More federal red ink on way
The White House has released its proposed budet for the federal government. Predictably, those who believe the state can never spend enough of your money warn doom will follow should any of the proposed spending reductions actually occur.
Trump's budget relies on "accounting gimmicks" long popular with both parties, such as using overly rosy economic projections to make an end-run around budget caps that his fellow Republicans once championed. The proposed budget would run trillion-dollar deficits in each of the next four years, and would take 15 years to balance—even with the optimistic assumptions about future economic growth—five years longer than the Trump administration's first budget promised.
The budget proposal released Monday also puts to bed the question of whether Trump can keep his campaign promise to eliminate the national debt in eight years.
Indeed, under the projections included in the budget plan, the country would run a deficit of $631 billion in 2025 (which would be Trump's eighth budget, if he remains in office that long)—hardly smaller than the $666 billion deficit in the final fiscal year of Preisdent Barack Obama's time in office.
And a kicker, for those of us still concerned about deficit spending:
Over 10 years, Trump's budget would add more than $7.9 trillion to the national debt.
The real outcome is likely to be much worse than the estimates provided Monday by the White House. That's because Trump's budget assumes 3 percent annual economic growth for the next decade, a figure that's well in excess of what most economists expect. The Federal Reserve, for example, projects 2.3 percent growth over the next year.
Without those overly rosy assumptions, the national debt would likely be $2 trillion higher by 2029, according to an analysis by the Committee for a Responsible Federal Budget (CRFB), a nonpartisan group that advocates for balanced budgets. The group says the budget is likely to add about $10 trillion to the national debt by 2029.
That is not sustainable. It is also highly irresponsible. But our political class seem not to care.
The reckoning will most likely come from markets, which will enforce reforms without regard to the priorities of various political interests.