| | Luke in 10 asked: For those state constitutions that have balanced budget provisions, how well do those work? Merlin in 12 replied: From what I've heard, not very well. Politicians find a way to get around them by calling some spending capital rather than operational and so forth. Therefore, an amendment would have to be written well enough to prevent loopholes.
However, the story seems somewhat deeper than this.
Every US state other than Vermont has some form of balanced budget amendment; the precise form varies. ... An unusual variant is the Oregon kicker, which bans surpluses of more than 2% of revenue by refunding the money to the taxpayers. State-level balanced budget amendments have been strongly criticized by Keynesian economists such as Paul Krugman as worsening the late-2000s recession by forcing states to cut services in the middle of a slump. ...
In 2009 Germany's constitution was amended to introduce the Schuldenbremse ("debt brake"), a balanced budget provision.[1] This will apply to both the federal government and the Länder (states). From 2016 onwards the federal government will be forbidden to run a deficit of more than 0.35% of gross domestic product (GDP). From 2020, the states will not be permitted to run any deficit at all.[2] The Basic Law permits an exception to be made for emergencies such as a natural disaster or severe economic crisis.
http://en.wikipedia.org/wiki/Balanced_Budget_Amendment
As part of a celebration of Albert Gallatin's upcoming 250th birthday the Swiss Embassy held a panel discussing the Swiss federal government's "debt brake" and what could be learned from its use. The panel included Swiss Federal Finance Administration Director-General Fritz Zurbruegg, IMF Fiscal Affairs Director (and Announcement Effect Club member) Carlo Cottarelli, House Budget Committee Chairman John Spratt, and former OMB director, former House Budget Committee Chairman, and current CRFB board member Jim Nussle. http://crfb.org/blogs/swiss-version-balanced-budget-amendment
(The Committee for a Responsible Federal Budget is a bipartisan, non-profit organization committed to educating the public about issues that have significant fiscal policy impact. The Committee is made up of some of the nation's leading budget experts including many of the past Chairmen and Directors of the Budget Committees, the Congressional Budget Office, the Office of Management and Budget, the Government Accountability Office, and the Federal Reserve Board.)
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