President Trump and the Democrats reached a budget deal, avoiding yet another round of debt ceiling drama.
The last few years we’ve seen politicians go back-and-forth on the budget, only to “resolve” the situation by shutting down the government.
This time they reached a deal to raise spending on defense and non-defense programs over the next few years while suspending the debt ceiling for the same time period.
Each side can point to a win.
President Trump and the Republicans can say they increased defense spending. Meanwhile, Speaker Pelosi and the Democrats can tout the domestic programs they protected. Some key points in the agreement include:
Debt ceiling suspended until July 31, 2021
$320 billion for defense, non-defense programs over two years
2011 spending caps expire
Allowing the spending caps to expire is a kick in the teeth to taxpayers. The caps were meant to enforce a 2011 debt reduction pact. But the limits were delayed each year as lawmakers couldn’t stomach not flashing the cash.
So, in the end, it’s all a bit of a joke. It’s the same thing every year. Spending is up. Budget deficits are above $1 trillion annually. And a decade from now, our national debt could reach $35 trillion.
Adding fuel to the fire, debt around the globe may cause a worldwide economic slowdown. At the end of March, global debt totaled $246.5 trillion, or 320 percent of the world’s economic output. In 2012, it was $210 trillion.
The danger here is obvious – economic growth is limited and eventually people will default.
With that in mind, this spending deal is just more kicking the can down the road. President Trump seems most concerned with pressuring the Federal Reserve to cut rates and keep the economy strong before the 2020 election.