Balanced Budget Act Flashcards, test questions and answers
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What is Balanced Budget Act?
The Balanced Budget Act (BBA) of 1997 was an important piece of legislation passed by the United States Congress that aimed to address large budget deficits in the US and reduce spending. The act required all levels of government to balance their budgets, prevented large increases in government spending except for emergencies, and reduced some taxes. It also limited the amount of debt authorized by Congress, created a PAYGO system which requires new initiatives that increase expenditures be funded by cuts elsewhere or taxes imposed on someone else, and increased Medicare premiums.The BBA had significant implications for both federal and state governments. On the federal level, it meant reducing expenditures across various departments in order to achieve a balanced budget without increasing taxes. At the state level, it meant making difficult decisions regarding which services could be cut back or eliminated altogether in order to stay within budgetary limits while still providing necessary services to its citizens. At first glance, this may seem like a positive step towards fiscal responsibility but there have been mixed reactions surrounding the BBA’s effectiveness over time as well as its potential unintended consequences for those served by programs affected by the Act’s implementation. While it has helped control government spending with strong enforcement mechanisms such as sequestration when Congress does not abide by its terms and conditions; critics argue that it has led to greater income inequality since lower-income families rely heavily on public services which are often cut due to budgetary constraints under this law. Additionally, some feel that it is too inflexible and prevents needed investments from being made when opportunities arise such as during economic downturns when stimulating growth could be beneficial for taxpayers overall. Overall, opinions remain divided about whether or not the Balanced Budget Act has been successful in achieving its intended goals but one thing is certain: this law brought attention to deficit reduction measures taken at both federal and state levels alike raising awareness among policymakers about how best they can invest taxpayer dollars responsibly while meeting their obligation to provide essential public services equally throughout society regardless of income background.