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.
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).
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.
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.