Amid discussions around President Donald Trump's plan to cut up to $2 trillion from the federal budget, it appears that unpopular choice may be on the horizon. So far, the administration's austerity measures have taken the form of government layoffs and rechanneling funds from certain departments.
Yet, substantial chunks of the federal budget are allocated towards Medicare and Social Security benefits apart from the interest on national debt repayments. Despite President Trump's earlier assurances of safeguarding Social Security and Medicare, analysts suggest that these programs might face the ax inevitably to make a substantial impact on the federal budget.
Tasked with exploring cost-cutting possibilities, The Department of Government Efficiency maintains that it has already saved approximately $52 billion, although an independent analysis by NPR confirms only $2 billion. In the previous year, the government overstepped its revenue by $1.83 trillion, largely from taxes and other sources of income.
Jon Hilsenrath, a senior advisor at financial services firm StoneX, commented that yearly budget deficits would still exceed a trillion dollars even if drastic measures like shutting down U.S. AID and terminating all federal employees were taken. He also pointed out the political hesitancy in making spending cuts, especially towards popular programs.
Data from a Morning Consult survey echoes this, with only 5% of voters suggesting that Medicare and Social Security see financial cuts, while about two-thirds want more funds allocated to these programs.
The Trump administration and DOGE advisor Elon Musk recently considered issuing a 'dividend' check to Americans from the saved budget cuts. Hilsenrath suggested that direct savings compensation to taxpayers could help make the spending cuts politically feasible. However, Chief Economist at the Economic Policy Institute, L. Josh Bivens, warned that deep cuts into crucial federal programs could precipitate economic issues, leaving vulnerable families worse off.