New Trump Budget Seeks Huge Spending Cuts, More Money for Defense

It's Friday and we've got lots of news to cover, so let's get right to it.

Trump Proposes Massive Spending Cuts, but More Money for Defense, Border

The White House on Friday proposed a fiscal year 2026 budget that would cut spending by $163 billion, with steep reductions to non-defense spending offset by an increase in outlays for defense and homeland security.

The proposal calls for a 22.6% cut to non-defense programs, including sharp reductions to funding for health, science, climate, education and housing. It would increase defense spending by $113.3 billion, or 13%, raising the annual total to more than $1 trillion. Homeland Security would receive $42.3 billion more for next year, a 65% increase that factors in another $175 billion in additional multiyear budget authority to fund the Trump administration's immigration crackdown and deportations. In all, discretionary spending would be cut by nearly 8% to just under $1.7 trillion (see the New York Times charts below).

"At this critical moment, we need a historic budget - one that ends the funding of our decline, puts Americans first, and delivers unprecedented support to our military and homeland security," White House Office of Management and Budget Director Russell Vought said in a statement.

The White House outline, known as a "skinny" budget, was sent to Congress by Vought's office, with a fully fleshed out fiscal plan for 2026 still to be delivered. Even so, the details in the proposal make clear it is a continuation of the Trump administration's assaults on the federal bureaucracy, diversity programs and efforts to combat climate change. The non-defense discretionary portion of the budget would be scaled back to the lowest level since 2017. The proposed cuts come as Trump and congressional Republicans are working to permanently extend their 2017 tax cuts and potentially enact new tax breaks - changes that would add trillions of dollars more to the $36 trillion national debt.

In a letter to Senate Appropriations Committee Chair Susan Collins, Vought said that the new plan resulted "from a rigorous, line-by-line review of FY 2025 spending, which was found to be laden with spending contrary to the needs of ordinary working Americans and tilted toward funding niche non-governmental organizations and institutions of higher education committed to radical gender and climate ideologies antithetical to the American way of life."

Vought added that the administration also looked at whether services would be better provided by state or local governments.

Among the most notable proposed cuts:

• The Department of Health and Human Services would see more than $33 billion in cuts, a 26% reduction. The National Institutes of Health would lose $18 billion while the Centers for Disease Control and Prevention budget would be slashed by about $3.6 billion. "NIH has broken the trust of the American people with wasteful spending, misleading information, risky research, and the promotion of dangerous ideologies that undermine public health," the White House budget document claims.

  The Trump administration says it will streamline and refocus these agencies to better align with the president's priorities and executive orders. The budget would also provide $500 million for HHS Secretary Robert F. Kennedy Jr.'s signature Make America Healthy Again initiative.

• The Low Income Home Energy Assistance Program (LIHEAP) would be eliminated to save $4 billion. The White House says it will "instead support low-income individuals through energy dominance, lower prices, and an America First economic platform."
   
• The Department of Housing and Urban Development would also lose more than $33 billion, a nearly 44% reduction from 2025 levels. Rental assistance programs for low-income families and others would be slashed by nearly $27 billion.
   
• The State Department and international programs would lose about 84% of their funding.
   
• Funding for the Internal Revenue Service would be reduced by about $2.5 billion. "The Budget ends the Biden Administration's weaponization of IRS enforcement, which targeted conservative groups and small businesses," the White House letter said. "The elimination of certain complex tax credits and technology improvements would increase IRS efficiency. The reduction would protect functions in Taxpayer Services."
   
• Department of Education spending would be reduced by $12 billion, or more than 15%.
   
• More than $15 billion in Infrastructure Investment and Jobs Act funding related to climate change and renewable energy would be canceled and more than $3 billion in other Department of Energy climate and science-related programs would be cut along with another $1.3 billion from the National Oceanic and Atmospheric Administration.
   
• The FBI would lose $545 million as Trump and his administration take aim at what they call the "weaponization" of the law enforcement agency and "pet projects" of the Biden administration.
   
• The Environmental Protection Agency would see a 55% cut, losing $5 billion in funding.
   
• Funding for the National Science Foundation would be slashed by 56%, from $8.8 billion to $3.9 billion.

Key Republicans push back: The Trump plan gives Republicans controlling both chambers of Congress a framework to work with as they begin crafting annual spending bills. House Speaker Mike Johnson praised the plan as a "bold blueprint" that "makes clear that fiscal discipline is non-negotiable." But congressional appropriators make their own choices on spending and some key Republicans have already raised objections to elements of the Trump request, including calls for even greater defense spending.

Collins, the top Republican appropriator, was cool to the president's plan. "The President's Budget Request is simply one step in the annual budget process," she said in a statement. "This request has come to Congress late, and key details still remain outstanding. Based on my initial review, however, I have serious objections to the proposed freeze in our defense funding given the security challenges we face." She also objected to the cuts for biomedical research and elimination of programs like LIHEAP. "Ultimately, it is Congress that holds the power of the purse," she noted.

Sen. Roger Wicker, the chairman of the Senate Armed Services Committee, complained that the president's request relied on $150 billion in supplemental Pentagon funding from Republicans' budget reconciliation bill, currently being drafted, to increase defense spending rather than asking for an increase in the military's base budget.

"President Trump successfully campaigned on a Peace Through Strength agenda, but his advisers at the Office of Management and Budget were apparently not listening," Wicker said in a statement. "OMB is not requesting a trillion-dollar budget. It is requesting a budget of $892.6 billion, which is a cut in real terms. This budget would decrease President Trump's military options and his negotiating leverage."

Sen. Mitch McConnell, the former Republican leader in the Senate, offered similar criticism. "Make no mistake: A one-time influx reconciliation spending is not a substitute for full-year appropriations," he said. "It's a supplement."

The administration reportedly believes its approach to defense funding is the best way to avoid having a standoff with Democrats, who typically have called for increases in non-defense spending on par with those for defense.

Democrats raise alarms: Democrats blasted Trump's proposal, which they warned would gut vital programs. "Donald Trump's days of pretending to be a populist are over. His policies are nothing short of an all-out assault on hardworking Americans," Senate Minority Leader Chuck Schumer said in a statement. "As he guts healthcare, slashes education, and hollows out programs families rely on- he's bankrolling tax breaks for billionaires and big corporations."

Sen. Patty Murray, the top Democratic appropriator, said the Trump plan would hurt families, abandon the nation's global leadership role and set it back decades. "This president believes we should shred at least $163 billion in investments here at home that make all the difference for families and have been essential to America's success-but that we should hand billionaires and the biggest corporations trillions in new tax breaks," she said in a statement. "That is outrageous-and it should offend every hardworking American."

Correction: This item originally said that the $163 billion in proposed spending cuts were partially offset by the increases to defense and homeland security, but the planned spending boost on the latter two categories from the Republican budget reconciliation package fully offsets the cuts.

Trump Orders Halt in Funding for PBS, NPR

Headed to his Florida resort on Air Force One Thursday evening, President Trump signed an executive order that seeks to end federal funding for PBS and NPR, broadcasters that rely in part on financial assistance from the government.

Accusing the broadcasters of being unfair, inaccurate and biased, Trump ordered the Corporation for Public Broadcasting to halt any direct funding provided to them. CPB received $535 million from Congress in fiscal year 2025, most of which is dispersed as direct grants to local public TV and radio stations.

In April, Trump attacked the pair of broadcasters, saying, "REPUBLICANS MUST DEFUND AND TOTALLY DISASSOCIATE THEMSELVES FROM NPR & PBS, THE RADICAL LEFT 'MONSTERS' THAT SO BADLY HURT OUR COUNTRY!"

In a statement Friday, the White House claimed that the broadcasters use taxpayer money to spread "radical, woke propaganda disguised as 'news'."

According to NPR, the network receives about 1% of its funding from the federal government directly, with a bit more coming from member stations around the country that also receive some federal funding and pay NPR for programming. PBS receives more, with about 15% of its funding coming from the Corporation for Public Broadcasting.

NPR said it would challenge the executive order on both constitutional and budgetary grounds. "The appropriation for public broadcasting, including NPR and PBS, represents less than 0.0001% of the federal budget," said NPR President Katherine Maher. "The President's order is an affront to the First Amendment rights of NPR and locally owned and operated stations throughout America to produce and air programming that meets the needs of their communities."

Job Growth Surprisingly Strong in April

The U.S. economy added 177,000 jobs in April and the unemployment rate held steady at 4.2%, the Labor Department announced Friday, defying worries that the labor market was beginning to crack under the strain of President Donald Trump's trade and spending policies.

Hiring was off slightly from the 185,000 recorded in March, which was downwardly revised from an initial 228,000, but well above estimates of 135,000, suggesting that the labor market remains solid despite the threat that massive new tariffs and extensive layoffs in the federal government could slow the economy.

The number of federal jobs shrank, but only by 9,000, far short of what some experts expected to see amid the DOGE-driven reductions in government employment. (The report noted that employees on paid leave or receiving severance payments are counted as employed, so many of the DOGE layoffs may not have made it into the data yet.)

Hiring by state and local governments picked up, rising by a combined 19,000, with nearly half of that in education. Manufacturing jobs were down, falling by 1,000, but employment in healthcare continued to increase at a solid pace, up 51,000. Transportation and warehousing hiring increased by 29,000, perhaps a sign that companies are building inventories ahead of any potential supply issues.

According to the separate household survey, the labor force participation rate moved slightly higher to 62.6%, showing little change over the last year.

What people are saying: The Trump administration celebrated the report, claiming victory for Trump's policies. "With President Trump at the helm, I'm telling you, he mentioned to the American people over and over again that the golden age was coming," Labor Secretary Lori Chavez-DeRemer told Fox Business. "I will tell you, the golden age is here."

Trump highlighted the report, as well, saying on his social media platform that the economy is in a transition stage and "just getting started!!!" Citing low inflation, he repeated his call for the Federal Reserve to lower interest rates. (He also claimed that gas prices "just broke $1.98 a Gallon, lowest in years," though as CNN's Daniel Dale noted, the average price for a gallon of gas nationally is about $3.19 and the lowest average price in any state is $2.66 per gallon in Mississippi.)

Economist Justin Wolfers of the University of Michigan warned that the celebration over the latest jobs data may be premature, since the April report may not include some of the layoffs that could have occurred after Trump announced his new tariff plan on what he called "Liberation Day," April 2. "These are no post-tariff numbers," Wolfers said.

Even so, the strength of the April report was encouraging for many economists. "We can push recession concerns to another month," said Seema Shah, chief global strategist at Principal Asset Management, per CNBC. "Job numbers remain very strong, suggesting there was an impressive degree of resilience in the economy in play before the tariff shock."

Shah added that she expects the economy to weaken as tariffs kick in, but the current momentum means "the U.S. has a decent chance of averting recession if it can step back from the tariff brink in time."

While the solid April numbers came as a relief, some analysts emphasized that other worrying signs for the economy are starting to crop up. "Were it not for the concerns about the economic fallout from higher tariffs, the steady labor market activity apparent in the April employment report would have been unremarkable," JPMorgan's Michael Feroli said in a research note. "Instead, the solid momentum in hiring stood out against the broad deterioration in business surveys last month."

Trump Again Threatens to Revoke Harvard's Tax-Exempt Status

President Trump on Friday once again threatened to revoke the tax-exempt status of Harvard University.

"We are going to be taking away Harvard's Tax Exempt Status. It's what they deserve!" he wrote on his social media platform.

In April, Trump made a similar threat against the university, as his administration accused Harvard of failing to protect Jewish students on campus during last year's campus protests against the war in Gaza. "Perhaps Harvard should lose its Tax Exempt Status and be Taxed as a Political Entity if it keeps pushing political, ideological, and terrorist inspired/supporting 'Sickness?'"

It's not clear, however, if Trump's threats are anything more than that. An administration official told The Wall Street Journal that Trump's threats are not an order to the IRS to take action.

Still, Harvard University President Alan Garber pushed against Trump's words, saying a revocation of tax-exempt status would be "highly illegal" and a threat to higher education.

"If the government goes through with a plan to revoke our tax exempt status, it would...be highly illegal unless there is some reasoning that we have not been exposed to that would justify this dramatic move," Garber told the Journal. "The message that it sends to the educational community would be a very dire one, which suggests that political disagreements could be used as a basis to pose what might be an existential threat to so many educational institutions."

Harvard sued the Trump administration in April after the administration froze more than $2 billion in funding for research, saying the funding freeze was illegal.