THE BUDGET DEFICIT of the federal government has emerged as a central focus in American public policy debate, attracting anxious attention from a variety of constituencies. The left now raises the specter of enlarged deficits in opposition to the increasingly audible calls for tax reduction, while the right continues to cite the same threat against new government spending initiatives. In either case the presumption of ill effects from a sustained deficit is an essential underpinning of the argument. The economic consequences of government deficits-usually alleged to be either inflationary (in the sense of raising prices), or deflationary (in the sense of depressing investment and hence economic growth), or both-today appear with unaccustomed urgency in discussions of hitherto unexciting policy issues. Several state legislatures have proposed a constitutional amendment prohibiting the federal government from spending beyond its receipts. In 1976 the victorious Democratic presidential candidate campaigned on a pledge to balance the government budget by 1980.