A balanced budget amendment or debt brake 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, and the balance requirement may be for each fiscal year or over a multi-year period.
Balanced-budget provisions have been added to the constitutions of Germany, Hong Kong, Italy, Poland, Slovenia, Spain and Switzerland, among others,International Monetary Fund Fiscal Affairs Department, "Fiscal Rules Dataset, 1985 - 2021," https://www.imf.org/external/datamapper/fiscalrules/matrix/matrix.htm, January 2021 as well as to the constitutions of most U.S. states.National Association of State Budget Officers, Budget Processes in the States, https://www.nasbo.org/reports-data/budget-processes-in-the-states, 2021, Table 9: Balanced Operating Budget Requirements, p. 61 In the United States, proposals for balanced budget amendments to the United States Constitution have often had bipartisan support but have become more associated with the Republican Party in the 21st century.Balanced Budget Amendment proposals in the U.S. House of Representatives, 1973-2025, Congress.gov, https://www.congress.gov/search?pageSort=dateOfIntroduction%3Adesc&q=%7B%22source%22%3A%22legislation%22%2C%22type%22%3A%22joint-resolutions%22%2C%22subject%22%3A%22Economics+and+Public+Finance%22%2C%22house-committee%22%3A%22Judiciary%22%7D, retrieved July 26, 2025
Balanced budget amendments are defended with arguments that they reduce deficit spending and constrain politicians from 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 annual balanced budget amendments have harmful near-term 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. In 1995, such an amendment passed the US House and came within one vote of passing the Senate.
Alternatively, some balanced budget requirements and proposals target multi-year balance instead of annual balance.Federal Department of Finance, "Debt Brake," Swiss Confederation, https://www.efd.admin.ch/en/the-debt-brake, retrieved July 26, 2025Rep. Justin Amash, H.J.Res.81 (112th Congress), Proposing a balanced budget amendment to the Constitution of the United States, https://www.congress.gov/bill/112th-congress/house-joint-resolution/81, introduced July 21, 2011.Rep. Dave Brat, H.J.Res.55, (114th Congress), Proposing a balanced budget amendment to the Constitution of the United States, https://www.congress.gov/bill/114th-congress/house-joint-resolution/55, introduced May 20, 2015 Structural balance—balance over the medium term—avoids the pro-cyclical features of an annual balance requirement and may allow adjustments for automatic changes in benefits programs known as automatic stabilizers.U.S. Government Accountability Office, "Economic Downturns: Considerations for an Effective Automatic Fiscal Response," GAO-25-106455, https://www.gao.gov/products/gao-25-106455, June 9, 2025.
Europe Austria In November 2011, the Austrian coalition government tried to amend its constitution and introduce a German style Schuldenbremse ("debt brake"). This would have forced the government to reduce its debt level to 60% of gross domestic product (GDP) by 2020. However, the government failed to gain a two-thirds majority in support of the constitutional amendment. Another attempt was made in October 2019, which was also unsuccessful.
Denmark Local and regional authorities in Denmark are not allowed to run deficits and must always balance their budgets. There is no such rule for the national government, which has no limits on debt beyond the common rules of the European Union. Danish debt is very low in international comparison and stands at 33% of GDP in 2019.
France Article 34 of the Constitution was amended in 2008 to include the objective of balancing the public sector accounts. In 2012, France passed a new law (2012–1403), creating the independent High Council of Public Finances, giving it the responsibility to report on the sustainability and deviation from planned targets of public spending.
Germany In 2009, Germany's constitution was amended to introduce the Schuldenbremse ("debt brake"), a balanced budget provision. This applies to both the federal government and the Länder (German states). From 2016 onwards, the federal government was forbidden to run a structural deficit of more than 0.35% of GDP. Since 2020, the states have not been permitted to run any structural deficit at all. The Basic Law permits an exception to be made for emergencies such as a natural disaster or severe economic crisis. The Federal government also used off-budget funds (Sondervermögen) to circumvent the brake rule. The debt brake has been criticized for low flexibility.
Italy In 2011, Italian Prime Minister Silvio Berlusconi promised to balance the budget by 2013, and a balanced budget amendment to the Constitution of Italy was added in 2012 with an overwhelming parliamentary majority, under the following Monti government. Under the amended Constitution, deficit spending can still take place in the event of emergencies, but only if authorized by a majority of the entire membership in both houses of Parliament. In practice, the term "emergency" has been loosely interpreted, and Parliament has always authorized the borrowing of new debt; Italy has not yet had a balanced budget since the passage of the amendment.
Poland Poland's constitution (adopted in 1997) caps the public debt at 60% of GDP – the government cannot take on any financial obligations that would cause that limit to be exceeded. To ensure this level is never breached, Poland has a self-imposed debt threshold of 55% of GDP, and the government must take action to balance the budget once this level is exceeded.
Slovenia In 2013, the Slovenian parliament approved a balanced budget amendment to the constitution that came into force in 2015.
Spain In 2011, the Spanish Parliament proposed a law amending the Spanish Constitution to require a balanced budget at both the national and regional level by 2020. The law states that public debt cannot exceed 60% of GDP, though exceptions would be made in case of a natural catastrophe, economic recession, or other emergencies. The changes will also require the government to stick to EU annual deficit limits of 3% of GDP.
Sweden The Swedish government is obliged to run a budget surplus of at least 1% of GDP on average over a business cycle. In 2019, this goal was temporarily lowered to 0.33% of GDP. The overall debt must not be above 35% of GDP. This rule includes all levels of government, including local authorities.
Switzerland After years of rising deficits and debt in the 1990s, Switzerland's citizens adopted the debt brake as a constitutional amendment in 2001. The rule was implemented starting in 2003. It states that each year, the budget must be in balance, adjusted for economic conditions. This adjustment is made by multiplying expenditures by a cyclical factor (the ratio of trend real GDP to expected real GDP), thus either allowing for deficits during recessions or forcing lawmakers to have surpluses during booms. Essentially, the rule calls for structural balance in each year and absolute balance over the course of a business cycle. So if lawmakers want to have expansionary fiscal policy during recessions, they need to pay for it by saving up during good economic times. The rule did initially allow for "extraordinary spending" if a qualified parliamentary majority approved, but recent changes have made this spending count as normal expenditures.
United States U.S. states Every U.S. state other than Vermont has some form of balanced budget provision that applies to its operating budget. The precise form of this provision varies from state to state. Indiana has a state debt prohibition with an exception for "temporary and casual deficits," but no balanced budget requirement. The governor is not legally required to submit a balanced budget, the legislature is not required to approve appropriations that are within available revenue, and the state is not required to end the year in balance. An unusual variant is the Oregon kicker, which bans surpluses of more than 2% of revenue by refunding the money to the taxpayers. State balanced budget requirements do not apply to state capital budgets, which generally allow states to use their debt capacity to finance long-term expenditures such as transportation and other infrastructure.National Association of State Budget Officers, "Capital Budgeting in the States" accessible at
U.S. federal government There is no balanced budget provision in the U.S. Constitution, so the federal government is not required to have a balanced budget and Congress usually does not pass one. Several proposed amendments to the U.S. Constitution would require a balanced budget. Most of these proposed amendments allow a supermajority to waive the requirement of a balanced budget in times of war, national emergency, or recession.
History The Articles of Confederation and the Perpetual Union had granted to the Continental Congress the power to borrow money, or emit bills on the credit of the United States, transmitting every half-year to the respective States an account of the sums of money so borrowed or emitted And, with this as a model Article I, Section 8, Clause 2 of the Constitution grants to the United States Congress the power To borrow money on the credit of the United States;
At the time that the Constitution came into effect, the United States had a significant debt, primarily associated with the Revolutionary War. There were differences within and between the major political coalitions over the possible liquidation or increase of this debt. As early as 1798, Thomas Jefferson wrote:I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government; I mean an additional article taking from the Federal Government the power of borrowing. I now deny their power of making paper money or anything else a legal tender. I know that to pay all proper expenses within the year would, in a case of war, be hard on us. But not so hard as ten wars instead of one. For wars could be reduced in that proportion; besides that, the State governments would be free to lend their credit in borrowing quotas. (Although Jefferson made a point of seeking a balanced budget during the early years of his administration, he seems to have later reversed himself in purchasing the Louisiana Territory. He made no exception for war, but rather saw the requirement of maintaining a balanced budget as a salutary deterrent.)
The issue of the federal debt was next addressed by the Constitution within Section 4 of the Fourteenth Amendment (proposed on June 13, 1866, and ratified on July 9, 1868): The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligation, and claims shall be held illegal and void.