy Analysis and Proposal of the Balance-Budget Veto Amendment]
• [http://www.balanceourbudget.com Americans for a Balanced Budget Amendment] organization
• [https://fas.org/sgp/crs/misc/R41907.pdf A Balanced Budget Constitutional Amendment: Background and Congressional Options] Congressional Research Service

{{Constitution of the United States}}

{{authority control}}

Category:Proposed amendments to the United States Constitution

Category:United States federal budgets