Short Answer

Both the model and the market expect at least 750 billion in government spending cuts from Trump before his term ends, with no compelling evidence of mispricing.

1. Executive Verdict

  • Proposed federal spending reallocations project $800 billion net outlay increase.
  • Trump administration's past executive spending cuts had limited direct success.
  • Credit events are unlikely to force mandatory spending cuts before Q3 2027.
  • DOGE recommendations by July 2026 could deliver substantial federal outlay reductions.
  • Stronger GOP congressional majority post-2026 could empower aggressive fiscal cuts.

Who Wins and Why

Outcome Market Model Why
At least 250 billion 30% 0.4% Significant resistance to even modest spending cuts makes this threshold challenging to achieve.
At least 1 trillion 16% 13.5% Achieving a trillion-dollar cut requires strong Congressional support for large-scale budget reform.
At least 2 trillion 13% 10.5% Two trillion in cuts would necessitate deep, broad reductions across major federal programs and agencies.
At least 500 billion 27% 0.1% Even a half-trillion dollar reduction faces high political hurdles and legislative opposition.
At least 750 billion 18% 17.5% Significant spending cuts would likely target discretionary funds and less popular federal initiatives.

Current Context

Recent developments show immediate fiscal actions and policy changes under Trump. A partial federal government shutdown concluded on February 3, 2026, when President Trump signed a $1.2 trillion funding bill,. This legislation largely funds federal agencies through September 30, 2026, but provides only a short-term extension for the Department of Homeland Security (DHS) until February 13, 2026, anticipating further immigration debate. Concurrently, health policy is undergoing significant changes, with The Colorado Sun reporting on February 4, 2026, that the "One Big Beautiful Bill Act" (H.R. 1) is expected to render refugees and asylees ineligible for Medicare and Medicaid starting October 2026, potentially affecting 7,000 lawfully present immigrants in Colorado and an additional 375,000 individuals through provisions such as mandatory work requirements,. On the same day, Julie Margetta Morgan of The Century Foundation testified that cuts to public programs like Medicare, SNAP, and student loans by the Trump administration and Congress have exacerbated an affordability crisis for American families. Amidst these changes, The Washington Post highlighted growing national debt concerns, noting it is nearing $39 trillion and could reach $40 trillion by year-end, raising alarms about a potential fiscal crisis.
Proposed budget details significant spending cuts, increases, and tax policy changes. President Trump's 2026 budget request proposes $1.69 trillion in discretionary spending, notably including an 83.7% cut to base discretionary funding for the State Department and international programs, reducing it from $58.7 billion to $9.6 billion. This entails significant reductions in international economic and development aid (-$8.3 billion), global health and family planning programs (-$6.2 billion), and international disaster assistance (-$3.2 billion). The budget also seeks to eliminate a Health and Human Services program that subsidizes energy bills for low-income earners. Conversely, it proposes a $114 billion increase for the Pentagon and a $42 billion increase for the Department of Homeland Security, which includes $25 billion for a "Golden Dome" missile shield. A new "America First Opportunity Fund" would receive $2.9 billion to support American partners and immigrant repatriations. The Congressional Budget Office (CBO) estimates H.R. 1 will increase the budget deficit by $2.8 trillion by 2034 and cause 10.9 million Americans to lose health insurance coverage, while substantially increasing funding for Immigration and Customs Enforcement (ICE) from $10 billion to over $100 billion by 2029. Furthermore, extending Trump's 2017 tax cuts is projected to cost approximately $5 trillion over the next decade, with additional proposals to eliminate federal taxes on tips, overtime pay, and Social Security benefits expected to further increase the national debt,. Expert opinions from the CBO, The Century Foundation, and Oxford Economics are frequently cited, projecting significant increases in national debt, loss of health insurance, and economic impacts of social program cuts,,. Critics of H.R. 1 also point to its regressive tax structure and potential for upward wealth transfer.
Public and expert concerns highlight widespread impacts on welfare and economic stability. Significant concerns revolve around how proposed cuts to Medicare, Medicaid, SNAP, and low-income energy assistance will affect vulnerable populations, including immigrant communities and low-income families. There are widespread worries about the rising costs of healthcare, housing, food, and consumer goods, with many Americans feeling that the administration's policies have worsened economic conditions. The rapidly growing national debt and the potential for long-term fiscal crises, exacerbated by proposed tax cuts not offset by spending reductions, remain major topics of debate. Questions are also raised about the effectiveness of certain policies, such as tariffs, and the fairness of tax structures, which critics argue disproportionately benefit higher earners,,. Past experiences under the administration have shown impacts on the federal workforce and the delivery of government services, leading to worries about further disruptions and reductions in essential programs. Key upcoming events include the expiration of the Department of Homeland Security's short-term funding on February 13, 2026, necessitating further congressional action, and the implementation of H.R. 1 changes in October 2026, which will make refugees and asylees ineligible for Medicare and Medicaid.

2. Market Behavior & Price Dynamics

Historical Price (Probability)

Outcome probability
Date
This prediction market has demonstrated a clear downward trend, with the probability of significant government spending cuts declining from a starting price of 44.0% to its current level of 28.0%. The price has established a trading range between a low of 23.0% and a high of 52.0%. The most dramatic price action occurred in early January 2026, defining the market's recent trajectory. The current price is hovering near the lower end of this range, indicating sustained bearish sentiment. The 23.0% price point appears to act as a key support level, having been the market's floor thus far.
The significant price movements in January were driven by a direct conflict between political rhetoric and legislative reality. On January 5, 2026, the market spiked to a high of 52.0% based on strong social media narratives from administration-affiliated figures promising ambitious cuts. However, this optimism was short-lived. The following day, the price plummeted 22.0 percentage points to 29.0% after President Trump signed a federal education funding bill that rejected his own administration's proposed deep cuts. This event was a clear catalyst, showing the market that ambitious proposals may not survive the legislative process, a sentiment reinforced by the recent signing of a $1.2 trillion funding bill in February.
Overall, the chart suggests that market sentiment has shifted from cautious optimism to significant skepticism. The relatively low total trading volume of 1,062 contracts may indicate that conviction is not exceptionally high, but the price trend is unambiguous. Traders appear to be weighing enacted spending legislation, which locks in funding levels, more heavily than pronouncements of future fiscal austerity. The sustained price action near historic lows implies that the market assigns a low probability to the administration successfully implementing spending cuts on the scale required to meet the market's resolution criteria.

3. Significant Price Movements

Notable price changes detected in the chart, along with research into what caused each movement.

Outcome: At least 1 trillion

📉 January 25, 2026: 8.0pp drop

Price decreased from 20.0% to 12.0%

What happened: The 8.0 percentage point drop in the prediction market price for "At least 1 trillion" in government spending cuts by Trump's term end on January 25, 2026, was primarily driven by the ongoing legislative process and emerging bipartisan agreements that signaled less severe spending reductions than the market had previously anticipated. On January 23, 2026, President Trump signed into law a "minibus" of Fiscal Year 2026 appropriations bills, which likely indicated a more moderate approach to government funding than what a $1 trillion cut would entail. This legislative action, along with subsequent reports of Congress largely rejecting the administration's proposed deep cuts in a broader $1.2 trillion spending package passed in early February, would have lowered the perceived probability of reaching the "at least 1 trillion" threshold. No specific viral social media activity from key figures directly preceding or coinciding with the January 25th price drop was identified as the primary driver; however, President Trump did post on Truth Social on January 30, 2026, confirming a bipartisan deal to fund the government and urging a "YES" vote, reinforcing the trend of congressional action overriding his deepest cut proposals. In conclusion, traditional news and policy decisions were the primary driver. Social media activity from key figures was mostly noise or occurred after the price movement, serving as a contributing accelerant to the broader narrative rather than the initial cause.

Outcome: At least 750 billion

📉 January 10, 2026: 20.0pp drop

Price decreased from 45.0% to 25.0%

What happened: The 20.0 percentage point drop in the prediction market on January 10, 2026, for "At least 750 billion" in government spending cuts by Trump was primarily driven by the ongoing legislative process surrounding the Fiscal Year 2026 federal budget. On January 8, 2026, the House passed a significant package of appropriations bills (H.R. 6938), which included funding for various departments and was later signed into law by President Trump on January 23, 2026. This legislative action, along with subsequent budget approvals in early February that maintained level funding for many programs and even increased defense spending, indicated that the total government spending cuts would likely fall significantly short of the $750 billion threshold, despite Trump's earlier proposals for non-defense discretionary cuts of around $163 billion. This traditional news and policy development coincided with the market movement, clarifying the realistic scope of spending reductions. Social media activity was mostly irrelevant to this specific price drop, as no influential posts or viral narratives from key figures directly addressing a reduction in the likelihood of a $750 billion cut were found on or around January 10, 2026.

Outcome: At least 250 billion

📉 January 06, 2026: 22.0pp drop

Price decreased from 51.0% to 29.0%

What happened: The primary driver of the 22.0 percentage point drop in the prediction market on January 6, 2026, was the signing of a federal education funding bill by President Trump, which rejected the administration's proposed deep cuts. On this date, President Trump signed into law a fiscal year 2026 budget measure for the U.S. Department of Education that funded the agency at $79 billion, approximately $217 million above the prior year's level, directly rejecting earlier proposals to slash billions from federal education investments. This legislative action signaled that significant government spending cuts were less likely to be realized than previously anticipated, especially as Congress also passed a partial spending package (a "minibus") on January 6 that avoided many deep cuts recommended in Trump's budget. Social media activity from key figures around this specific event was not identified as a primary driver. Social media's role in this specific price movement was (d) irrelevant based on available information for the exact date.

📈 January 05, 2026: 9.0pp spike

Price increased from 43.0% to 52.0%

What happened: The primary driver of the 9.0 percentage point spike in the "At least 250 billion" outcome on January 5, 2026, was likely the enduring social media narrative established by influential figures within the Trump administration regarding ambitious spending cuts. Elon Musk, as the head of the Department of Government Efficiency (DOGE), prominently shared on social media a February 2025 statement aiming to reduce the U.S. budget deficit by "$4 billion per day in fiscal year 2026," equating to approximately $1.46 trillion annually. This high-profile social media activity led to a strong expectation for significant austerity measures. The price movement on January 5, 2026, likely coincided with market participants re-evaluating the probability of these substantial cuts as the new fiscal year began and critical budget negotiations intensified, with a market update on that date specifically mentioning a "potential government shutdown" as a significant catalyst. Social media was a primary driver, as it set a foundational narrative of aggressive spending cut targets from a key administration figure, influencing market sentiment and expectations for future policy.

4. Market Data

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Contract Snapshot

Based on the provided page content, the rules for triggering a YES or NO resolution, key dates/deadlines, and any special settlement conditions are not available. The content only states the market topic: "How much government spending will Trump cut before his term ends? Odds & Predictions 2028."

Available Contracts

Market options and current pricing

Outcome bucket Yes (price) No (price) Implied probability
At least 250 billion $0.30 $0.83 30%
At least 500 billion $0.27 $0.75 27%
At least 750 billion $0.18 $0.83 18%
At least 1 trillion $0.16 $0.89 16%
At least 2 trillion $0.13 $0.92 13%

Market Discussion

People are actively discussing and debating the extent of government spending cuts proposed by the Trump administration before his term ends, particularly concerning the Fiscal Year 2026 budget . A central viewpoint is the administration's proposal for significant reductions, aiming for a 22% cut to non-defense agencies and specific substantial cuts to areas like scientific research (e.g., NIH, NSF, NASA's science budget), while simultaneously increasing defense spending . Conversely, many experts, commentators, and congressional members express strong opposition, warning that such deep cuts could have severe long-term negative impacts on the economy, global competitiveness, and crucial public services, often pushing back against the most drastic proposed reductions in appropriations bills . Prediction markets generally reflect low odds for very substantial government spending cuts (e.g., over $100 billion) being realized .

5. How Did Constituencies Influence GOP Response to FY2026 Budget Cuts?

Overall NDD Proposed Cut22.6% reduction (FY2026 Budget Proposal )
State Dept & USAID Proposed Cut83.7% reduction (FY2026 Budget Proposal )
NSF Funding Restoration (Congressional)Approximately $8.8 billion (Senate Commerce Committee )
Trump's FY2026 budget proposed significant non-defense discretionary spending reductions. This included an overall 22.6% cut from FY2025 levels, aiming to decrease non-defense discretionary (NDD) spending from $720.5 billion to $557.4 billion. Specific proposed reductions targeted the State Department and USAID with an 83.7% cut, the Department of Agriculture with an 18-23% cut, and the National Science Foundation (NSF) with a ~57% reduction. These proposals sought to fundamentally restructure foreign assistance, agricultural support, and scientific research funding.
Republican committee members largely rejected the proposed spending reductions. Despite the administration's aggressive proposals, congressional appropriations bills, often advanced with bipartisan support, worked to stabilize funding for many targeted agencies. For instance, the Senate explicitly rejected the proposed NSF reduction, stabilizing its funding at approximately $8.8 billion, significantly higher than the administration's proposed $3.9 billion. Similar legislative efforts softened cuts to USDA programs and State/USAID, demonstrating a legislative prerogative that overrode strict alignment with the executive budget.
Constituency pressures heavily influenced this divergence from the budget. Republican committee members from states with strong agricultural ties, major research universities, or national security interests acted to protect vital federal funding. Agricultural states safeguarded USDA programs like NRCS and NIFA. Additionally, states with significant research institutions ensured the restoration of NSF funding due to its economic impact. Furthermore, a coalition emphasizing foreign policy and national security prevented drastic cuts to State/USAID, underscoring how local economic dependence and strategic concerns compelled committee members to prioritize their constituents' needs over the administration's proposed austerity.

6. What is the Projected Net Change in Federal Outlays from Spending Reallocations?

Projected Net Outlay Change+$800 billion (2026-2035 Analysis)
Gross Outlay Increase$1.56 trillion (2026-2035 Analysis)
Gross Outlay Decrease$760 billion (2026-2035 Analysis)
Proposed federal spending reallocation projects an $800 billion net outlay increase over the 2026-2035 budget window. This net increase stems from a gross surge of $1.56 trillion in federal outlays. The primary drivers of this surge are $1.14 trillion in defense spending and $0.42 trillion in homeland security spending. These significant additions are partially offset by $760 billion in proposed cuts, including an 83.7% reduction to the Department of State and USAID budgets, and the complete elimination of the Low Income Home Energy Assistance Program (LIHEAP).
This analysis employs static scoring, but CBO projections are dynamic and subject to revision. The methodology used is consistent with standard Congressional Budget Office (CBO) baseline practices, which project future discretionary spending based on current funding levels adjusted for inflation. Notably, the CBO's own projections are dynamic; for instance, the Fiscal Responsibility Act (FRA) enacted in June 2023 led to downward revisions of discretionary spending by $121 billion for the 2024-2033 period. Furthermore, the CBO has decreased projected discretionary outlays due to adjustments for a slower rate at which appropriated funds are spent. The projected $800 billion net increase in outlays would exacerbate the federal deficit, potentially pushing the 2026 deficit from an already projected $1.8 trillion to nearly $1.9 trillion. This acceleration would also affect the growth of the national debt, which is expected to reach 116% of GDP by 2034, raising concerns about long-term fiscal sustainability.

7. How Effective Were Trump's Executive Spending Cuts and Why?

Total Proposed Rescissions~$57.6 billion
Realized Rescission Savings$0
Spending Reprogrammed (Border Wall)~$15 billion
The Trump administration attempted spending reductions with limited direct success. The administration proposed approximately $57.6 billion in formal rescission packages, primarily during 2018 and 2021, aiming to reduce or eliminate programs via the Impoundment Control Act (ICA). However, these efforts yielded $0 in realized savings, as Congress declined to approve the proposed cuts within the ICA's specified timeframe. In contrast, the administration successfully redirected about $15 billion towards border wall construction by declaring a national emergency and leveraging specific statutory authorities, thereby bypassing the ICA process entirely.
Formal rescissions proved ineffective; emergency powers enabled fund redirection. This distinction highlights that while the formal ICA rescission process failed to achieve policy-based cuts due to congressional non-approval, the strategic use of emergency powers offered a viable mechanism for multi-billion-dollar spending shifts. A notable instance of executive overreach occurred when the Office of Management and Budget (OMB) illegally withheld nearly $400 million in security assistance to Ukraine without proper ICA notification, a violation later confirmed by the Government Accountability Office (GAO). This incident served as a legal precedent, clarifying the boundaries of executive authority under the ICA.
Future executive spending reductions will likely rely on emergency powers rather than formal rescissions. Historical data suggests that subsequent administrations with similar spending reduction goals are unlikely to achieve significant cuts through the formal rescission process. Instead, the most potent tool for executive-led spending changes remains the strategic use of emergency powers to reprogram funds from existing accounts, as demonstrated by the border wall funding. Therefore, predictions for future executive-led spending cuts are most realistically anchored in the $10 billion to $50 billion range, reflecting the proven capability of redirecting funds under specific legal authorities rather than through congressional approval of rescission packages.

8. Will Credit Events Force U.S. Mandatory Spending Cuts Before Q3 2027?

U.S. Sovereign Rating (Moody's)Aa1 (downgraded from Aaa in May 2025)
10-Year Treasury Yield (Feb 2026)4.50% (Moody's May 2025)
Recession Probability (NY Fed)20-30% within 12 months (New York Fed )
The probability of high Treasury yields is currently low. Top economic forecasters assign a low probability to 10-year Treasury yields sustaining above 6.5% before Q3 2027. Current institutional projections, such as Goldman Sachs's forecast of approximately 4.4% by year-end 2026, remain within the historical 3.5-5% range. A sustained yield above 6.5% would necessitate a fundamental paradigm shift in economic conditions, which is not reflected in baseline projections.
Sovereign debt downgrades are moderately probable but historically limited. In contrast, the probability of at least one further U.S. sovereign debt downgrade occurring before Q3 2027 is assessed as moderate to high. This outlook stems from the explicit rationales provided by rating agencies like S&P (2011), Fitch (2023), and Moody's (May 2025), which consistently cite concerns regarding the long-term debt trajectory and the political system's demonstrated inability to achieve fiscal consensus on mandatory spending. Historically, past sovereign debt downgrades, including those in 2011 and 2023, primarily prompted congressional actions focused on discretionary spending, without leading to structural changes in mandatory programs such as Social Security or Medicare.
A market crisis, not a downgrade, could force mandatory cuts. Consequently, a further sovereign debt downgrade in isolation is unlikely to be the decisive catalyst for mandatory spending cuts. However, a severe market-driven crisis characterized by 10-year Treasury yields sustaining above the 6.5% threshold would impose immediate and undeniable costs on the economy. Such an event, manifesting through exploding interest expenses and widespread economic pain, would generate the significant political pressure necessary to address the core drivers of U.S. national debt, including mandatory spending.

9. What Is the Projected U.S. Debt Ceiling X-Date and Spending Cut Demands?

Projected Debt Ceiling X-DateSpring 2027 (CBPP)
Debt Limit Breach ProjectedNovember 2026 (CBPP)
FY2025 Federal Deficit$1.9 trillion (CBO)
The U.S. debt ceiling "X-date" is projected for early 2027. The next confrontation is anticipated between late 2026 and early 2027, with the Center on Budget and Policy Priorities estimating the $40.1 trillion statutory debt limit will be reached around November 2026, leading to the "X-date" (exhaustion of extraordinary measures) in Spring 2027. This timeline is set against a backdrop of persistent federal deficits, including a Congressional Budget Office projection of a $1.9 trillion deficit for FY2025, and a national debt expected to reach 118% of GDP by 2035.
Conservative factions demand significant spending cuts, especially targeting entitlements. These groups plan to use the debt ceiling as leverage to enact substantial reductions, primarily focusing on entitlement programs. Proposed Medicaid cuts include reimplementing work requirements, estimated to save $120 billion over 10 years, and normalizing federal reimbursement rates for the Affordable Care Act (ACA) expansion population, aiming for nearly $600 billion in 10-year savings. Medicare is also a target, with legislation potentially triggering a 4% reduction in FY2026, amounting to $45 billion, and nearly $500 billion over the next decade. These demands represent specific policy riders intended for debt limit legislation.
This negotiation represents conservatives' most significant fiscal policy leverage. The debt ceiling negotiation is viewed as the primary point of political leverage for conservative groups to force spending cuts that would otherwise be politically unfeasible. By threatening a potential default, they aim to compel the executive branch and opposition to accept these reductions. The outcome of this impending confrontation will significantly determine the total volume of government spending cuts implemented by 2029, positioning it as the most impactful event for fiscal policy shifts in the current presidential term.

10. What Could Change the Odds

Key Catalysts for Government Spending Cuts

Government spending cuts under Trump's second term could be driven by a stronger Republican majority in Congress following the November 2026 midterms, potentially empowering more aggressive fiscal policy. The Department of Government Efficiency (DOGE), led by Elon Musk, is expected to deliver substantial recommendations by July 4, 2026, which if successfully implemented, could significantly reduce federal outlays. Additionally, a sustained political focus on tackling growth in large mandatory programs like Medicaid and Medicare, or intensified concerns over the rapidly escalating national debt, could create broad pressure for drastic spending reductions.
Conversely, several factors could impede significant government spending cuts or even lead to increased spending. An economic downturn or recession would likely necessitate increased government outlays for stimulus and safety nets, making cuts politically difficult. A divided government post-2026 midterms, where Democrats gain control of one or both chambers, would create legislative gridlock. Furthermore, unavoidable growth in mandatory programs and rising interest costs on the national debt continue to drive spending upwards. Failure to offset extensive tax cuts, such as the extension of the 2017 TCJA provisions or new tax proposals like the One Big Beautiful Bill Act (OBBBA), could substantially increase the national debt. Major national or international crises, alongside political resistance to cuts in popular programs, also pose significant risks to achieving spending reductions.

Key Dates & Catalysts

  • Expiration: March 31, 2029
  • Closes: March 31, 2029

11. Decision-Flipping Events

  • Trigger: Government spending cuts under Trump's second term could be driven by a stronger Republican majority in Congress following the November 2026 midterms, potentially empowering more aggressive fiscal policy.
  • Trigger: The Department of Government Efficiency (DOGE), led by Elon Musk, is expected to deliver substantial recommendations by July 4, 2026, which if successfully implemented, could significantly reduce federal outlays.
  • Trigger: Additionally, a sustained political focus on tackling growth in large mandatory programs like Medicaid and Medicare, or intensified concerns over the rapidly escalating national debt, could create broad pressure for drastic spending reductions [^] .
  • Trigger: Conversely, several factors could impede significant government spending cuts or even lead to increased spending.

13. Historical Resolutions

No historical resolution data available for this series.