🇺🇸 President Trump wants to switch to war economy in 2027 with massive increase in military spending and massive cuts to healthcare and other domestic agencies

Once a deficit hawk — he said in 2016 that he thought he could balance the budget in five years — Trump ended his first term with $7.8 trillion in added debt. His 2027 proposal is expected to give an update on 10-year deficit projections currently estimated at around $16 trillion.

The GOP's message for the Midterms will be focused on the "need" for a massive defense build up while the Democrats' message will be focused on affordability.

The fiscal 2027 budget will be the first time Trump puts his second-term governing agenda into one comprehensive document — with the numbers to back it up. The budget he released last year lacked detailed line-by-line spending targets and the economic assumptions necessary to project the long-term cost of his proposals.

Investors in US Treasuries will be looking to see if the debt and deficit levels rely on overly rosy economic numbers that predate the war in Iran, and whether they depend on spending cuts that have no realistic path to overcoming a Senate Democratic filibuster. Any increased doubts about the sustainability of US public debt could cause long-term Treasury yields to rise.

Projections released by the White House last September estimated that Trump’s tax and spending policies would halve the projected deficit over the next 10 years. But that number relied on tariff revenues that the Supreme Court decision upended, as well as lower interest rates and higher growth than many economists now expect.

Trump has said he will be seeking to boost defense spending to $1.5 trillion from less than $1 trillion in the current fiscal year. The details of how this massive increase will be spent are yet unknown.

Last year’s budget relied on a one-time boost to defense spending, using a legislative process known as reconciliation to pass $113 billion in new spending along party lines — on top of a bipartisan baseline of $848 billion.

Now the administration is looking for a much larger baseline increase in the defense budget. Trump hasn’t made clear whether the $1.5 trillion figure is just for the Pentagon operating budget, or also includes other defense line-items like military construction and nuclear weapon spending by the Energy Department. Nor has the administration detailed whether the increased spending would continue in 2028 and beyond.

There are also unresolved issues for the current fiscal year. The Pentagon has sent a $200 billion request for immediate spending to the White House to pay for the war against Iran. The White House budget office is evaluating that proposal, which Trump has not yet proposed to Congress.

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