The Balanced Budget and Emergency Grid Control Act , also called the Gramm — Rudman — Hollings Act , an act passed by the US Congress in 1985 and signed by President Reagan to reduce the rapidly growing US federal budget deficit . The main authors of the law were Senators Philip Gramm ( Texas ) and Warren Rudman ( New Hampshire ). The law limited the adoption of acts that increase expenditures and reduce revenues, up to and including 1998. Subsequently, the law was supplemented by the general law on budget coordination of 1993.
Content
The need to pass a law
The relevance of this law has increased in connection with the doubling of US government debt during the first presidential term of Ronald Reagan . According to researchers, in the first six years of the Reagan administration, US government debt increased in total at constant prices by the amount of real debt accumulated by the government during the first two hundred years of the US existence (including debts related to financing the US participation in World War II ) [1] . By 1986, federal debt reached 41% of US GDP .
Content and implementation of the law
The law divides budget expenditures into two categories:
- “Approved”, which include, inter alia, salary costs and other current expenses of government departments;
- “Settled” (or “mandatory”), which include, in particular, the costs of medical care for the elderly and the disabled, unemployment insurance, support for agricultural producers and financing of the product labeling program;
Approved expenditures are approved by the adoption of annual budget appropriations. Settled costs are approved by standing laws.
With regard to budget revenues, the law establishes rules in accordance with which they are determined by permanent laws.
Notes
- ↑ Stiglitz J. Yu. Public Sector Economics. M., INFRA-M, 1997.S. 59.
Sources
- US budget. Budget strengthening
- Encyclopedia of Banking and Finance: LAW OF GRAMMA-RUDMAN-HOLLINGS
- Stiglitz, J. Yu. Public Sector Economics. M., INFRA-M, 1997. S. 59-60.