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Balanced budget amendment


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.