In his first full budget proposal since returning to the White House, President Donald J. Trump has laid out a sweeping $1.7 trillion spending blueprint that slashes domestic programs to levels not seen since the 1960s, while prioritizing military strength, border security, and a sharply reduced federal footprint.
Among the most striking features of the 2026 fiscal plan is a $163 billion reduction in discretionary spending, targeting a vast array of federal agencies, from the Environmental Protection Agency (EPA) and Centers for Disease Control (CDC), to the National Endowment for the Arts (NEA) — the last of which is slated for complete elimination.
The White House’s vision reflects what budget director Russell Vought called a “line-by-line dismantling of the administrative state,” where programs deemed redundant, politicized, or “contrary to the needs of ordinary working Americans” have been zeroed out. The proposed budget has drawn heavy criticism from both sides of the aisle, as these billions often make their way to various states and districts around the U.S. This means many politicians might see billions of typically expected income for their constituents decimated or completely wiped out.
Lowest Domestic Spending Since the Great Society
If enacted, Trump’s budget would drop non-defense discretionary funding to below 2% of gross domestic product (GDP) — the lowest share since records began. That figure includes core programs ranging from education and public health to housing and environmental safety.
Federal support for the arts, humanities, public media, clean water, job training, and public housing all face massive reductions or outright elimination. Meanwhile, $113 billion in new defense spending and a 65% boost to the Department of Homeland Security (DHS) round out the other end of the ledger. Overall, when including defense spending, the budget sees a roughly flat YoY spending amount.
But Trump noted the $113 billion for defense spending should be a one-time increase as the administration looks to crack down on ongoing campaign objectives. This could mean the 2027 budget sees similar spending to current levels, minus that $113 billion increase — ultimately resulting in headway towards denting America’s spending deficit.
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Winners and Losers: From the Pentagon to DOGE
While the Defense Department, Homeland Security, and Veterans Affairs are among the few winners, nearly every other agency is expected to tighten its belt. The Department of Education faces a $12 billion cut; the Department of Health and Human Services will see $33.2 billion disappear; and HUD, which oversees affordable housing, would lose over $33 billion — nearly half its budget.
Alongside proposed defunding of the National Endowment for the Arts and the Humanities, Trump’s budget formalizes spending towards a new project: the National Garden of American Heroes. The National Garden of American Heroes is a proposed statuary park initiated by Trump to honor 250 notable figures from American history. Originally announced during a 2020 Independence Day event at Mount Rushmore, the project aims to celebrate individuals who have made significant contributions to the nation's cultural, scientific, economic, and political heritage.
Democratic lawmakers were quick to disapprove of the budget, with Senate Appropriations Chair Patty Murray warning it could worsen inequality, economic fragility, and health outcomes.
But opposition is not strictly partisan. Moderate Republicans like Senator Susan Collins (R-ME) expressed concern over the depth of cuts to heating assistance, Medicaid administration, and services for low-income seniors.
House Speaker Mike Johnson came out in support of the document, potentially signaling some version of the proposal could make its way to the White House desk.
The Long Game: Tax Cuts and Political Leverage
Behind the dramatic spending reductions lies a larger strategy. Trump’s allies view the budget as a precursor to a broader legislative package — expected later this year — that would expand expiring tax cuts from the president’s first administration. The spending cuts provide political and fiscal cover for what may become one of the largest tax reduction efforts in U.S. history.
Trump was previously responsible for one of the largest tax cuts and overhauls in U.S. history. The overall effects of those have been debated. Many worried federal receipts would plummet while further advancing income inequality. After going into effect in 2018, however, federal receipts grew from $3.33 trillion to $3.46 trillion. For reference, the preceding three years, revenues only grew from $3.25 trillion to $3.33 trillion. In 2024, federal receipts are now close to topping $5 trillion. Meanwhile, the S&P 500 Index (SPY) has risen 111% since December 2017.
Now, Trump has hinted at another sweeping overhaul of taxes coming later this year. On the campaign trail, the president promised a number of sweeping changes. This includes everything from eliminating personal income taxes in favor of tariffs to “no tax on tips,” where wait staff will no longer pay taxes on tips earned while working. A post on the official White House website said it “will include No Tax on Tips, NO Tax on Social Security, and No Tax on Overtime.”
The White House claims this will:
- Increase real wages by as much as $3,300 per year.
- Increase take-home pay for median-income households by as much as $5,000/year.
- Short-run real GDP will be boosted by 3.3-3.8% and long-run real GDP by 2.6-3.2%.
- Save 4.1 million jobs.
What’s Next?
Trump’s budget proposal is not binding; it is an opening bid. But it signals where the administration is headed: a downsized federal government that cuts deeply into domestic programs while emphasizing enforcement, industrial policy, and ideological realignment.
For now, the real battle will take place in Congress, where Republicans themselves must decide how far they are willing to go in reshaping the federal government.
