Balanced Budget Amendment Law and Legal Definition

Balanced-Budget Amendment is an amendment to the U.S. Constitution that constrains total government spending to be less than or equal to total tax collections. Such an amendment would effectively eliminate the federal deficit, which results when the spending exceeds taxes. The logic behind such an amendment is to prevent discretionary use of fiscal policy, which is often blamed for political business cycles and the resulting problems of inflation and unemployment. It requires a balance between the projected revenues and expenditures of the government.