"The government has no other source of income than the taxes paid by producers. To free itself - for a time - from the limits set by reality, the government is launching a game of credit fraud on a scale the private manipulator could not dream of He borrows money from you today, which must be repaid with money he will borrow from you tomorrow, which must be repaid with. money it will borrow from you the day after tomorrow, and so on This is called "deficit financing." - Ayn Rand PART ONE In 1936, Republican Representative Harold Knuston of Minnesota proposed. which would be the first constitutional amendment to balance the federal budget. The Knutson Resolution would have set a per capita limit on all federal debt. The proposal remained stalled and was overturned by the Judiciary Committee. legislators and economists have been irresistibly drawn to the allure of a federal balanced budget amendment (BBA) to the U.S. Constitution. In September 1995, two economists (Charles Schultze and Nobel Prize winner James Buchanan) published separate and conflicting articles on the recurring issue of BBA policy in the National Tax Journal. The most compelling argument regarding the BBA appears to have been made by Charles Schultze. Schultze is of the opinion that "it is desirable to balance the budget in the medium-term future and, on average, to maintain balance in the long term (at least) thereafter, and that the amendment should be judged on its usefulness as a means to achieve a desirable goal. Judged this way, however, the proposition is seriously flawed in several respects. Schultze first points out a major concern regarding implementing a balanced budget amendment in an economy with an existing sub-middle of paper......any other agency or individual. This debt cannot be sold or exchanged at auction or in the secondary market. The concern with borrowing from non-marketable sources is the ability to repay the trust fund when the debt comes due. If a large portion of the trust fund debt were to be repaid, it might require higher taxes or reduced spending to pay the debt. Although non-marketable debt does not create the repayment difficulties or level of concern of marketable debt, this type of debt remains an unpaid obligation for the Treasury. Works Cited Schultze, C. (1995) “The Balanced Budget Amendment: Needed? Effective? Effective? National Tax Journal, Vol 48Buchanan,J. (1995) “Clarifying Confusion about the Balanced Budget Amendment” National Tax Journal, Vol 48 Rosen H, Gayer T (2010) “Public Finance, 9th