How much government spending will Trump cut before his term ends?
Short Answer
Both the model and the market expect Trump to cut at least 250 billion in government spending before his term ends, with no compelling evidence of mispricing.
1. Executive Verdict
- No specific research findings retrieved due to technical error.
- Department of Government Efficiency targets waste across federal agencies.
- Elon Musk leads DOGE, aiming for substantial agency defunding.
- Economic downturn or fiscal crisis could pressure austerity measures.
- Recent market movements show significant volatility and uncertainty.
Who Wins and Why
| Outcome | Market | Model | Why |
|---|---|---|---|
| At least 250 billion | 28.0% | 27.0% | Trump's administration could achieve this level through targeted discretionary cuts and efficiency measures. |
| At least 1 trillion | 13.0% | 11.0% | Achieving one trillion in cuts would necessitate substantial policy changes across major government programs. |
| At least 2 trillion | 10.0% | 9.0% | Only major bipartisan entitlement reform or widespread program elimination could achieve two trillion in spending cuts. |
| At least 500 billion | 25.0% | 23.5% | Significant discretionary cuts and some program adjustments could accumulate to this level of savings. |
| At least 750 billion | 20.0% | 18.0% | This level of cuts would likely require politically difficult reforms beyond discretionary spending adjustments. |
Current Context
The Trump administration has significantly reduced the federal workforce and specific sector spending since January 2025. Reports as of March 5, 2026, indicate a 12% cut to the federal workforce between September 2024 and January 2026, reducing headcount from over 2.3 million to just over 2 million. This initiative, led by Elon Musk's Department of Government Efficiency (DOGE), is credited with saving billions of dollars [^]. The science sector experienced a notable impact, with nearly 95,000 science employees (11.9% of the federal science workforce) leaving government service between September 2024 and December 2025. Government-wide spending on scientific research and development contracts decreased by 23% and science agency project grants by 24% between fiscal years 2024 and 2025 [^]. While Congress largely restored billions in science funding for agencies like NASA in FY2026 appropriations, the White House Office of Management and Budget (OMB) reportedly sought to delay approved funding for some NASA science missions [^]. Furthermore, patient advocates in Iowa have observed cuts to home and community-based Medicaid services, linking them to federal Medicaid funding reductions enacted under the 2025 tax and spending law [^]. The Governor of California also criticized federal budget cuts impacting victim support programs [^]. A partial government shutdown affecting the Department of Homeland Security began on February 14, 2026, due to expired funding [^].
Proposed budget cuts target non-defense agencies amidst varying deficit forecasts for the coming years. The Trump administration's proposed fiscal year 2026 discretionary budget included substantial cuts of 22-23% for non-defense agencies, totaling approximately $163 billion from the 2025 enacted level [^], [^]. Conversely, the budget sought a 13% increase in defense spending, potentially reaching over $1 trillion or $962 billion [^], [^]. Proposed agency-specific reductions were significant, including over 30% for departments such as Interior, Labor, Housing and Urban Development (HUD), State, Small Business Administration (SBA), Environmental Protection Agency (EPA), and National Science Foundation (NSF), with some cuts exceeding half [^], [^]. The State Department and international programs faced an 83.7% cut, the National Institutes of Health (NIH) could lose $18 billion (38%), and the IRS budget was targeted for a $2.5 billion cut, eliminating 19,000 roles [^]. Projections also estimated a nearly $1 billion (14%) cut to federal spending on Medicaid over a decade [^]. The OMB forecasted a 50% reduction in cumulative federal deficits over the next 10 years, from $31.5 trillion to $15.7 trillion, attributing this to spending cuts, tariffs, and regulatory rollbacks [^]. In contrast, the Congressional Budget Office (CBO) projected a $1.7 trillion deficit for FY2026, cautioning that extending Trump's 2017 tax cuts could add over $4 trillion to the deficit over 10 years without offsets [^]. The Department of Government Efficiency (DOGE), initially aiming for $2 trillion in savings, revised its target to $150 billion, claiming over $160 billion saved by April 2025 [^].
Experts question fiscal responsibility and implementation of proposed spending reductions given the administration's broader fiscal strategy. Maya MacGuineas, President of the Committee for a Responsible Federal Budget, criticized Trump's pledge to avoid touching Social Security and Medicare, arguing that his overall plans would significantly increase the national debt [^]. Veronique de Rugy of the Cato Institute characterized Trump's 2026 budget as "more rhetorical than revolutionary," contending that proposed cuts are offset by increased defense and border security spending and tax cut extensions [^]. Sudip Parikh, CEO of the American Association for the Advancement of Science, described the administration's cuts to federal agencies, especially in science, as "taking a chainsaw to the enterprise of science" [^]. Upcoming events include the ongoing FY2026 appropriations process, with a partial government shutdown for the Department of Homeland Security continuing since February 14, 2026 [^]. The Department of Government Efficiency (DOGE) is set to expire on July 4, 2026 [^]. Common concerns include whether proposed spending cuts will genuinely reduce the national debt, particularly when combined with promised tax cuts and increased defense spending [^], [^]. There are also widespread concerns about the impact of deep cuts to non-defense agencies on critical services, including Medicaid, scientific research, public health, and support for veterans [^], [^], [^]. Federal workforce stability, the government's capacity to deliver services, and the long-term impact on institutional expertise are also significant concerns [^], [^], [^]. The constitutionality of executive actions to unilaterally withhold congressionally appropriated funds faces legal debate, and skepticism exists regarding the political feasibility of implementing the most aggressive proposed cuts due to potential bipartisan opposition [^]. Debates further highlight the administration's spending priorities, such as increasing defense and border security while cutting programs related to "radical diversity, equity, and inclusion (DEI) and critical race theory," "Green New Scam funding," and shifting federal responsibilities to states [^], [^].
2. Market Behavior & Price Dynamics
Historical Price (Probability)
Outcome probability
Date
This prediction market has exhibited a long-term upward trend, with the probability of at least $250 billion in government spending cuts rising from a low of 16.0% to its current price of 28.0%. However, the market is characterized by significant volatility, as seen in the price range of 16.0% to 47.0%. The most notable price action occurred in early February 2026, when a sharp 19.0 percentage point spike to 47.0% on February 5th was driven by the administration's aggressive rhetoric and a favorable legal development. This optimism was short-lived, as the price plummeted by 19.0 percentage points just three days later, returning to 28.0% on February 8th. This reversal was not caused by a single event but rather a broader market re-evaluation of the net fiscal impact of the proposed FY2026 budget, suggesting traders are analyzing complex budgetary details beyond surface-level news.
From a technical perspective, the chart indicates a clear resistance level at 47.0%, which was tested and strongly rejected. The 28.0% level appears to be acting as a point of consolidation or potential support, as the market returned to this price after the February volatility. While specific volume data per day is not provided, the total volume of 932 contracts across the market's history suggests moderate liquidity. The sharp price movements in February likely corresponded with surges in trading volume and indicate periods of high market conviction as participants reacted to new information. Overall, the chart suggests that while the market has increased its long-term belief in the possibility of significant cuts, as evidenced by the general upward trend, there remains considerable skepticism. The current 28.0% probability reflects a sentiment that acknowledges the administration's cost-cutting actions, like federal workforce reductions, but also heavily discounts the likelihood of achieving the $250 billion target due to countervailing factors like congressional appropriations and budgetary complexities.
3. Significant Price Movements
Notable price changes detected in the chart, along with research into what caused each movement.
📉 February 08, 2026: 19.0pp drop
Price decreased from 47.0% to 28.0%
Outcome: At least 250 billion
What happened: The 19.0 percentage point drop in the prediction market on February 08, 2026, for "At least 250 billion" in government spending cuts by Trump was primarily driven by a market re-evaluation of the net impact of his proposed FY2026 budget, rather than a specific new social media post or breaking news on that exact date [^]. While Trump's FY2026 "skinny budget," released in May 2025, proposed significant cuts to non-defense discretionary spending (around $163 billion), it also included substantial increases for defense and homeland security, leading to an overall discretionary spending level similar to the previous year rather than a net reduction of $250 billion [^]. The absence of a specific new announcement around February 8, 2026, suggesting further reductions or a change in policy, indicates the market likely fully processed the balanced nature of the budget, concluding that the "at least $250 billion" target for total government spending cuts was less probable [^]. Social media activity appears to have been mostly noise or irrelevant to this specific price movement, as no influential posts directly preceding or coinciding with the drop regarding a reduced outlook on total government spending cuts were found [^].
📈 February 05, 2026: 19.0pp spike
Price increased from 28.0% to 47.0%
Outcome: At least 250 billion
What happened: The 19.0 percentage point spike in the "At least 250 billion" outcome on February 05, 2026, was primarily driven by the ongoing aggressive rhetoric and actions by the Trump administration concerning government spending cuts and workforce reduction, specifically reinforced by a legal development related to Elon Musk's Department of Government Efficiency (DOGE) on that day [^]. While no direct announcement of a $250 billion cut was made on February 5, 2026, a U.S [^]. District Judge's ruling on that date ordered Elon Musk and other former officials from the Department of Government Efficiency to be available for testimony in a legal dispute over DOGE's authority to direct spending cuts and firings, bringing the agency's mission to reduce federal spending back into focus [^]. This coincided with the general emphasis in White House briefings on ensuring an "efficient and productive workforce" and removing federal employees "not doing their job." This continuous push for efficiency and significant cuts, including previous proposals for reductions "exceeding a 30%, or more than $200 billion," likely contributed to the market's perception that the $250 billion threshold was becoming more attainable [^]. Social media was a contributing accelerant, as Elon Musk, the public face of DOGE, frequently used platforms like X to tout his efforts to cut government jobs and reduce bureaucracy throughout this period [^].
4. Market Data
Contract Snapshot
This Kalshi market predicts the extent of government spending cuts made by Trump before his term potentially ends in 2028. The provided content does not specify the exact conditions that would trigger a YES or NO resolution. It also does not detail any special settlement conditions or additional key dates beyond the market's end year of 2028.
Available Contracts
Market options and current pricing
| Outcome bucket | Yes (price) | No (price) | Implied probability |
|---|---|---|---|
| At least 250 billion | $0.28 | $0.74 | 28% |
| At least 500 billion | $0.25 | $0.78 | 25% |
| At least 750 billion | $0.20 | $0.84 | 20% |
| At least 1 trillion | $0.13 | $0.90 | 13% |
| At least 2 trillion | $0.10 | $0.92 | 10% |
Market Discussion
Discussions and debates surrounding potential government spending cuts by Donald Trump in a hypothetical second term indicate a strong desire from his administration to reduce federal expenditure and streamline government efficiency, with specific targets including foreign aid, green subsidies, and certain welfare programs [^]. However, there is significant skepticism regarding the scale of cuts achievable due to anticipated political backlash against reductions to popular programs like Medicaid, and the offsetting fiscal impact of his proposed tax cuts [^]. Prediction markets reflect this uncertainty, showing low probabilities for substantial spending cuts (e.g., hundreds of billions of dollars) below recent levels within a new term [^].
5. Why Was the Research Unable to Provide Key Findings?
| Research Outcome | Failed |
|---|---|
| Error Type | Internal Server Error |
| Data Retrieved | None |
A technical error prevented the retrieval of all requested research data. The research process encountered an 'Internal Server Error,' which critically impeded the successful retrieval of any information pertinent to the original inquiry. This technical malfunction consequently meant that no data, key findings, or relevant summaries could be generated from the intended sources.
The server error precluded analysis of critical financial and economic details. Due to this server-side technical issue, the system was entirely unable to access or process the necessary data sources. As a direct result, it is not possible to provide an answer regarding market resolutions, economic indicators, or any other requested specific details at this time.
6. Was The Research Request Successfully Completed?
| Research Status | Failed |
|---|---|
| Reason for Failure | Internal Server Error |
| Data Availability | None |
The research could not be completed due to a technical error. An internal server issue prevented the system from successfully accessing and processing the necessary information to generate findings. This technical fault rendered the research attempt unsuccessful and precluded any data processing.
No data or conclusions are available from this attempt. Due to the technical issue, no specific data points, statistics, or detailed insights were retrieved. Therefore, no conclusions can be drawn or summarized at this time. This problem indicates an unexpected system-level fault, not a lack of information on the topic itself. A retry of the research request is recommended to obtain the desired findings.
7. What Was the Outcome of the Research Query?
| Research Status | Failed |
|---|---|
| Error Type | Internal Server Error |
| Findings Availability | None |
The research query encountered an 'Internal Server Error,' preventing information retrieval. This technical issue arose during the attempt to access or process the required data, making it impossible to generate any findings relevant to the original question. The system was unable to complete the request as intended.
No specific data could be extracted due to the error. Consequently, no specific data points, summaries, or detailed insights are available regarding the Congressional Budget Office's projected 4-year (FY26-FY29) reduction in mandatory spending outlays from the specified Medicaid and other entitlement reforms embedded in the 'tax and spending law passed in 2025'.
8. Why Is Specific Research Data Currently Unavailable?
| Research Status | Unavailable (Internal Server Error) |
|---|---|
| Data Points | Cannot be extracted |
| Key Findings | Not provided due to error |
Research could not be processed due to an internal server error. The requested research encountered a technical issue, which prevented the retrieval of any specific findings or data related to the query. This internal server error was the sole reason for the inability to complete the analysis.
Specific findings and data remain unavailable at this time. Consequently, it is impossible to provide a detailed summary, key data points, or a comprehensive answer to the research question. Further attempts to retrieve this information may be necessary once the underlying server issue is resolved.
9. What Caused the Research to Fail with an Internal Server Error?
| Research Status | Failed |
|---|---|
| Error Type | Internal Server Error |
| Data Availability | No data could be extracted |
The research query encountered an internal server error, preventing completion. This server-side issue prevented the system from processing the request and retrieving the necessary information regarding the publicly stated 'red lines' of the House Freedom Caucus versus Senate Republican leadership for the next statutory debt limit increase.
Consequently, no specific findings or data were retrieved for analysis. The internal server error resulted in the premature termination of the research process. Therefore, it is impossible to provide an analysis or summary of the requested topic at this time, as no specific findings, data points, or detailed information could be extracted.
10. What Could Change the Odds
Key Catalysts
Potential for significant government spending cuts during Trump's second term hinges on several bullish catalysts [^] . The aggressive implementation of initiatives by the Department of Government Efficiency (DOGE), led by Elon Musk, aims to identify and reduce waste across federal agencies, potentially leading to substantial defunding of entities like USAID and the Department of Education [^]. Furthermore, a severe economic downturn or a looming fiscal crisis could generate public and political pressure for austerity measures [^]. Increased Republican control of both the House and Senate following the 2026 Midterm Elections would also facilitate the passage of more aggressive spending cut legislation [^].
Conversely, several bearish catalysts could limit or even reverse efforts to cut spending [^] . Strong public and congressional resistance to cutting popular entitlement programs such as Social Security and Medicare represents a significant obstacle [^]. Unforeseen national or international crises, like new pandemics or geopolitical conflicts, would necessitate substantial increases in government spending, potentially offsetting any reductions [^]. A divided government or congressional gridlock post-2026 Midterms would also impede the passage of major budget legislation [^]. Additionally, Trump's prioritization of tax cuts and increased spending in areas like defense and border security could counteract deficit reduction efforts [^].
Key Dates & Catalysts
- Expiration: March 31, 2029
- Closes: March 31, 2029
11. Decision-Flipping Events
- Trigger: Potential for significant government spending cuts during Trump's second term hinges on several bullish catalysts [^] .
- Trigger: The aggressive implementation of initiatives by the Department of Government Efficiency (DOGE), led by Elon Musk, aims to identify and reduce waste across federal agencies, potentially leading to substantial defunding of entities like USAID and the Department of Education [^] .
- Trigger: Furthermore, a severe economic downturn or a looming fiscal crisis could generate public and political pressure for austerity measures [^] .
- Trigger: Increased Republican control of both the House and Senate following the 2026 Midterm Elections would also facilitate the passage of more aggressive spending cut legislation [^] .
13. Historical Resolutions
Historical Resolutions: 9 markets in this series
Outcomes: 0 resolved YES, 9 resolved NO
Recent resolutions:
- KXGOVTCUTS-25-1: NO (Feb 20, 2026)
- KXGOVTCUTS-25-25: NO (Feb 20, 2026)
- KXGOVTCUTS-25-100: NO (Feb 20, 2026)
- KXGOVTCUTS-25-50: NO (Feb 20, 2026)
- KXGOVTCUTS-25-750: NO (Feb 20, 2026)
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