One Cheer for the Trump Budget Proposal

As the readers of this blog are well aware, I believe that the rapidly accumulating national debt is by far the biggest long term problem our country faces.  While I am in general optimistic about the future of our country, I am pessimistic that our debt crisis can be solved in a planned and rational manner without going through another huge financial crisis.

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Simply put, fixing a debt problem requires a bipartisan solution, and, at the present time, our broken political system makes it all but impossible to find any kind of consensus short of having a national crisis.  The only way to fix the debt is to get entitlement spending under control (see the first chart).

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The Trump budget for 2020 projects a deficit of $1.1 trillion or 4.9% of GDP which is way too large.  Nevertheless it does at least make some attempt to control both Medicare and Medicaid spending as the second chart shows.
The budget also takes a whack at various governmental departments and agencies (see third chart).  Such whacks at discretionary spending do little to reduce the annual deficit (which will still amount to $1.1 trillion) but are beneficial to force the federal government to operate more efficiently.

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Unfortunately the final budget for 2020, after approval by Congress, is likely to project an even larger deficit than the $1.1 trillion projected by Trump.  This is because Congress is likely to insist on more discretionary spending than Trump proposes.

Summary: The Trump budget proposal at least takes a few small steps towards controlling entitlement spending as well as making cuts in discretionary spending.  Unfortunately even these relatively modest spending curtailments are unlikely to survive Congressional action.

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