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Pathways to Fiscal Reform in the United States$
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John W. Diamond and George R. Zodrow

Print publication date: 2014

Print ISBN-13: 9780262028301

Published to MIT Press Scholarship Online: September 2015

DOI: 10.7551/mitpress/9780262028301.001.0001

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PRINTED FROM MIT PRESS SCHOLARSHIP ONLINE (www.mitpress.universitypressscholarship.com). (c) Copyright The MIT Press, 2018. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in MITSO for personal use.date: 17 October 2019

Federal Budget Reform

Federal Budget Reform

Lessons from State and Local Governments

(p.135) 4 Federal Budget Reform
Pathways to Fiscal Reform in the United States

Shanna Rose

Daniel L. Smith

The MIT Press

In this chapter, Shanna Rose and Daniel Smith investigate the extent to which various state budgetary rules have been successful in imposing fiscal discipline on U.S. state governments, and whether such provisions should be considered by the federal government as a means of promoting fiscal sustainability. They find that (1) balanced budget amendments have been fairly successful in limiting debts and deficits, especially in states that have rules that preclude carryover of deficits across budget years, (2) studies on state debt limits have been inconclusive regarding their success in limiting government spending, and (3) state tax and expenditure limits and the line item veto have had little success in restraining spending. The experience of state and local governments suggests that fiscal institutions have the potential to promote long-term fiscal sustainability. They conclude by noting that institutional and political barriers will make it difficult to impose such constraints on the federal government, but that such barriers may be surmountable, given the urgency of the current fiscal situation.

Keywords:   fiscal sustainability, state governments, local governments, budgetary rules, fiscal rules, institutional barriers

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