Balanced Budget Amendment

A Balanced Budget Amendment (BBA) is a proposed constitutional rule that would prohibit a government from spending more than it collects in revenue during a given fiscal period, except under defined emergency conditions. In the United States, BBA proposals have been introduced in nearly every Congress since the 1930s. The most prominent near-success came in 1995, when a BBA passed the House but failed in the Senate by a single vote (falling one short of the two-thirds supermajority required under Article V).

Typical BBA proposals include several common elements:

• A requirement that total outlays not exceed total receipts for a fiscal year.
• A supermajority override (often three-fifths or two-thirds) to permit deficit spending.
• Exceptions for declared war or serious military conflict.
• Limits on raising the debt ceiling without supermajority approval.
• Sometimes a cap on federal spending as a percentage of GDP.

Supporters argue a BBA would impose fiscal discipline, reduce intergenerational debt burdens, and constrain political incentives to defer costs. Critics — including most mainstream macroeconomists — counter that it would be procyclical, forcing spending cuts or tax increases during recessions when deficits naturally widen, deepening downturns. It could also complicate counter-cyclical tools used in 2008–2009 and 2020.

At the U.S. state level, 49 of 50 states operate under some form of balanced budget requirement (Vermont being the commonly cited exception), though these vary widely in stringency and typically apply only to operating budgets, not capital budgets. States can also borrow through bond issuance.

Internationally, comparable mechanisms exist. Germany's Schuldenbremse (debt brake), enacted into the Basic Law in 2009, limits structural federal deficits to 0.35% of GDP. The EU's Stability and Growth Pact sets a 3% deficit ceiling for member states, and the 2012 Fiscal Compact (TSCG) required signatories to enshrine balanced-budget rules in national law.

A U.S. BBA has never been ratified, as Article V requires approval by two-thirds of both chambers of Congress (or a convention) and three-fourths of state legislatures.