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Spending Caps

Definition: Spending caps are limits imposed on the amount of budget authority provided in annual appropriations bills.

History: Spending Caps are a mechanism used by governments to limit the amount of federal spending to avoid creating a deficit and/or adding to their national debt. A major piece of legislation that addressed this issue was H.J. Res. 372, the Balance Budget and Emergency Deficit Control Act of 1985, also known as the Gramm-Rudman-Hollings Act. The main purpose of the Act was to implement a maximum amount of deficit that the federal government could allow, and over a five year period, decrease that amount until there was no deficit allowed. On August 2, 2011, President Obama signed the Budget Control Act, which placed enforceable spending caps on both defense and nondefense discretionary spending over the next ten years.