We had a balanced budget at one point. Bush decided to come in and cut taxes and get us into multiple wars. Obama didn't do much and the Trump cut taxes again. If we want a balanced budget again we will probably need to raise taxes AND cut spending
I actually think big government debt is going to become an economic staple going forward - not just in the US but in a lot of countries. I'm giving a presentation this weekend on a very related topic as part of a Masters program so I could go quite far into this but I'll try to keep my thoughts brief:
*We're looking at heading towards the "Japanification" of markets in which low growth, low rates and low inflation become the new norm. It's been heading this way since the GFC.
*Monetary policy is pretty average at stimulating growth outside asset prices. This is a whole other topic that goes into how bad the economic metrics are at saying what's going on in the economy (TL;DR: if house prices were included in inflation, rates would have been raised years ago and we'd be in a more "normal" cycle).
*Fiscal policy is a lot more direct. Building a road or investing in a healthcare system that doesn't suck balls (for example) has a bigger impact on the economy and central governments are better placed to do that. As long as they get kept away from the whole printing money side of things (the Fed's independent for a reason...).
Japan right now has a government debt twice the size of their economy, and the Bank of Japan's been happy to "lend" the government money since the 1990s. Government debt also doesn't compound like a mortgage or credit card - once you pay the interest that's it, so as long as the government stays on top of the interest payments it's not necessarily a huge issue.
Going forward I think the conversation's less about the size of the debt and more about how well the money's being spent. Which is a whole other thing entirely.
Yeah it does seem like the recession is lurking. I still think the U.S. has a little more run in it but it is tough to say exactly when things will happen.
I think China is holding out for 2020 and it may be a while until this gets resolved. Not good for global growth and the bond market is flashing a lot of warning signs
China's been playing the long game since the Opium Wars, so they're more than happy to wait out Trump. I posted a chart a while ago showing how they're happy to live with hurting parts of their own economy, so like you say it doesn't bode well for global growth.
With that said, the Democrats aren't exactly a hugely pro free trade party themselves. Chuck Schumer quietly doesn't think Trump's trade measures go far enough (sigh). I don't see a Democrat ending the trade war themselves unless they get something big out of it. A while ago I mentioned eight or so different things Trump seems to have flagged and how his administration needs to pick one or maybe two of them to focus on for this to have been worth it. But China won't give up their preferential market status or end their IP policy if it looks like they're being beaten into it. Changing their IP policy to join an existing bloc like the TPP would have been feasible because it could look like a positive decision they took on their own merits, but the concept or face matters too much and right now I don't see how either side gets anything significant without it looking like the other side made some kind of retreat.
The path I saw out of the trade war a few months ago was a superficial deal that looked good but didn't do much (China agreeing to buy a bunch of soybeans and giving the US improved access to a market that's already crowded by established players, for example. Watch for those things in any deal that does get struck) but letting the yuan fall below a publicly significant level (ie, crossing a red line) strikes me as more of a statement than anything else.
Wars are easy to start but hard to finish, and this doesn't appear to be an exception.