Short Answer
Both the model and the market expect that Trump will cut at least 1 billion in government spending in 2025, with no compelling evidence of mispricing.
1. Executive Verdict
- Trump's FY2026 budget proposed 22.6% non-defense discretionary spending cuts. The OBBB Act implemented cuts to Medicaid, SNAP, and student loans. Administration cancelled $7.6 billion in "Green New Scam" funding. Presidents can unilaterally alter appropriated funds through rescission and reprogramming. House Freedom Caucus targets October 2025 for future spending reductions. Economic contractions historically prompt increases in discretionary government spending.
Who Wins and Why
| Outcome | Market | Model | Why |
|---|---|---|---|
| At least 1 billion | 5% | 3.5% | Trump's campaign has consistently promised significant cuts to federal spending. |
| At least 250 billion | 2% | 2.7% | Historical data shows presidents typically struggle to achieve large-scale spending reductions. |
| At least 25 billion | 4% | 2.5% | Reductions in non-defense discretionary spending could easily achieve this target. |
| At least 500 billion | 2% | 1.6% | Achieving $500 billion in cuts requires rare bipartisan support or major entitlement reforms. |
| At least 1 trillion | 1% | 50% | Deep cuts to Social Security or Medicare, which Trump has resisted, would be necessary. |
Current Context
Recent actions in early 2026 and proposals from a hypothetical 2025 Trump administration indicate significant government spending reduction goals. As of early February 2026, President Trump signed a spending bill to end a partial government shutdown, funding most federal agencies through fiscal year (FY) 2026, while providing only a temporary extension for the Department of Homeland Security (DHS). The administration also announced the cancellation of $1.5 billion in grants to "blue states" (California, Colorado, Illinois, Minnesota) for Department of Transportation (DOT) and Centers for Disease Control and Prevention (CDC) projects, citing waste and mismanagement concerns. Looking back to May 2025, the White House released President Trump's budget proposal for fiscal year 2026, which outlined plans for approximately $163 billion, or a 22.6% cut, in non-defense domestic spending. This proposal aimed to eliminate or drastically reduce funding for programs related to child care, disease research, renewable energy, and peacekeeping, while increasing spending on national security and a "mass deportation agenda".
Proposed cuts target specific programs and raise significant economic concerns. Beyond overall reductions, detailed proposals for the Department of Education suggest an $11 billion (14%) cut, eliminating Title I grants and English Language Acquisition programs, and slashing Federal Work-Study and need-based financial aid. Federal housing, healthcare, and public health programs are also targeted for deep cuts, along with the elimination of dozens of smaller government initiatives. Experts from the Institute on Taxation and Economic Policy (ITEP) warn that these spending reductions, combined with tax changes, would primarily benefit the wealthy and corporations, deeply cut public services, and could add trillions to the national deficit. Analysis by the Tax Foundation suggests net spending cuts of about $1.5 trillion over a decade, contributing to an overall budget deficit increase of $1.7 trillion over the same period, despite potential GDP growth from tax provisions.
Cuts raise concerns about vulnerable populations and IRS enforcement capabilities. Senate Democrats, including Senator Ron Wyden, have voiced concerns that deep Internal Revenue Service (IRS) cuts, with agents reassigned to anti-immigrant assignments, would disproportionately burden working- and middle-class Americans with audits while enabling tax evasion by wealthy individuals and corporations. These proposed changes and actual cuts impact social services like housing assistance, public health, and food aid, raising significant concerns about vulnerable populations, including working-class families, low-income students, and immigrant communities. Upcoming deadlines include further negotiations on immigration policy for DHS by February 14, 2026, and drug manufacturers must decide by February 28, 2026, whether to participate in Medicare price negotiations for selected drugs. State legislatures, such as in Idaho, are also debating spending cuts to align with federal tax changes.
2. Market Behavior & Price Dynamics
Historical Price (Probability)
Outcome probability
Date
This market has exhibited a consistent sideways trend, trading within a very narrow range for its entire duration. The price started at $0.05, establishing an early baseline, and has returned to this exact level. Key price points have been established with firm support at the $0.02 level and clear resistance at the $0.08 mark. Despite some fluctuations, such as the dip to 2% seen in the mid-period sample, the price has failed to sustain any significant breakout, indicating a stable and unchanging market consensus. The market has consistently priced the probability of significant spending cuts in 2025 as very low.
The provided context from early 2026, including the signing of a spending bill and the cancellation of specific grants, occurred after this market's resolution period of "Before 2026" and therefore did not influence the price action. The May 2025 budget proposal, which outlined $163 billion in potential cuts for the next fiscal year, also failed to generate a significant or sustained price spike. This suggests the market either did not believe the proposed cuts would be enacted within the 2025 calendar year or did not consider a budget proposal to be a finalized "cut" according to the market's resolution criteria. The lack of volatility around this news indicates traders discounted its relevance to the market's outcome.
Total volume has been substantial, but sample data indicates a notable increase in trading volume in the market's later stages. This suggests a firming of conviction around the 5% probability level as the resolution period neared its end. Overall, the price chart reflects a strong and unwavering market sentiment that significant, finalized government spending cuts were highly unlikely to be achieved within the 2025 calendar year. The market priced this as a low-probability event from its inception to its conclusion, never assessing the odds as higher than 8%.
3. Market Data
Contract Snapshot
Based on the provided page content, the information regarding YES/NO resolution triggers, key dates/deadlines, and special settlement conditions is not available. The content only provides the market's question: "How much government spending will Trump cut in 2025?" and general site navigation links.
Available Contracts
Market options and current pricing
| Outcome bucket | Yes (price) | No (price) | Implied probability |
|---|---|---|---|
| At least 1 billion | $0.05 | $0.96 | 5% |
| At least 25 billion | $0.04 | $0.97 | 4% |
| At least 100 billion | $0.03 | $0.98 | 3% |
| At least 50 billion | $0.03 | $0.98 | 3% |
| At least 250 billion | $0.02 | $1.00 | 2% |
| At least 500 billion | $0.02 | $1.00 | 2% |
| At least 1 trillion | $0.01 | $1.00 | 1% |
| At least 2 trillion | $0.01 | $1.00 | 1% |
| At least 750 billion | $0.01 | $1.00 | 1% |
Market Discussion
Discussions surrounding potential government spending cuts by Donald Trump in 2025 centered on proposed multi-trillion dollar reductions in areas such as Medicaid, healthcare services, education, and federal programs, often justified by allies as necessary to reduce the national debt and stimulate the economy . Critics, however, voiced concerns that these cuts, some aligned with "Project 2025," would disproportionately benefit the wealthy, exacerbate the national debt despite intended reductions, and severely diminish essential services for vulnerable populations, potentially leading to negative societal and economic consequences . Social media and news commentary reflected intense debate on these proposed changes, with significant attention given to their impact on various sectors and the potential for political motivations behind specific funding withdrawals.
4. What Were Moderate Republican Stances on the FY2025 Budget Cuts?
| Senator Collins' Final Vote | Voted against the 'One Big Beautiful Bill Act' due to "draconian" cuts (July 1, 2025) |
|---|---|
| Senator Murkowski's Final Vote | Voted for the bill after securing a $50 billion rural hospital fund and SNAP flexibility for Alaska (July 1, 2025) |
| Enacted Law's Healthcare Impact | Reduced federal healthcare spending by over $1 trillion, increasing uninsured by 10 million |
Moderate Republican Senators Collins and Murkowski diverged on FY2025 budget reconciliation. Senators Susan Collins (R-ME) and Lisa Murkowski (R-AK) adopted differing strategies regarding the Fiscal Year 2025 budget reconciliation bill, despite initially sharing skepticism towards aggressive spending cuts proposed by the House. Their final stances were shaped by varying evaluations of the bill's impact and the potential for negotiation, highlighting the amplified influence of centrist senators in a narrowly divided Senate during the reconciliation process.
Senator Collins staunchly opposed broad cuts, prioritizing social safety net programs. She maintained a principled opposition to broad cuts in social safety net programs, particularly Medicaid. Her legislative approach focused on the qualitative impact of proposed reductions, characterizing cuts to health, education, and child support enforcement programs as "draconian." This principled stance led her to vote against the final 'One Big Beautiful Bill Act', emphasizing the substance of the cuts over political pressure. She also voted against a $9.4 billion rescissions package targeting other federal funding. The research does not indicate a specific spending cut ceiling that Senator Collins committed to supporting; instead, her position was one of opposition to the proposed reductions.
Senator Murkowski secured concessions, ultimately supporting the reconciliation bill. Conversely, Senator Murkowski leveraged her critical swing vote position to secure significant concessions for Alaska. After initially expressing reservations and supporting amendments to protect Medicaid, she ultimately voted in favor of the bill. Her support was contingent on the inclusion of a $50 billion fund for rural hospitals and clinics and increased flexibility for Alaska within the Supplemental Nutrition Assistance Program (SNAP). Her decision reflected a pragmatic calculation, prioritizing tangible state-level gains despite the bill's broader national impact. The final bill passed by a narrow 51-50 vote on July 1, 2025, with Vice President JD Vance casting the tie-breaking vote. While Senator Murkowski's vote contributed to the passage of a bill that included spending cuts, the research does not specify a particular fiscal year 2025 spending cut ceiling she publicly or privately committed to supporting.
5. How Much Spending Can a President Unilaterally Cut or Reprogram in 2025?
| Potential Rescission Pool | ~$150 Billion (Impoundment Control Act of 1974 ) |
|---|---|
| Potential Reprogramming Pool | ~$200 Billion (OMB Circular A-11, agency discretion) |
| Total Unilaterally Vulnerable Funds | ~$350 Billion (Combined executive authorities) |
The executive branch can alter appropriated funds through two key mechanisms. These distinct authorities, rescission and reprogramming, allow the executive branch to modify congressionally appropriated funds without new legislation. Presidential rescission proposals, which aim to permanently cancel unobligated discretionary budget authority, are governed by the Impoundment Control Act of 1974 (ICA). For these proposals to take effect, Congress must approve them within 45 days of continuous session; otherwise, the funds must be released. Separately, reprogramming permits federal agencies to shift unobligated funds within an appropriation account for different purposes. This is a more flexible administrative tool typically guided by OMB Circular A-11 and congressional notification thresholds.
Significant funds are estimated to be vulnerable to these executive actions. Approximately $150 billion in unobligated discretionary funds could be subject to presidential rescission proposals by a new administration in 2025, primarily stemming from prior-year emergency-designated spending. Additionally, an estimated $200 billion in funds could be administratively redirected through reprogramming actions within federal agencies without requiring congressional votes. This combined "Total Vulnerable Pool" of roughly $350 billion represents the maximum theoretical amount an administration could target to effectuate spending cuts or policy shifts without needing to pass new appropriations laws. The actual success of rescission proposals, however, largely depends on the President's political will and the partisan control of Congress, making potential cuts a political negotiation.
6. Will a 2025 GDP Contraction Lead to Increased Discretionary Spending?
| Q1 2025 GDP Contraction | -0.6 percent (BEA ) |
|---|---|
| Q2 2025 GDP Rebound | +3.8 percent (BEA ) |
| FOMC 2025 Full-Year GDP Projection | 1.7 percent (FRED ) |
Economic contractions have historically prompted significant increases in discretionary spending. Historically, periods of U.S. economic contraction have consistently led to counter-cyclical fiscal policies, resulting in notable increases in discretionary spending. For example, discretionary spending rose by 14.2% following the 2001 recession, increased by 12.5% after the 2008-2009 Great Financial Crisis, and surged by 30.5% in FY2020 during the COVID-19 pandemic, demonstrating a robust tendency towards fiscal expansion. The debate in such instances typically centers on the magnitude and specific targeting of new appropriations rather than the fundamental necessity of increased spending.
The 2025 economic landscape presents a complex and ambiguous picture. Although a reported -0.6 percent GDP contraction occurred in Q1 2025, it was immediately followed by a robust +3.8 percent rebound in Q2 2025, suggesting a temporary rather than a prolonged downturn. Economic forecasts remain mixed, with optimistic indicators such as the Federal Reserve Bank of Atlanta's 4.2 percent real GDP growth forecast for Q4 2025 and the FOMC's 1.7 percent median projection for the full year. However, the New York Fed provides a lower 1.2 percent projection. This ambiguity, combined with a hypothetical Trump administration's pro-growth agenda focused on tax cuts and deregulation over direct spending, complicates the traditional policy response.
A massive, broad-based spending increase is therefore unlikely in 2025. Consequently, a large-scale, across-the-board increase in discretionary spending, akin to those observed in past major crises, is improbable. Instead, the Q1 contraction may provide political justification for targeted spending increases in ideologically favored areas, such as defense and border security. These increases would likely be offset by proposed deep cuts to other discretionary programs. The most probable outcome for FY2026 is a net-flat to modest 1-3% increase in total discretionary spending, primarily reflecting a significant reallocation of resources within a roughly stable budget, or potentially fiscal gridlock leading to frozen spending levels.
7. What Were the Key FY2025 Fiscal Savings from Trump's Administration?
| FY2025 Customs Duties | $195 billion |
|---|---|
| Actual FY2025 Federal Deficit | $1.775 trillion |
| 10-Year Tariff Deficit Reduction (CBO) | $3.0 trillion to $4.0 trillion |
Administrative actions on trade, healthcare, and immigration led to significant FY2025 fiscal savings. The actual federal deficit for FY2025 was recorded at $1.775 trillion, approximately $90 billion below the CBO's baseline projection. The single largest contributor to these fiscal savings was the dramatic increase in customs duties from tariffs, with actual FY2025 customs duties reaching $195 billion, a substantial increase over baseline projections. CBO estimates indicated that these tariffs could generate total deficit reduction ranging from $3.0 trillion to $4.0 trillion over a ten-year window (2025-2035). Other administrative actions also contributed, including the 2025 Marketplace Integrity and Affordability Rule, projected to reduce the deficit by $100 billion over 2026-2035, and stricter immigration enforcement actions, which lowered projected spending by over $5 billion in a single year.
Social safety net reforms provided negligible near-term savings due to various constraints. In contrast to the impactful changes in trade and regulation, proposed administrative alterations to work requirements for SNAP and Medicaid, and changes to Social Security Disability Insurance (SSDI) eligibility, yielded minimal near-term fiscal savings. Efforts to implement stricter work requirements for SNAP and Medicaid were consistently blocked by federal courts, which ruled that the administration had exceeded its statutory authority. Experiences, such as those in Arkansas, showed that these policies led to significant health coverage loss without corresponding gains in employment. Similarly, proposals to tighten SSDI eligibility faced existing systemic hurdles, including high denial rates and massive backlogs, alongside substantial political opposition against cuts targeting older workers. These challenges highlight the significant legal, operational, and political constraints on administrative actions aiming to reduce spending in social safety net programs.
8. How Will the House Freedom Caucus Impact FY2026 Spending Cuts?
| Critical Appropriations Deadline | October 1, 2025 |
|---|---|
| President's Proposed Non-Defense Cuts | 22.6% cut to non-defense discretionary budget authority |
| Freedom Caucus Preferred Outcome | Year-long continuing resolution (CR) |
The House Freedom Caucus targets October 1, 2025, for spending cuts. The Fiscal Year 2026 (FY2026) appropriations process is framed by the critical October 1, 2025, deadline, which the House Freedom Caucus (HFC) intends to utilize as a shutdown threshold to compel federal spending reductions. This process was initiated by the President's FY2026 budget proposal, which suggested a 22.6% cut to non-defense discretionary budget authority while simultaneously increasing funding for defense and border security. The HFC's strategic aim is to obstruct the passage of standard appropriations bills, advocating instead for a year-long continuing resolution that they anticipate would lead to significant, across-the-board federal spending cuts.
The HFC specifically targets DHS and other key spending bills for leverage. The House Freedom Caucus's strategy is highly focused, particularly on any spending legislation that does not fully fund the Department of Homeland Security (DHS) in alignment with their border enforcement priorities. In addition to DHS, the HFC also seeks to influence appropriations bills for sectors such as Labor, Health and Human Services, Education, Agriculture, and Financial Services. This ongoing legislative contention is also reflected in prediction markets, including Kalshi's "How much government spending will Trump cut in 2025?", where the market's resolution, contingent on actions "Before 2026," is explicitly linked to the success of the HFC's efforts to achieve spending cuts by December 31, 2025.
9. What Could Change the Odds
Key Catalysts
The Trump administration initiated several measures in 2025 aimed at reducing government spending. Its May 2025 Fiscal Year 2026 budget request proposed substantial cuts, including a 22.6% reduction in non-defense discretionary funding. This was reinforced by actions such as the "One Big Beautiful Bill" (OBBB) Act, signed in July 2025, which implemented cuts to Medicaid, SNAP, and federal student loans. Additionally, the administration cancelled approximately $7.6 billion in "Green New Scam funding" and disrupted over $12 billion in education grants, while establishing a Department of Government Efficiency (DOGE) to identify further reductions. A January 13, 2026 report noted that FY2025 outlays were $18 billion (0.3%) below the Congressional Budget Office's (CBO) baseline, suggesting some level of spending reduction.
Despite these efforts, significant challenges limited the extent of spending cuts. Mandatory spending on programs like Social Security, Medicare, and Medicaid increased by $249 billion (8%) in FY2025, largely due to factors difficult to control. Congressional resistance also played a key role, as demonstrated by Congress approving $9.42 billion for global health programs in the FY2026 National Security-State Department Appropriations Bill, which was significantly more than the administration's request. Furthermore, while cutting in some areas, the administration's FY2026 budget also proposed substantial increases for defense and border security, and rising interest payments on the national debt continued to grow as a major expenditure. The complexity of the appropriations process was underscored by a significant government shutdown from October 1 to November 12, 2025, and a partial shutdown on January 31, 2026.
The market's final assessment before the March 31, 2026 settlement date will be heavily influenced by forthcoming official data and analyses. Key events include the release of more detailed or final reports on FY2025 actual spending from entities like the CBO or Office of Management and Budget (OMB). Ongoing analysis of the impact of the "One Big Beautiful Bill" Act will continue to emerge, alongside media and expert commentary on the administration's fiscal performance. Developments in the ongoing FY2026 appropriations process could also retroactively inform views on the administration's ability to enact cuts in the preceding year.
Key Dates & Catalysts
- Expiration: March 31, 2026
- Closes: March 31, 2026
10. Decision-Flipping Events
- Trigger: The Trump administration initiated several measures in 2025 aimed at reducing government spending.
- Trigger: Its May 2025 Fiscal Year 2026 budget request proposed substantial cuts, including a 22.6% reduction in non-defense discretionary funding [^] .
- Trigger: This was reinforced by actions such as the "One Big Beautiful Bill" (OBBB) Act, signed in July 2025, which implemented cuts to Medicaid, SNAP, and federal student loans [^] .
- Trigger: Additionally, the administration cancelled approximately $7.6 billion in "Green New Scam funding" and disrupted over $12 billion in education grants, while establishing a Department of Government Efficiency (DOGE) to identify further reductions [^] .
12. Historical Resolutions
No historical resolution data available for this series.
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