Economist and fiscal expert Chris Edwards emphasizes that Trump wields significant power in budget decisions. Additionally, private school choice programs are accessible for all K-12 students in 12 states. Other potential spending programs that could be cut, according to Edwards, include urban transit subsidies ($20 billion), unspent subsidies and tax breaks for wind and solar energy in the Inflation Reduction Act (IRA), subsidies for batteries and electric vehicles ($100 billion), broadband subsidies in the 2021 Infrastructure Bill ($65 billion), housing and community development grants ($75 billion), and farm subsidies, with a majority going to the largest farms in the country.
Furthermore, significant savings could be achieved by implementing caps on Medicaid payments to states, which have more than doubled since the passage of the Affordable Care Act, reaching $824 billion in 2022, as reported by Statista. Despite the popularity of many of these programs, potential budget cuts may face opposition, especially with a slim GOP majority in Congress.
Efforts to repeal Obamacare during Trump’s first term were unsuccessful, and it remains popular among various groups. Additionally, while the Inflation Reduction Act was not supported by any Republicans, red states may benefit more from its subsidies. Moreover, there are opportunities to reduce spending by focusing on waste elimination, real estate consolidation, defense budget adjustments, and reducing the federal workforce.
Previous attempts to cut federal spending, such as the Grace Commission established by President Ronald Reagan in 1982, have not been entirely successful, highlighting the challenges that come with attempting to streamline the administrative state. As per the Reagan Presidential Library, most of the recommendations made during Reagan’s presidency were not implemented, especially those requiring congressional legislation.
A report by Cato in 2004 stated that federal spending was 69 percent higher at the end of Reagan’s second term compared to 1981. Despite a decrease in government revenues from 19.6 percent to 18.3 percent of GDP, the deficit remained high due to Congress’ reluctance to make substantial cuts.
It was President Bill Clinton’s administration that managed to bring federal budgets back into balance in 1998.
In 2010, the Obama administration established the National Commission on Fiscal Responsibility and Reform, known as Simpson-Bowles. The commission proposed significant spending cuts and tax increases, but failed to gain enough support in Congress.
The recommendations from DOGE are expected to be delivered in 2026, during Trump’s second term. With the potential loss of momentum and congressional majorities, success may be challenging. However, Trump has the power to veto budget decisions and implement substantial cuts if needed.
Edwards emphasized that Trump has the authority to include recommended cuts in the budget and refuse to sign until substantial reductions are made.
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