As President-elect Donald Trump prepares to take the White House for a second term, the federal government could be staring down significant spending cuts that echo his early agenda, according to experts on both sides of the aisle.
As Trump’s policies take shape, Americans face a critical question: will the cuts achieve their intended goals of reducing debt and inflation, or will they leave millions without essential services? For now, Trump’s allies argue that the short-term pain will lead to long-term gain. But for those on the receiving end of these cuts, the stakes couldn’t be higher.
The Department of Education, the Supplemental Nutrition Assistance Program (SNAP), which provides monthly food benefits to low-income households, and Medicaid could be affected by major funding changes.
Bob Greenstein, visiting fellow in economic studies at the Brookings Institution and founder and president emeritus of the Center on Budget and Policy Priorities, says that to understand what funding could be cut, look at what “can be found in the proposals from [Trump’s] first term and even Project 2025.”
“Trump may pursue policies further to the right than he did in his first time in office,” Greenstein says. “Nothing is off the table, including $2.2 trillion in Medicaid cuts—double what he proposed in his first term.”
The proposed cuts are seen as necessary to offset anticipated tax reductions and address the rising federal deficit—which is currently at $1.83 trillion—to keep programs like Social Security and Medicare from going bankrupt.
“If you’re going to make massive tax cuts without blowing up the deficit, cuts in social spending are almost inevitable,” says Chris Edwards, an economist at the Cato Institute, a libertarian think tank. “If the government doesn’t make tough decisions now, programs like Social Security and Medicare could face insolvency in the coming decades.”
Although Trump has distanced himself from Project 2025, a conservative policy roadmap published by the Heritage Foundation, Edwards believes its focus on reducing federal programs and boosting domestic production could shape his approach.
“I’m sure he’ll draw from the Heritage Foundation,” Edwards says. “They’ve been crafting spending reform proposals since the 1980s, and they continue to strongly influence conservative policy planning.”
Trump tapped Elon Musk, owner of X, and biotech founder Vivek Ramaswamy to spearhead DOGE, a government-wide cost-cutting mission. This new task force will work outside of the federal government, according to Trump, with a mandate to streamline bureaucracy and slash spending.
“Whether Elon or Vivek bring in insiders or outsiders to review federal operations, these efforts often end up like the Grace Commission—an external review by business leaders,” Edwards says. “I believe Vivek may have a deeper understanding of federal operations. However, they may underestimate the complexity of federal agencies.”
Trump’s Education Proposal May Force States To Cut Programs or Raise Taxes
Trump’s first administration tried to make deep cuts in federal education funding, but many of those proposals stalled in Congress. Both Trump’s official platform and Project 2025 doubles down, calling for an end to the Department of Education and shifting responsibility for funding schools from the federal government to states and local communities.
The idea is to empower state governments to manage education funding, allowing flexibility on where to direct resources.
Under this approach, federal grants for K-12 programs—such as Title I funding for low-income schools—would see significant reductions or disappear altogether.
Edwards says that cuts to federal aid would force states to dip into their budgets or cut educational resources.
“If federal aid to states for education is cut, it’ll be up to the states to figure it out,” Edwards said. “We could see some states raise taxes, which is never popular, or reduce education budgets.”
For parents and students, this could mean fewer resources for public schools, reduced funding for special education and school meal programs, and possibly higher local taxes. Wealthier states may manage the transition, but less affluent states could struggle to fill the gap, raising concerns about deepening educational inequality across state lines.
Both Trump’s platform and Project 2025 share a common goal in education policy: limiting content on race, gender, and sexuality that they deem “inappropriate.” Trump proposes cutting federal funds to schools teaching “critical race theory” and “radical gender ideology,” while Project 2025 advocates withholding federal dollars from entities supporting such content.
Their alignment lies in using funding cuts as a tool to enforce these views. Under Project 2025, reduced education budgets could mean larger class sizes and fewer after-school programs, similar to Trump’s proposed $5.6 billion education cut in 2021.
Medicaid Cuts Could Bring Higher State Costs and Fewer Benefits
Medicaid, which provides health insurance to more than 72 million low-income Americans, is a primary target in the Project 2025 plan. Currently, Medicaid is funded through a federal-state partnership where the federal government covers a set portion of each state’s Medicaid expenses.
The Trump administration’s 2017 budget pushed for significant Medicaid cuts and repealing the Affordable Care Act (ACA), targeting $763 billion in cuts over 10 years. It backed the Cassidy-Graham proposal, replacing Medicaid expansion and subsidies with a diminishing block grant. The budget also proposed a per capita cap on Medicaid and loosened consumer protections for private coverage.
Trump said he would not touch Medicare but has been quiet about Medicaid funding.
Project 2025 recommends capping this federal funding and turning it into block grants—fixed amounts for each state—or per capita caps, a set amount per person on Medicaid.
Under a capped system, states receive a fixed Medicaid budget regardless of rising healthcare costs or increased enrollment during economic downturns or emergencies. This funding limit could force states to cut services, reduce eligibility or raise costs for those who remain in the program.
“If the federal government switches to block grants, it’s going to be tough for states to keep up as costs rise,” Edwards said. “It would mean that Medicaid services could shrink, with low-income Americans feeling the brunt.”
Greenstein says another scenario could see time limits on coverage for Medicaid beneficiaries, increased premiums, and cuts to required benefits, such as nursing home care for the elderly and preventive services for children.
Experts say this change could mean higher costs elsewhere. If states can’t fully fund Medicaid, emergency rooms and community health clinics might end up providing unpaid care, which could ultimately be covered by higher local taxes or increased healthcare costs. And for those who rely on Medicaid, the changes could limit access to necessary care, especially for people with chronic health issues or disabilities.
Social Programs: Deep Cuts to Balance the Books
Project 2025’s broader goal is to rein in “wasteful federal spending,” a key promise of Trump’s 2024 campaign. This includes significant cuts to federal programs that support low-income families, such as food assistance, housing aid, and other social safety nets. The plan argues that many of these services should be managed locally, where they can be tailored to individual community needs.
However, eliminating or reducing federal contributions could affect millions of working-class Americans who depend on these services.
If Trump returns to his past proposals, SNAP costs may go to states, where they’d cover 25% of the program’s cost. This would give states more control over eligibility and benefits but could lead to funding gaps in states with tight budgets.
For millions of families who rely on programs like SNAP, cuts could mean reduced access to basic needs. Critics point out that while these programs may not affect every taxpayer directly, they help reduce poverty and stabilize local economies, especially in times of recession.
In fiscal year 2023, SNAP supported an average of 42.1 million people monthly, or 12.6% of U.S. residents. State participation varied, from 23.1% in New Mexico to 4.6% in Utah, with 34 states having between 8% and 16% of residents receiving benefits.
How Would Trump’s Spending Cuts Impact Taxpayers?
For taxpayers, the proposed spending cuts under Trump’s plan could mean significant shifts in how much they pay for essentials like healthcare and education, as well as potential changes in state and local taxes.
While the Trump administration argues that reduced federal spending could lower inflation, stabilize the economy, and ultimately lead to lower taxes, critics worry about the immediate impact on working- and middle-class families.
Under the proposed changes, states would bear more responsibility, and residents in lower-income states could see a direct impact in the form of decreased access to public services or higher state and local taxes to cover funding gaps.
Programs like Medicaid and SNAP not only serve as lifelines for low-income families but also play a stabilizing role in many communities, especially in rural and economically distressed areas.