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What is Balanced Budget Amendment mean?
A balanced budget amendment is a constitutional rule requiring that a state cannot spend more than its income. It requires a balance between the projected receipts and expenditures of the government.
Balanced-budget provisions have been added to the constitutions of most U.S. states, Germany, Hong Kong, Italy, Poland, Slovenia, Spain and Switzerland, among others. The Republican Party has advocated for the introduction of a balanced budget amendment to the U.S. Constitution.
Balanced budget amendments are defended with arguments that they reduce deficit spending and constrain politicians in making irresponsible short-term spending decisions when they are in office. Research shows that balanced budget amendments lead to greater fiscal discipline. However, there is substantial agreement among economists that strict balanced budget amendments have harmful economic effects. In times of recession, deficit spending has significant benefits, whereas spending cuts by governments aggravate and lengthen recessions. To prevent that, most balanced-budget provisions make an exception for times of war, national emergency, or recession, or allow the legislature to suspend the rule by a supermajority vote.
referencePosted on 18 Oct 2024, this text provides information on Miscellaneous in Business related to Business. Please note that while accuracy is prioritized, the data presented might not be entirely correct or up-to-date. This information is offered for general knowledge and informational purposes only, and should not be considered as a substitute for professional advice.
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