trump-2027-budget-proposal

6 hours ago - Economy

Trump's all guns, no butter budget proposal

Neil Irwin

Donald Trump sitting behind a desk. — Photo: Brendan Smialowski/AFP via Getty Images

A sharp rise in defense spending. Steep cuts elsewhere. All against a backdrop of rapid growth.

That is the Trump administration's formal 2027 budget proposal, in a nutshell.

Why it matters: As always, the presidential budget is more of a statement of the White House's goals than a road map that is likely to be enacted by Congress. This one shows a president who is eager to spend big on the military while bringing austerity to the rest of the federal budget.

It is premised on a period of much more robust growth than is envisioned by other forecasters — and a steep decline in interest rates from current levels.
The proposal does not contain projections of how the administration's fiscal agenda would affect deficits and debt, normally a mainstay of these documents.

By the numbers: The White House proposes a $1.5 trillion military budget for the 2027 fiscal year, up 42% from 2026.

It includes a 10% cut in non-defense discretionary spending, or $73 billion in spending cuts.
The departments with the steepest proposed cuts are the Small Business Administration (down 67.2% from 2026 funding levels), the National Science Foundation (down 54.7%) and the Environmental Protection Agency (down 52.4%).
"Savings are achieved by reducing or eliminating woke, weaponized, and wasteful programs, and by returning State and local responsibilities to their respective governments," a White House fact sheet says.

The intrigue: In the administration's economic assumptions, GDP growth clocks 3.5% this year and 3.1% from 2027 to 2029.

That would be a remarkable acceleration from 2025, which was around 2%.
Forecasts from the Congressional Budget Office and the Federal Reserve put GDP growth below 2% in the coming years, reflecting demographic shifts that result in slow growth in the labor force.
The White House's higher growth projections imply much faster productivity growth than has been seen over the last couple of decades, perhaps from AI advances.

Of note: The projections have the 10-year U.S. Treasury yield falling to 3.5% in 2027 and even further in ensuing years.