Deficit watchdog urges Congress to cut more, spend less than Trump’s budget request

By Thérèse Boudreaux
The Center Square

As congressional Republicans begin considering how to implement President Donald Trump’s budget request into next year’s government funding bills, fiscal responsibility groups are urging them to find more spending offsets.

Trump’s “skinny” budget blueprint for fiscal year 2027 asks for a total of $1.5 trillion for discretionary defense spending and $660 billion for non-defense discretionary spending, a $73 billion reduction from last year.

If mandatory spending were included – such as Social Security, Medicare and Medicaid – the real price tag of the $2.1 trillion budget request rises to about $6.7 trillion.

With the national debt currently over $39 trillion, the Cato Institute has joined the chorus of deficit watchdogs, telling lawmakers to reduce entitlement program spending by hundreds of billions in order to accommodate the defense budget boost.

“Because the administration doesn’t suggest or even really discuss programs like Medicare and Social Security — it’s basically throwing in the towel and saying ‘there’s no chance that we’re going to even try to balance the budget or achieve a modicum of fiscal sustainability, don’t address those programs’ — it’s just not possible to put the budget back on the right track,” Cato policy analyst Dominick Lett told The Center Square.

The federal deficit topped $1.7 trillion in fiscal year 2025 as federal revenues have not kept up with the roughly $7.68 billion the U.S. government spends per day.

As of Oct. 2026, Social Security accounted for about 22% of federal spending, while Medicare accounted for 15%.

“It may seem innocuous in the moment that the president isn’t discussing reforms for these programs. But every time Congress or the president kicks the can down the road, it’s placing that burden onto the future,” Lett said.

“Maybe in a vacuum the administration would like to talk about some of these programs,” he added. “But of course during an election year, Congress is less likely to discuss reforms to Medicare and Social Security and Medicaid, in part because the necessary reforms for these programs are politically difficult.”

The longer politicians wait, however, the “more draconian, more significant, and potentially more economically damaging” future spending cuts or tax increases will need to be, Lett warned.

While the $73 billion in proposed spending cuts are “absolutely worth pursuing,” Lett thinks – including returning more disaster responsibility to the states and privatizing TSA – Congress should aim for hundreds of billions more in offsets.

If Republicans cannot do this via the fiscal year 2027 appropriations process, they could do so via their next budget reconciliation bill.

Since Republicans’ previous budget reconciliation bill – the “One Big Beautiful Bill” – exceeded its deficit target by $600 billion, Lett says that amount “would be a good starting point” for deficit reduction.

“If they include, let’s say, $300 billion in new defense spending, then they need to include $900 billion in offsetting,” Lett suggested. “Congress could make a reconciliation bill fiscally responsible by, for example, including $2 of cuts to entitlement programs for every $1 in increased spending. That would reduce the deficit and be fiscally responsible.”

Besides the pressure of upcoming midterm elections, most members of Congress are generally already hesitant to impose large spending cuts.

Social Security, Medicaid and Medicare are “third rail” issues, and Republicans already received heat for the OBBB’s cost-cutting reforms to Medicaid. Many Republicans also automatically support funding boosts to national defense activities, no matter the associated deficit impacts.

However, if Republicans don’t use their narrow majority to enact real spending cuts now, they won’t have enough money for defense by 2036, Lett said.

“Given our fiscal situation, by 2036, Social Security, Medicare, Medicaid and interest on the national debt will consume 100% of federal revenues. So over the long run, things like defense will get squeezed out because of entitlement programs,” he explained. “So from the perspective of the defense hawks, whether they like it or not, defense will get squeezed eventually if you don’t address entitlement.”

The House Budget Committee is scheduled to meet next week to consider the president’s budget request. The House Appropriations Committee will also meet multiple times next week to begin hearing federal agencies’ budget requests for fiscal year 2027, despite Congress not having fully funded the government for fiscal year 2026 yet.

The FY2026 Homeland Security appropriations bill, which funds DHS, has not yet passed the Senate, triggering a shutdown nearly two months ago that is still ongoing.

Republicans’ plan at the moment is to include portions of DHS funding that Democrats refuse to pass inside the next budget reconciliation bill.