# How much government spending will Trump cut before his term ends?

Before 2029

Updated: March 26, 2026

Category: Economics

Tags: Growth

HTML: /markets/economics/growth/how-much-government-spending-will-trump-cut-before-his-term-ends/

## Short Answer

**Key takeaway.** Both the **model** and the **market** expect at least 250 billion in government spending cuts before Trump's term ends, with no compelling evidence of mispricing.

## Key Claims (January 2026)

**- - Overall federal spending is rising, making substantial cuts highly unlikely.** - Proposed defense spending shows significant increases, offsetting potential cuts.
- Actual enacted spending cuts (rescissions) have been minimal since 2025.
- No specific FY2027 mandatory spending cuts are yet established.
- Major entitlement programs remain untouched, hindering significant fiscal reform.

### Why This Matters (GEO)

- AI agents extract claims, not arguments.
- Improves citation probability in summaries and answer cards.
- Enables fact stitching across multiple sources.

## Executive Verdict

**Key takeaway.** **Model** estimates **5%** **probability** vs 10c **market**, implying a 10x payout for unlikely substantial cuts.

### Who Wins and Why

| Outcome | Market | Model | Why |
| --- | --- | --- | --- |
| At least 250 billion | 10.0% | 5.0% | Market higher by 5.0pp |
| At least 1 trillion | 6.0% | 2.8% | Market higher by 3.2pp |
| At least 500 billion | 3.0% | 3.5% | Model higher by 0.5pp |

## Model vs Market

| Outcome | Market Probability | Octagon Model Probability |
| --- | --- | --- |
| At least 250 billion | 10.0% | 5.0% |
| At least 1 trillion | 6.0% | 2.8% |
| At least 500 billion | 3.0% | 3.5% |
| At least 2 trillion | 5.0% | 2.5% |
| At least 750 billion | 3.0% | 3.0% |

- Expiration: March 31, 2029

## Market Behavior & Price Dynamics

This prediction market has experienced a significant downward trend, with the probability of substantial government spending cuts falling from a high of 23.0% to its current level of 10.0%. The most dramatic price movement occurred in mid-to-late March 2026, when the price plummeted from 23.0% to 10.0%. This sharp decline directly correlates with news reports from the same period indicating that overall federal spending had actually increased in Fiscal Year 2025 and that Congress had approved very few of the administration's proposed cuts for Fiscal Year 2026. This reality check appears to have caused a major repricing as traders reassessed the likelihood of achieving significant cuts.

The market has established a new support level around the 10.0% mark, where it has since stabilized. The initial 23.0% price serves as a distant resistance level, representing peak optimism that has since dissipated. Total volume traded is relatively low at 215 contracts, and the sample data points show zero volume during the main price drop, suggesting the adjustment may have been driven by a small number of informed traders or a market maker reacting to new information, rather than a broad-based sell-off. Overall, the price action reflects a strong shift in market sentiment from initial optimism to significant pessimism, with participants currently assigning a low probability that the Trump administration will successfully implement major spending cuts before the end of its term in 2029.

## Significant Price Movements

#### 📉 March 21, 2026: 18.0pp drop

Price decreased from 26.0% to 8.0%

**Outcome:** At least 2 trillion

**What happened:** The primary driver of the 18.0 percentage point drop on March 21, 2026, was likely a social media statement from Elon Musk [[^]](https://bipartisanpolicy.org/report/deficit-tracker/). Musk publicly revised his outlook on Trump's potential spending cuts, stating that a $2 trillion target was unlikely and a maximum of $1 trillion was more realistic [Web research] [[^]](https://bit.ly/4q8Mc6g). This influential statement directly undermined the "At least 2 trillion" outcome, causing a significant downward re-evaluation of its probability [[^]](https://www.politifact.com/truth-o-meter/promises/maga-meter-tracking-donald-trumps-2024-promises/promise/1673/cut-the-federal-governments-budget-every-year/article/3245/). Social media was the primary driver [[^]](https://www.govexec.com/management/2025/05/biggest-takeaways-trumps-cut-filled-fy26-budget/405037/).

#### 📈 March 20, 2026: 21.0pp spike

Price increased from 5.0% to 26.0%

**Outcome:** At least 2 trillion

**What happened:** The provided web research indicates no evidence of a 21.0 percentage point spike for "At least 2 trillion" in government spending cuts by Trump on March 20, 2026. Sources show Trump's FY2026 budget proposals were for much smaller non-defense cuts, around $163 billion, and Congress often rejected most proposed reductions, with overall spending even increasing in FY2025 [[^]](https://bit.ly/4q8Mc6g). Given the explicit statement that "No evidence of $2 trillion cuts or 21.0pp growth spike on 2026-03-20" exists in the available data [Web research provided by user], it is not possible to identify a primary driver for the described market movement.

## Contract Snapshot

For the "At least 250 billion" market, a YES resolution occurs if government spending (FGEXPND) is at least $250 billion below the Q4 2024 level in any quarter from Q1 2025 through Q4 2028, with the outcome verified by FRED. If this condition is not met by Q4 2028, the market resolves to NO. The market opened on November 13, 2024, closes early if the event occurs, or by March 31, 2029, at 11:00 AM EDT otherwise, with payouts projected 30 minutes after closing.

## Market Discussion

Traders overwhelmingly expect that Donald Trump will not make significant cuts to government spending before his term ends, with the likelihood of even a $250 billion cut currently at only 10%. Arguments for this "No" stance suggest that Trump has no intention of cutting spending, and that government expenditures are unlikely to shrink under any administration. While some "Yes" positions exist, they are primarily focused on clarifying market rules rather than expressing confidence in actual spending reductions.

## Market Data

| Contract | Yes Bid | Yes Ask | Last Price | Volume | Open Interest |
| --- | --- | --- | --- | --- | --- |
| At least 1 trillion | 3% | 6% | 6% | $14,802 | $3,702 |
| At least 2 trillion | 5% | 8% | 5% | $8,479 | $1,728 |
| At least 250 billion | 6% | 9% | 10% | $28,730 | $21,874 |
| At least 500 billion | 3% | 9% | 3% | $9,485 | $2,274 |
| At least 750 billion | 2% | 6% | 3% | $8,470 | $1,969 |

## What is the status of FY2027 spending cuts and senatorial votes?

FY2027 Budget Resolution Status | Not finalized as of March 26, 2026 [[^]](https://www.crfb.org/papers/fy-2027-budget-resolution-principles) |
FY2027 Spending Cuts Target | No specific dollar amount established (as of March 26, 2026) [[^]](https://www.crfb.org/papers/fy-2027-budget-resolution-principles) |
Previous FY2025 Spending Goal | $2 trillion in deficit reduction (H.Con.Res.14) [[^]](https://www.crfb.org/blogs/houses-2-trillion-spending-cuts-should-be-absolute-minimum) |

**As of March 26, 2026, no specific FY2027 mandatory spending cuts have been established**

As of March 26, 2026, no specific FY2027 mandatory spending cuts have been established. A final, passed FY2027 Congressional Budget Resolution has not been identified, meaning no specific dollar amount for mandatory spending cuts via reconciliation instructions has been set. While the Committee for a Responsible Federal Budget (CRFB) published FY2027 principles on February 10, 2026, advocating for significant mandatory spending savings, these principles do not specify a dollar amount and do not constitute a passed resolution [[^]](https://www.crfb.org/papers/fy-2027-budget-resolution-principles). For context, the House's prior FY2025 resolution (H.Con.Res.14), agreed upon in April 2025, targeted **$2** trillion in net deficit reduction from spending committees via reconciliation instructions, providing a precedent for such cuts [[^]](https://www.crfb.org/blogs/houses-2-trillion-spending-cuts-should-be-absolute-minimum).

No moderate Republican Senators have confirmed support for a hypothetical FY2027 reconciliation bill. There are no public confirmations from Republican Senators Susan Collins, Lisa Murkowski, or Mitt Romney indicating they will vote for a hypothetical FY2027 reconciliation bill. Both Senators Collins and Murkowski have previously opposed similar bills, citing concerns such as Medicaid cuts [[^]](https://alaskapublic.org/news/politics/washington-d-c/2025-07-01/murkowski-helps-win-senate-passage-of-republican-megabill). Although Senator Murkowski's office has been involved in discussions regarding FY2027 appropriations and Community Project Funding requests, this does not imply a confirmation on a reconciliation bill [[^]](https://www.murkowski.senate.gov/fy27-appropriations-and-cds-requests). Similarly, Senator Collins has participated in bipartisan efforts unrelated to such a vote [[^]](https://www.collins.senate.gov/newsroom/senators-collins-reed-murkowski-lead-bipartisan-group-urging-hhs-to-release-remaining-liheap-funds).

## What are the CBO's mandatory spending projections for 2026-2028?

Net Mandatory Spending Decrease | $1.2 trillion (legislative changes) [Web Research Results, 2, 3] [[^]](https://bipartisanpolicy.org/explainer/the-fiscal-outlook-in-cbos-latest-10-year-baseline/) |
Mandatory Spending Increase | $0.27 trillion (economic changes) [Web Research Results, 2, 3] [[^]](https://bipartisanpolicy.org/explainer/the-fiscal-outlook-in-cbos-latest-10-year-baseline/) |
Projected Deficit Increase | $1.4 trillion (2026-2035 period) [Web Research Results, 2, 3] [[^]](https://bipartisanpolicy.org/explainer/the-fiscal-outlook-in-cbos-latest-10-year-baseline/) |

**The cumulative change in the Congressional Budget Office's (CBO) 10-year baseline projection for mandatory spending outlays, encompassing Social Security, Medicare, and interest on the debt, from January 2026 through January 2028 cannot be fully determined [[^]](https://bipartisanpolicy.org/explainer/the-fiscal-outlook-in-cbos-latest-10-year-baseline/)**

The cumulative change in the Congressional Budget Office's (CBO) 10-year baseline projection for mandatory spending outlays, encompassing Social Security, Medicare, and interest on the debt, from January 2026 through January 2028 cannot be fully determined [[^]](https://bipartisanpolicy.org/explainer/the-fiscal-outlook-in-cbos-latest-10-year-baseline/). CBO reports for August 2026, January 2027, and January 2028 have not yet been published, rendering comprehensive projections across these specific reports unavailable [Web Research Results] [[^]](https://www.americanactionforum.org/print/?url=https%3A%2F%2Fwww.americanactionforum.org%2Finsight%2Fhighlights-of-cbos-february-2026-budget-and-economic-outlook%2F%3Fprint). Recent CBO data shows increased deficits despite some mandatory spending cuts [[^]](https://www.crfb.org/papers/cbos-february-2026-budget-and-economic-outlook). The CBO's February 2026 Budget and Economic Outlook, which updated the January 2025 baseline, projected a **$1.4** trillion increase in overall deficits over the 2026-2035 period [Web Research Results, 2, 3] [[^]](https://www.cbo.gov/system/files/2025-01/60870-Outlook-2025.pdf). This outlook included a net **$1.2** trillion decrease in mandatory spending, primarily attributed to Medicaid cuts incorporated within the "One Big Beautiful Bill Act" [Web Research Results, 2, 3] [[^]](https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/51129-chapter3.pdf). However, this legislative reduction was partially offset by economic changes, which contributed a **$0.27** trillion increase to mandatory spending [Web Research Results, 2, 3] [[^]](https://www.cbo.gov/sites/default/files/115th-congress-2017-2018/reports/52370-outlook_1.pdf). Specific component changes remain indeterminable without upcoming CBO reports [[^]](https://bipartisanpolicy.org/explainer/the-fiscal-outlook-in-cbos-latest-10-year-baseline/). Without the subsequent release of CBO reports, specific cumulative changes for individual mandatory spending components, such as Social Security, Medicare, and net interest, from January 2026 through January 2028 cannot be determined [Web Research Results] [[^]](https://www.americanactionforum.org/print/?url=https%3A%2F%2Fwww.americanactionforum.org%2Finsight%2Fhighlights-of-cbos-february-2026-budget-and-economic-outlook%2F%3Fprint).

## How Much Budget Authority Did Congress Rescind Since 2025?

Total Proposed Rescissions | $14.3 billion (June 2025 [[^]](https://www.federalregister.gov/documents/2025/06/09/2025-10377/rescissions-proposals-pursuant-to-the-congressional-budget-and-impoundment-control-act-of-1974), August 2025 [[^]](https://www.presidency.ucsb.edu/documents/message-the-congress-reporting-rescissions-budget-authority-0)) |
Successfully Rescinded by Congress | $9 billion [[^]](https://www.congress.gov/bill/119th-congress/house-bill/4) |
Percentage Successfully Rescinded | Approximately 63% (Based on total proposed and successfully rescinded amounts) [[^]](https://www.federalregister.gov/documents/2025/06/09/2025-10377/rescissions-proposals-pursuant-to-the-congressional-budget-and-impoundment-control-act-of-1974) |

**The administration proposed a cumulative $14.3 billion in budget authority for cancellation**

The administration proposed a cumulative **$14.3** billion in budget authority for cancellation. Since January 2025, the administration has sent two presidential rescission messages to Congress, totaling **$14.3** billion in proposed budget authority cancellations. The first message, sent in June 2025, suggested rescinding **$9.4** billion [[^]](https://www.federalregister.gov/documents/2025/06/09/2025-10377/rescissions-proposals-pursuant-to-the-congressional-budget-and-impoundment-control-act-of-1974). A subsequent message in August 2025 proposed an additional **$4.9** billion for cancellation [[^]](https://www.presidency.ucsb.edu/documents/message-the-congress-reporting-rescissions-budget-authority-0). These proposals were issued consistent with the Congressional Budget and Impoundment Control Act of 1974.

Congress successfully rescinded **$9** billion of the proposed budget authority. Congress acted on the initial package of proposed rescissions, with the Rescissions Act of 2025 (Pub. L. 119-28) being signed into law on July 24, 2025, which effectively cancelled **$9** billion in budget authority [[^]](https://www.congress.gov/bill/119th-congress/house-bill/4). However, the **$4.9** billion proposed in the August 2025 message was not acted upon by Congress, and the funds expired, a process sometimes referred to as a "pocket rescission" [[^]](https://www.everycrsreport.com/reports/LSB11373.html). Therefore, out of the total **$14.3** billion proposed since January 2025, **$9** billion was successfully rescinded by congressional action, representing approximately **63%** of the total proposed value.

## What is the Status of Trump's FY2027-2028 Budget Proposals?

Official FY2027/2028 Budget Proposals | Not released as of March 26, 2026 (Web Research Results) [[^]](https://www.globalsecurity.org/military/library/budget/fy2027/index.html) |
Proposed FY2027 Defense Budget | $1.5 trillion [[^]](https://www.defensenews.com/news/pentagon-congress/2026/01/07/trump-proposes-massive-increase-in-2027-defense-spending-to-15t/) |
FY2027 Defense Spending Increase (vs. FY2026) | Approximately $600 billion [[^]](https://www.defensenews.com/news/pentagon-congress/2026/01/07/trump-proposes-massive-increase-in-2027-defense-spending-to-15t/) |

**Official budget proposals for FY2027 and FY2028 are currently unavailable**

Official budget proposals for FY2027 and FY2028 are currently unavailable. As of March 26, 2026, the Trump administration has not released official budget proposals for Fiscal Years 2027 or 2028 [Web Research Results]. Preliminary statements, however, indicate a proposed defense '050' budget of **$1.5** trillion for FY2027 [[^]](https://www.defensenews.com/news/pentagon-congress/2026/01/07/trump-proposes-massive-increase-in-2027-defense-spending-to-15t/). This figure represents a significant increase of approximately **$600** billion when compared to the FY2026 enacted defense spending level of **$901** billion [[^]](https://www.defensenews.com/news/pentagon-congress/2026/01/07/trump-proposes-massive-increase-in-2027-defense-spending-to-15t/).

Calculating the "defense offset" is not possible with current data. To assess the "defense offset" and determine the net effect on total discretionary spending for FY2027 and FY2028, it is necessary to subtract proposed cuts to non-defense discretionary (NDD) spending from the proposed increases to defense '050' spending, relative to the CBO baseline. The available research explicitly states that "No explicit NDD cut figures, CBO baseline projections, or 'defense offset' calculations relative to CBO baseline for FY2027/FY2028 found in sources" [Web Research Results]. While prior patterns suggest deep NDD cuts, such as a **$163** billion reduction (**22%**) below FY2025 for FY2026 base NDD [[^]](https://www.americanactionforum.org/print/?url=https%3A%2F%2Fwww.americanactionforum.org%2Finsight%2Fhighlights-of-cbos-february-2026-budget-and-economic-outlook%2F%3Fprint), specific proposals for FY2027 and FY2028 are absent.

The net effect on total discretionary spending remains undetermined. Given the lack of explicit proposed non-defense discretionary (NDD) spending cuts and CBO baseline projections for FY2027 and FY2028, it is not possible to calculate the net effect on total discretionary spending or the "defense offset" as defined by the question. Therefore, the impact on total discretionary spending for these fiscal years, relative to the CBO baseline, cannot be determined based on the currently available information.

## How Do OMB and Blue Chip 2026 GDP Forecasts Differ?

OMB 2026 Real GDP Growth | 3.2% (FY2026 Mid-Session Review, September 2025) [[^]](https://www.whitehouse.gov/wp-content/uploads/2025/09/MSR_2026.pdf) |
Blue Chip 2026 Real GDP Growth | 1.9% (December 2025 survey) [[^]](https://www.prnewswire.com/news-releases/wolters-kluwers-blue-chip-economic-indicators-panelists-now-anticipate-softer-than-previously-predicted-real-gdp-growth-this-quarter-but-leave-consensus-forecast-of-annual-growth-unchanged-300424242.html) |
Forecast Divergence | 1.3 percentage points [[^]](https://www.whitehouse.gov/wp-content/uploads/2025/09/MSR_2026.pdf) |

**The White House Office of Management and Budget (OMB) projects a significant divergence for upcoming fiscal year's real GDP growth**

The White House Office of Management and Budget (OMB) projects a significant divergence for upcoming fiscal year's real GDP growth. The OMB's real GDP growth forecast for calendar year 2026 (Q4/Q4) is **3.2%**, as outlined in its FY2026 Mid-Session Review published in September 2025 [[^]](https://www.whitehouse.gov/wp-content/uploads/2025/09/MSR_2026.pdf). In contrast, the Blue Chip Economic Indicators consensus forecast for 2026 real GDP growth stands at **1.9%**, based on their December 2025 survey [[^]](https://www.prnewswire.com/news-releases/wolters-kluwers-blue-chip-economic-indicators-panelists-now-anticipate-softer-than-previously-predicted-real-gdp-growth-this-quarter-but-leave-consensus-forecast-of-annual-growth-unchanged-300424242.html). This results in a divergence of approximately 1.3 percentage points, with the OMB's forecast being notably more optimistic than the Blue Chip consensus [[^]](https://www.whitehouse.gov/wp-content/uploads/2025/09/MSR_2026.pdf).

No data confirms a widening gap in forecasts over successive budget releases. There is no specific evidence in the research to suggest that the gap between OMB and Blue Chip forecasts is widening with each successive President's Budget release, primarily due to a lack of multi-year President's Budget data for such a comparison [[^]](https://www.americanactionforum.org/insight/how-cbos-latest-economic-projections-compare-to-other-forecasts/). However, historical analyses consistently show that the OMB's economic projections tend to be more optimistic than those from independent forecasters, such as the Congressional Budget Office (CBO), which projected a **2.2%** real GDP growth for 2026 in September 2025 [[^]](https://www.americanactionforum.org/insight/how-cbos-latest-economic-projections-compare-to-other-forecasts/). While this optimistic stance in the administration's forecasts generally supports higher government revenue projections, independent sources frequently view these projections as less realistic [[^]](https://www.americanactionforum.org/insight/how-cbos-latest-economic-projections-compare-to-other-forecasts/).

## What Could Change the Odds

**Prediction markets currently show low odds for significant government spending cuts during a potential Trump term (Q4 2024 to Q4 2028), with the probability of cuts reaching or exceeding $250 billion, $500 billion, or $1 trillion decreasing [[^]](https://www.reuters.com/world/us/trump-unveils-federal-budget-blueprint-2025-05-02/).** This bearish outlook is attributed to anticipated offsets, the untouched status of major entitlement programs, and the potential for government shutdowns hindering fiscal reforms [[^]](https://www.reuters.com/world/us/trump-unveils-federal-budget-blueprint-2025-05-02/). Although the OBBBA previously enacted roughly **$1.4** trillion in cuts over ten years, predominantly in areas like Medicaid, SNAP, and student loans, the net reduction after increases was about **$1** trillion [[^]](https://www.reuters.com/world/us/trump-unveils-federal-budget-blueprint-2025-05-02/).

**Several key catalysts could influence the market probability of spending cuts.** The release of the FY2027 budget proposal in early 2026, followed by reconciliation processes, will be a critical event [[^]](https://www.reuters.com/world/us/trump-unveils-federal-budget-blueprint-2025-05-02/). Strong economic growth or the implementation of new tariffs could provide additional fiscal leeway, potentially bolstering a bullish outlook for spending reductions [[^]](https://www.reuters.com/world/us/trump-unveils-federal-budget-blueprint-2025-05-02/). Conversely, robust congressional opposition to proposed cuts would likely serve as a bearish catalyst, making substantial reductions difficult to achieve [[^]](https://www.reuters.com/world/us/trump-unveils-federal-budget-blueprint-2025-05-02/). The appropriations process during the summer of 2026 will also be a crucial period for observing legislative intent regarding government spending [[^]](https://www.reuters.com/world/us/trump-unveils-federal-budget-blueprint-2025-05-02/).

## Key Dates & Catalysts

- **Expiration:** March 31, 2029
- **Closes:** March 31, 2029

## Decision-Flipping Events

- Prediction markets currently show low odds for significant government spending cuts during a potential Trump term (Q4 2024 to Q4 2028), with the **probability** of cuts reaching or exceeding **$250** billion, **$500** billion, or **$1** trillion decreasing [^] .
- This bearish outlook is attributed to anticipated offsets, the untouched status of major entitlement programs, and the potential for government shutdowns hindering fiscal reforms [^] .
- Although the OBBBA previously enacted roughly **$1.4** trillion in cuts over ten years, predominantly in areas like Medicaid, SNAP, and student loans, the net reduction after increases was about **$1** trillion [^] .
- Several key catalysts could influence the **market** **probability** of spending cuts.

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## Historical Resolutions

**Historical Resolutions:** 9 markets in this series

**Outcomes:** 0 resolved YES, 9 resolved NO

**Recent resolutions:**

- KXGOVTCUTS-25-1: NO (Feb 20, 2026)
- KXGOVTCUTS-25-25: NO (Feb 20, 2026)
- KXGOVTCUTS-25-100: NO (Feb 20, 2026)
- KXGOVTCUTS-25-50: NO (Feb 20, 2026)
- KXGOVTCUTS-25-750: NO (Feb 20, 2026)

## Disclaimer

This content is for informational and educational purposes only and does not constitute financial, investment, legal, or trading advice.
Prediction markets involve risk of loss. Past performance does not guarantee future results.
We are not affiliated with Kalshi or any prediction market platform. Market data may be delayed or incomplete.

### Data Sources & Model Transparency

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**Freshness:** Analysis is generated periodically and may not reflect the latest developments. Verify critical information from primary sources.

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