Short Answer

Both the model and the market expect Trump to balance the budget during his term, with no compelling evidence of mispricing.

1. Market Behavior & Drivers

This prediction market displays a distinct lack of volatility, with the probability of a "YES" outcome trading in a very narrow sideways channel between 10.0% and 12.0%. The price has remained anchored around the 11.0% starting point throughout its history, indicating a stable and strong consensus among traders. Volume has been exceptionally low, with only 335 contracts traded across 301 data points, suggesting minimal market participation and a lack of conviction that new information will change the outcome. This low volume, combined with the tight price range, points to a market that has already priced in the available information and sees little reason to re-evaluate.
The price action, or lack thereof, directly reflects the provided context. There have been no significant price spikes or drops because the fundamental economic data is consistently negative for a "YES" resolution. Reports of ongoing and projected multi-trillion-dollar deficits from sources like the CBO create a high barrier for a balanced budget. Even news of Trump's proposals for spending cuts has failed to move the market, suggesting traders view these plans as insufficient or unlikely to overcome the massive fiscal challenges. The 10.0% level has acted as a firm support floor, while 12.0% has served as a resistance ceiling. Overall, the chart indicates a deeply entrenched market sentiment that a balanced budget during Trump's term is a highly improbable event.
  • Trump's economic nominees prioritize growth through tax cuts to reduce deficits.
  • House Freedom Caucus proposes broad spending cuts across various sectors for FY2026.
  • CBO projects combined tariffs and spending cuts could significantly reduce deficits.
  • No specific FY2026 or FY2027 congressional budget resolutions are currently adopted.
  • The Fiscal Year 2025 deficit reached $1.775 trillion.
  • CBO forecasts a $1.9 trillion deficit for FY2026, with continued growth thereafter.

Who Wins and Why

Outcome Market Model Why
During Trump's term 12.0% 8.4% Trump's past policies, including tax cuts and increased spending, typically expanded federal deficits.

Current Context

Trump is unlikely to balance the federal budget during his term. As of March 2026, the federal budget for Fiscal Year 2026 (FY2026) shows ongoing deficits exceeding $600 billion year-to-date [1]. The Congressional Budget Office (CBO) projects this deficit to reach $1.9 trillion for the full FY2026, further rising to $3.1 trillion by 2036. Fiscal Year 2025 concluded with a deficit of $1.8 trillion. Historically, tax cuts enacted through the Omnibus Budget Reconciliation Act (OBBBA) have added trillions to deficits, though these have been partially offset by tariffs.
Despite budget proposals, experts view balancing the budget as unrealistic. Trump has proposed sharp spending cuts in his 2026 budget and pledged to balance the budget [2], [3], [4]. However, experts from the Committee for a Responsible Federal Budget (CRFB) deem this goal unrealistic, noting it would require approximately $17 trillion in savings to achieve [5], [6]. They characterize this ambition as being at odds with fiscal reality [6].
Prediction markets reflect low confidence in achieving budget balance. On Kalshi, the implied odds for no deficit during FY2025-2028 are around 11%. Similarly, Polymarket shows 43% odds for any monthly reduction in the deficit by 2026. These figures suggest skepticism regarding the feasibility of achieving a balanced budget.
Sources (6)
  1. 1December Closes with $144.75 Billion Deficit, Up to $602.38 Billion Deficit for FY2026 - December Closes with $144.75 Billion Deficit, Up to $602.38 Billion Deficit for FY2026 - U.S. Congress Joint Economic Committeejec.senate.gov
  2. 2Trump’s 2026 Budget Plan Seeks Sharp Spending Cuts | News, Sports, Jobs - The Intelligencertheintelligencer.net
  3. 3Trump’s 2026 Budget: Federal Cuts and New Revenuekcci.com
  4. 4As national debt nears $39 trillion and Trump promises to balance budget, Americans spend more on interest payments than on defenseyahoo.com
  5. 5Top 13 Fiscal Charts of 2025-2025-12-31crfb.org
  6. 6Trump calls for balanced budget: experts say goal is worthy but at 'odds with fiscal reality' | Just The Newsjustthenews.com

2. Price Chart

Historical Price (Probability)

Outcome probability
Date

3. Market Data

Contract Snapshot

This market resolves to "Yes" if the US federal budget does not have a deficit for any of the fiscal years 2025, 2026, 2027, or 2028, with the outcome verified from FRED (FYFSD series); otherwise, it resolves to "No." The market opened on January 3, 2025, and closes either when the outcome occurs or by July 1, 2029, 10:00 am EDT, with projected payout 30 minutes after closing. Trading is prohibited for employees of Source Agencies and individuals holding material, non-public information on the underlying event.

Available Contracts

Market options and current pricing

Outcome bucket Yes (price) No (price) Last trade probability
During Trump's term $0.12 $0.89 12%

Market Discussion

The dominant sentiment among traders is highly skeptical that Donald Trump will balance the budget, with "No" currently trading at 89¢. Arguments for this position highlight the substantial ~$1.8 trillion annual deficit, recent tax cuts, and rapid debt accumulation observed, prompting some to question why the "Yes" side isn't priced even lower than its current 12¢. While no strong arguments are presented for a "Yes" outcome, one key insight was a clarification of the market rules: the contract resolves to "Yes" if the budget is balanced in any single fiscal year between 2025 and 2028.

4. What Are Trump's Economic Nominees' Fiscal Strategies?

OMB Director Vought's Tax Cut Deficit Reduction$1.4 trillion (via dynamic growth scoring) [1]
Treasury Secretary Bessent's GDP Growth Target3% (through deregulation and tax cuts) [2]
Treasury Secretary Bessent's Deficit Target3% of GDP by 2028 [2]
Trump's confirmed economic nominees prioritize growth through tax cuts to reduce deficits. Russell Vought, confirmed OMB Director, supports extending tax cuts, considering them "fiscally responsible" through dynamic growth scoring. This approach projects a $1.4 trillion reduction in deficits due to anticipated economic expansion [1]. Kevin Hassett, designated National Economic Council Director, advocates a "super pro-growth agenda" and defends the Tax Cuts and Jobs Act (TCJA) for boosting wages and productivity [3].
Treasury nominee Scott Bessent detailed a "3-3-3" plan for economic growth. This plan aims to achieve 3% GDP growth through deregulation, tax cuts, and increased oil production, with the objective of reducing the deficit to 3% of GDP by 2028. Bessent’s strategy suggests that economic expansion will enable the nation to "grow out" of its debt [2].
Sources (3)
  1. 1OMB director calls Trump bill 'fiscally responsible' despite some GOP opposition | Fox Businessfoxbusiness.com
  2. 2Treasury secretary nominee Scott Bessent's '3-3-3' plan: What to knowfoxbusiness.com
  3. 3Kevin Hassetten.wikipedia.org

5. How Do House Freedom Caucus and RSC Budgets Compare to Trump's Pledges?

HFC Proposed Rescissions$9.4 billion, including NPR/PBS funding [1]
RSC Budget Balance GoalBalance budget in 10 years [2]
Trump Defense Spending Increase13% increase to $1.01 trillion [3]
The House Freedom Caucus proposes broad spending cuts across various sectors. For Fiscal Year 2026, the caucus advocates for eliminating funding for areas such as refugee resettlement, migrant assistance, Diversity, Equity, and Inclusion (DEI) programs, climate initiatives, non-governmental organizations (NGOs), and abortions [1]. Their plan also targets fraud in state social services and supports $9.4 billion in rescissions, which include defunding National Public Radio (NPR) and Public Broadcasting Service (PBS) [1]. Notably, the House Freedom Caucus’s proposals do not explicitly cut Social Security or Medicare benefits [1].
The Republican Study Committee outlines a budget to balance federal spending within 10 years. Their comprehensive budget aims to return spending to pre-pandemic levels and address waste [2]. Proposed reforms include changes to Medicaid, such as cutting matching rates for undocumented immigrants, implementing site-neutral payments, and enforcing the public charge rule [2]. The committee also suggests stricter work requirements for the Supplemental Nutrition Assistance Program (SNAP), repealing Affordable Care Act (ACA) provisions for able-bodied individuals, and cracking down on Medicare upcoding [2]. Similar to the House Freedom Caucus, the Republican Study Committee seeks to eliminate funding for NPR, PBS, and DEI initiatives, while explicitly stating no increases to the Social Security retirement age or cuts to benefits [2].
Both groups align with Trump on key pledges, but some conflicts exist. The proposals from both the House Freedom Caucus and the Republican Study Committee align with former President Trump's commitment to avoiding direct cuts to Social Security and Medicare benefits [1]. There is also general support for increased or strategic defense spending, which aligns with Trump's pledge for a 13% increase, totaling $1.01 trillion [1]. However, potential conflicts arise with the Republican Study Committee's specific Medicaid reforms, such as cutting matching rates for undocumented immigrants, which could exert pressure on programs Trump has pledged to protect and go further than past budget cuts [2]. Furthermore, the broader, deep spending cuts advocated by both groups to balance the budget represent a fiscal objective Trump has been described as less likely to prioritize, given his focus on tax cuts [1].
Sources (3)
  1. 1Read the 2026 House Freedom Caucus Agenda to Fix the Republicfreedomcaucus.org
  2. 2https://app.justthenews.com/sites/default/files/2026-01/FINAL_RSC_BUDGET_W_COVER_PDF.pdfapp.justthenews.com
  3. 3https://www.whitehouse.gov/wp-content/uploads/2025/05/President-Trumps-Fiscal-Year-2026-Discretionary-Funding-Request-Overview.pdfwhitehouse.gov

6. How Much Could Proposed Tariffs Reduce US Federal Deficits?

Average Annual Deficit Reduction$290 billion annually (CBO, 2025-2034) [1]
Total Deficit Reduction (2025-2034)$2.9 trillion (CBO) [1]
FY2026 Deficit OffsetApproximately 15% (CBO) [1]
The Congressional Budget Office (CBO) projects significant deficit reduction from proposed tariffs. According to CBO analyses, a policy combining a universal 10% baseline tariff with a 60% tariff on Chinese goods could reduce federal deficits by an average of $290 billion annually over the 2025-2034 period, amounting to a total of $2.9 trillion [1]. This projected deficit reduction is primarily attributed to increased tariff revenue. The Penn Wharton Budget Model, however, has not provided a specific projection for this exact combination of tariffs in its current analyses [2].
Tariff revenue would offset a fraction of the projected 2026 deficit. In comparison to the broader fiscal outlook, the CBO anticipates a federal deficit of $1.9 trillion for fiscal year 2026 [3]. Consequently, the estimated average annual deficit reduction of $290 billion from the proposed tariffs would offset approximately 15% of the CBO's projected FY2026 deficit [1].
Sources (3)
  1. 1Effects of Illustrative Policies That Would Increase Tariffscbo.gov
  2. 2The Economic Effects of President Trump’s Tariffs | Penn Wharton Budget Modelbudgetmodel.wharton.upenn.edu
  3. 3CBO’s February 2026 Budget and Economic Outlook-Wed, 02/11/2026 - 12:00 | Committee for a Responsible Federal Budgetcrfb.org

7. What are CBO's projected debt service costs for FY2026-2029 (0.5% interest hike)?

Specific Cost Increase (FY2026-2029, 0.5% hike)Not explicitly stated in available research [Web Research Results] [1]
Estimated Net Interest (FY2026)Around $1 trillion [2]
Estimated Net Interest (FY2029)Over $1.5 trillion [2]
The Congressional Budget Office (CBO) does not provide this specific federal debt service projection. The CBO does not explicitly provide a projected increase in federal debt service costs for FY2026-2029 directly attributable to a 50 basis point (0.5%) increase in the average interest rate on 10-year Treasury notes within its available research [Web Research Results]. While the CBO offers comprehensive economic outlooks and budget projections, the precise dollar figure for this specific scenario over the specified timeframe is not directly presented [Web Research Results].
Broader CBO projections illustrate substantial increases in net interest costs. The CBO's "The Budget and Economic Outlook: 2026 to 2036," published February 11, 2026 [3], provides insights into federal debt service. Baseline net interest projections indicate that such costs are estimated to be around $1 trillion in FY2026, rising to over $1.5 trillion by 2029 [2]. The CBO also highlights that annually higher interest rates, even by small increments like 5 basis points, would lead to much higher debt burdens over time [4].
CBO tools allow broader analysis, not specific 0.5% rate shock calculations. Additionally, the CBO offers an interactive tool that allows for analysis of how changes in revenues and outlays would affect debt service, deficits, and debt [5]. However, it does not provide the exact calculation for a specific 0.5% shock on 10-year rates over FY2026-2029 [7, Web Research Results].
Sources (5)
  1. 1Congressional Budget Officecbo.gov
  2. 2CBO’s February 2026 Budget and Economic Outlook-Wed, 02/11/2026 - 12:00 | Committee for a Responsible Federal Budgetcrfb.org
  3. 3The Budget and Economic Outlook: 2026 to 2036ideas.repec.org
  4. 4The Long-Term Budget Outlook Under Alternative Scenarios for the Economy and the Budgetcbo.gov
  5. 5How Changes in Revenues and Outlays Would Affect Debt Service, Deficits, and Debtcbo.gov

8. What Budget Instructions Exist for FY2026-2027 Congressional Committees?

FY2026/2027 Resolution AdoptionNot adopted as of March 26, 2026 (Web Research Results) [1]
House Ways and Means Deficit InstructionIncrease deficit by up to $4.5 trillion (FY2025-2034) [2]
Senate Finance Deficit InstructionReduce deficit by at least $1 billion (FY2025-2034) [3]
No specific FY2026 or FY2027 budget resolutions are currently adopted. As of March 26, 2026, no Congressional Budget Resolutions specifically for Fiscal Years (FY) 2026 or 2027 have been adopted [Web Research Results]. Consequently, there are no distinct deficit reduction instructions assigned to the House Ways and Means Committee and the Senate Finance Committee solely for those years, meaning the scope of any potential budget reconciliation bill for FY2026 or FY2027 cannot currently be determined by such resolutions [Web Research Results].
The most recent adopted resolutions establish instructions for future years. These are the FY2025 resolutions, H.Con.Res. 14 in the House and S.Con.Res. 7 in the Senate [4]. These resolutions set appropriate budgetary levels extending through FY2034, thereby encompassing the FY2026 and FY2027 periods [4]. Within these standing instructions, the House Ways and Means Committee was directed to legislate changes that would increase the deficit by up to $4.5 trillion over the entire FY2025-2034 period [2]. Conversely, the Senate Finance Committee was instructed to reduce the deficit by at least $1 billion for the same FY2025-2034 timeframe [3]. These are the current instructions covering the specified years, absent any separately adopted resolutions for FY2026 and FY2027.
Sources (4)
  1. 1Home | U.S. Senate Committee On The Budgetbudget.senate.gov
  2. 2https://docs.house.gov/meetings/BU/BU00/20250213/117894/BILLS-119HConRes14ih.pdfdocs.house.gov
  3. 3https://punchbowl.news/wp-content/uploads/senate-budget-resolution.pdfpunchbowl.news
  4. 4H.Con.Res.14 - Establishing the congressional budget for the United States Government for fiscal year 2025 and setting forth the appropriate budgetary levels for fiscal years 2026 through 2034. 119th Congress (2025-2026) | Get alertscongress.gov

9. What Could Change the Odds

Key Catalysts

Prediction markets assign a low 11% probability to a balanced federal budget occurring between fiscal years 2025 and 2028 [1]. This outlook is anchored by significant current and projected deficits; the fiscal year 2025 deficit reached $1.775 trillion, and the Congressional Budget Office forecasts a $1.9 trillion deficit for fiscal year 2026, with continued growth thereafter [2]. Several bearish catalysts could exacerbate these fiscal challenges [3]. The potential extension of existing tax cuts and the proposed "One Big Beautiful Bill," which could add $3.4 trillion to $5.5 trillion to deficits over a decade, pose substantial risks [4]. Furthermore, a rising national debt interest, projected to exceed defense spending, and an anticipated debt-to-GDP ratio of 118% by 2035, signal further fiscal strain [5]. On the other hand, a few bullish catalysts could improve the budget picture [6]. Revenue generated from tariffs, amounting to $195 billion in fiscal year 2025, provides a positive contribution [7]. Additionally, sustained economic growth, potentially driven by advancements in artificial intelligence and the implementation of significant spending cuts, could help mitigate the projected deficits [8].

Key Dates & Catalysts

  • Expiration: July 01, 2029
  • Closes: July 01, 2029
Sources (8)
  1. 1Will Trump balance the budget? Odds & Market Details | Bitcoin.com Marketsmarkets.bitcoin.com
  2. 2Will Trump balance the budget? Odds & Predictionskalshi.com
  3. 3Reviewing President Trump's 2025 Fiscal Record - EPIC for Americaepicforamerica.org
  4. 4US budget deficit to grow to $1.853 trillion in FY2026, CBO saysfinance.yahoo.com
  5. 5Top 13 Fiscal Charts of 2025-2025-12-31crfb.org
  6. 6As national debt nears $39 trillion and Trump promises to balance budget, Americans spend more on interest payments than on defenseyahoo.com
  7. 7The Budget and Economic Outlook: 2025 to 2035cbo.gov
  8. 8https://www.whitehouse.gov/wp-content/uploads/2025/09/MSR_2026.pdfwhitehouse.gov