So far during President Trump’s second term, the federal budget has, at first glance, held up just fine.
Of course, the outlook for America’s fiscal state is still bleak in the long run. But even after Republicans passed a huge tax cut last year and Congress rejected most of Mr. Trump’s proposed spending cuts, the deficit has shrunk a bit. A combination of money from the president’s tariffs and, perhaps surprisingly, a bump in income tax revenue has kept the fiscal situation steady.
Both of those supports are now at risk of sagging, and Mr. Trump’s latest budget proposal includes little that would realistically bolster the country’s financial health.
The White House budget plan released on Friday pairs a huge increase in military spending with steep cuts to many nondefense programs. Like his budget last year, it does not include many of the typical forecasts for how the administration’s agenda could affect the federal debt over time.
“It’s the most number-free budget we’ve seen in recent history,” said Maya MacGuineas, the president of the bipartisan Committee for a Responsible Federal Budget. “I have to imagine that there’s a story that the numbers would tell that they don’t want to tell.”
What the White House presented as its fiscal outlook relied on spending cuts that would be difficult to get through Congress and projections of strong government revenue, fueled by tariffs and bounding economic growth. Every administration’s budget presents optimistic assessments of its own plans, but this year’s felt particularly perfunctory to independent budget experts.
Absent were proposals for how to address growth in spending on Social Security and Medicare, the two most expensive federal programs, and the supersized military budget could add significantly to the debt if continued in perpetuity.
“They’re not even pretending to try,” said Douglas Holtz-Eakin, a former director of the nonpartisan Congressional Budget Office.
But even without a detailed plan, the current budget situation has not significantly changed under Mr. Trump — yet.
The president’s single largest fiscal change has been the roughly $5 trillion tax cut that was passed last year, and his most recent budget does not propose any other tax changes. Unlike the tax cut from his first term, much of last year’s was put into place permanently. To do that, Republicans worked around congressional rules that would have prevented approval of such a significant fiscal measure without bipartisan support.
That means the law will shape the country’s fiscal trajectory for decades, but its costs have so far been masked. Its most costly provisions didn’t take effect until this year, and Mr. Trump’s improvisational tariffs have raised significant sums of money that have offset some of that lost revenue.
The Supreme Court threw out many of those duties in February. Mr. Trump has begun imposing other tariffs in their stead, and his budget forecasts roughly $6 trillion in tariff revenue through 2036.
But independent experts expect those new duties to bring in far less. The Yale Budget Lab estimates the current tariff regime will generate roughly $1.7 trillion over the same period, about $1 trillion less than its estimate for the tariff system the Supreme Court blew up. (And even that smaller sum is likely an overestimate: Unlike the tax cuts, Mr. Trump’s tariffs could be abandoned single-handedly by a future president.)
Mr. Trump’s most prominent cost-savings initiative — the Department of Government Efficiency — failed to live up to its ambitions of reducing federal spending by $1 trillion last year and has faded in prominence. This year, the White House has turned to a new task force dedicated to combating fraud as a way to recoup federal funds that are slipping through the cracks, an effort that is unlikely to have an effect on the budget overall.
And Congress may reject many of the spending cuts Mr. Trump requested in his budget, as it did last year, even as the war in Iran starts to weigh on the budget. “The President’s Budget Request is just that, a request,” Senator Susan Collins of Maine, the top Republican on the Senate Appropriations Committee, said in a statement outlining her concerns with several of Mr. Trump’s proposed cuts.
Not only could the war drive up military spending, but its economic fallout could also eat into tax revenues. The war has rattled financial markets, meaning Americans may begin to recoup less from their investments. A strong stock market the last couple of years has returned more to Americans who cash out, prompting them to pay more income taxes on their gains.
As of November, Americans had reported nearly $1.2 trillion in income from capital gains in 2025, a more than 40 percent increase from the year before, according to Internal Revenue Service data. That has translated into higher tax receipts. Revenue from income taxes that are not withheld from paychecks, a category that includes taxes on capital gains, is up roughly 30 percent so far this fiscal year, which started in October.
Overall, government revenue is up about 11 percent this fiscal year, which has helped trim the deficit 12 percent from a year ago, according to Treasury data. The deficit also dropped slightly last fiscal year.
While that has reversed its growth over the last couple of years of the Biden administration, the deficit is still very high by historical standards, at 5.8 percent of gross domestic product. And it is far from Treasury Secretary Scott Bessent’s goal of getting it below 4 percent by the end of Mr. Trump’s term.
William Hoagland, a budget expert at the Bipartisan Policy Center, said that goal would probably not be reached with military spending growing so fast and proposed domestic spending cuts unlikely to win approval from Congress.
“I think that’s a good goal, but I don’t see how that they would even come close to that based on what they submitted,” Mr. Hoagland said of the president’s budget.
Andrew Duehren covers tax policy for The Times from Washington.
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