Fiscal blueprint proposes 23% cut to non-defense spending, 13% rise for Pentagon, and sweeping agency eliminations
President Donald Trump has released a stark 2026 “skinny budget” that seeks to reshape federal priorities through sweeping cuts to domestic spending and historic increases to military and homeland security funding. The proposal, unveiled Friday, outlines a 22.6% reduction in non-defense discretionary spending — a US$163bn cut — while lifting national security allocations to over US$1tn, a 13% year-on-year rise.
The budget refrains from offering economic forecasts, revenue projections, or long-term debt and deficit paths — a break from precedent that limits external analysis of its fiscal impact. Instead, it serves as a statement of political intent, advancing Trump’s goal of a leaner federal government focused on border control, military strength, and deregulation.
Major domestic cuts and eliminations
Under Trump’s plan, environmental, education, and public health programs would face some of the steepest reductions:
- Environmental Protection Agency (EPA): Facing over 50% in cuts, with climate and environmental justice programs branded as part of the “Green New Scam.”
- Department of Education: Targeted for a US$12bn reduction and eventual elimination, with specific cuts to teacher grants, preschool programs, and diversity initiatives.
- National Institutes of Health (NIH) and Centers for Disease Control and Prevention (CDC): Budget slashed by tens of billions collectively, with funding redirected toward a new US$500m “Make America Healthy Again” program led by Health Secretary Robert F. Kennedy Jr.
- National Science Foundation (NSF): Cut by over US$5bn.
- National Oceanic and Atmospheric Administration (NOAA): Targeted for US$1.5bn in cuts, affecting satellite programs and climate monitoring.
Several agencies are marked for elimination, including:
- The U.S. Institute of Peace
- The Minority Business Development Agency
- Voice of America
- The Community Development Financial Institutions Fund
- Corporation for Public Broadcasting, AmeriCorps, and both national endowments for the arts and humanities
The administration also proposes to repeal over US$15bn in renewable energy initiatives under the bipartisan 2021 infrastructure law, characterising them as wasteful and ideological.
Border and defense funding surge
By contrast, Trump proposes significant expansions in defense and border-related funding:
- Department of Homeland Security (DHS): Budget would increase by nearly 65%, supporting mass deportation operations and expanded border security.
- Department of Defense: Budget would rise to US$1.01tn, funding nuclear modernisation, missile defense, shipbuilding, and a 3.8% military pay increase.
- Federal Aviation Administration (FAA) and rail safety agencies would receive targeted increases to address air traffic control shortfalls and modernise transport infrastructure.
Role of DOGE and Elon Musk
The budget reflects months of cost-cutting orchestrated by the so-called Department of Government Efficiency (DOGE) — an initiative led by Elon Musk to reduce federal overhead. DOGE has already instigated mass layoffs, contract cancellations, and agency closures without formal congressional approval. Although initially aiming for US$2tn in savings, DOGE has since revised its target to US$150bn.
Despite DOGE’s aggressive restructuring efforts, the budget concedes that deep cuts to agency operations yield limited long-term fiscal impact in a budget increasingly dominated by mandatory entitlement programs and rising debt servicing costs.
Political backlash and legislative outlook
Key Republicans, including Senate Appropriations Chair Susan Collins and former GOP leader Mitch McConnell, have criticised the plan for its unrealistic scope and proposed defense funding freeze in real terms. Collins also objected to cuts in biomedical research and energy assistance for low-income Americans, while McConnell described the defense proposals as an accounting “gimmick.”
Congress — which retains ultimate control over federal spending — is unlikely to adopt the proposal in full. However, Trump’s administration has not ruled out invoking impoundment powers to withhold funding approved by lawmakers, a move that has already prompted legal challenges and multiple oversight investigations.
House Republicans are advancing a separate reconciliation package, incorporating Trump’s tax cut extensions and some elements of the proposed spending reductions. Nonetheless, any final funding agreement will require Democratic support in the Senate to avoid a government shutdown when the current fiscal year ends on September 30.
Strategic implications
Though presidential budgets are rarely enacted as submitted, Trump’s 2026 proposal sets the tone for months of fiscal wrangling and marks a sharp departure from previous federal spending frameworks. With its emphasis on defense, deportation, and deregulation — and its symbolic rejection of climate, equity, and public health priorities — the document crystallises the administration’s policy direction heading into a contentious appropriations season.
