Balanced Budget

The term balanced budget is defined for the Federal Government as occurring when receipts for a fiscal year is equal to or greater than the outlays expended in that year. Though a budget with an greater receipts than outlays will be formally in “surplus”, it is may still be considered balanced.

The term “balanced budget” has been used in the title of two reconciliation bills passed by Congress, the first in 1995 was vetoed while the Balanced Budget Act of 1997 was signed by President William Clinton. The term is also used to refer to Joint Resolutions which would amend the U.S. Constitution to require that outlays be lower than receipts.

Section 1103 of title 31 of the U.S. Code includes a commitment by Congress in this regard, as follows:

§1103. Budget ceiling

Congress reaffirms its commitment that budget outlays of the United States Government for a fiscal year may be not more than the receipts of the Government for that year.

GAO Glossary of Terms and Definition (September 2005)

Balanced Budget

A budget in which receipts equal outlays. (See also DeficitSurplus.)

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House Glossary of Federal Budget Process Terms

Balanced Budget – Loosely, a budget with a surplus rather than a deficit. In governmental accounting terms, a budget in which anticipated or actual total revenues equal anticipated or actual total expenditures. Conversely, an unbalanced budget is one in which expenditures exceed revenues, or vice versa. The President’s budget and the one Congress agrees to each year are anticipatory budgets, consisting of estimates and assumptions about future economic conditions, demographic developments, and workload. Even using the most sophisticated and rigorously objective techniques, those estimates and assumptions are subject to error. A one percent mistake in the assumption about the number of unemployed in an upcoming fiscal year, for instance, may change expected revenues and expenditures by billions of dollars. Moreover, the estimates and assumptions made by both the president and Congress are often influenced by political considerations and therefore subject to further error. Consequently, a nominally “balanced” budget on paper may turn out to be unbalanced when government auditors add up actual expenditures and revenue collections after a fiscal year has ended.



Backdoor Spending


Balanced Budget and Emergency Deficit Control Act of 1985