balanced budget amendment

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A proposal to compel the US government to balance its budget by a consitutional amendment forbidding further government borrowing. Such an amendment would remove the discretion to allow a deficit to deal with a depression in activity or a political crisis requiring increased military spending. Also, short-run fluctuations in the budget position 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 so that a balanced budget is not enforceable.

Subjects: Economics.

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