On Friday, May 2, President Trump released the fiscal year (FY) 2026 Skinny Budget (“Budget”). Per the release, the Budget reduces nondefense discretionary funding by $163 billion or 23% from the 2025 enacted level, while prioritizing an increase in defense spending by 13%. The increase in defense and security spending is driven by the inclusion of mandatory reconciliation funds in the Budget.[1] The table below reflects the discretionary funding levels for Cabinet agencies.
|
Agency
|
President’s FY26 Request
|
Enacted FY25 Level
|
Change
|
|
U.S. Department of Agriculture
|
$22.30
|
$27.30
|
-18.32%
|
|
U.S. Department of Commerce
|
$8.50
|
$10.20
|
-16.67%
|
|
U.S. Department of Defense
|
$961.60
|
$848.30
|
13.36%
|
|
U.S. Department of Education
|
$66.70
|
$78.70
|
-15.25%
|
|
U.S. Department of Energy
|
$45.10
|
$49.80
|
-9.44%
|
|
U.S. Department of Health and Human Services
|
$93.80
|
$127.00
|
-26.14%
|
|
U.S. Department of Homeland Security
|
$107.40
|
$65.10
|
64.98%
|
|
U.S. Department of Housing and Urban Development
|
$43.50
|
$77.00
|
-43.51%
|
|
U.S. Department of the Interior
|
$11.70
|
$16.80
|
-30.36%
|
|
U.S. Department of Justice
|
$33.20
|
$36.00
|
-7.78%
|
|
U.S. Department of Labor
|
$8.60
|
$13.30
|
-35.34%
|
|
U.S. Department of State and International Programs
|
$31.20
|
$59.60
|
-47.65%
|
|
U.S. Department of Transportation
|
$26.70
|
$25.20
|
5.95%
|
|
U.S. Department of Treasury
|
$11.50
|
$14.20
|
-19.01%
|
|
U.S. Department of Veterans Affairs
|
$134.60
|
$129.20
|
4.18%
|
Note: figures are in billions
Outlook
The release of the Budget received mixed reaction from congressional appropriators, including concerns about the administration incorporating one-time mandatory reconciliation funds into the discretionary Budget. House Appropriations Chairman Tom Cole (R-OK) released a statement acknowledging the Budget protects taxpayer dollars but warned the defense request would create a cliff for the next president during a Defense Department appropriations hearing. Meanwhile Senate Appropriations Chairwoman Susan Collins (R-ME) released a statement outlining her objection to the proposed defense freeze, among other concerns.
The president is expected to release the full budget in the coming weeks. House and Senate appropriators have begun receiving testimony on the Budget from several agency officials, which we expect to continue through early June. As the House and Senate Appropriations committees close their submission portals, individual subcommittees will begin drafting bills in advance of subcommittee markups.
We expect the House to mark up bills out of committee that are more closely aligned to the Budget. The Senate will likely maintain a bipartisan approach, but that will be difficult given the proposal to drastically reduce nondefense spending. There is currently no legislation that sets forth defense and nondefense topline allocations for FY26. Unless congressional appropriators reach a topline agreement in advance of markups, the timeline for passing individual appropriations bills before the Sept. 30 deadline is likely to slip.
[1] The Department of Defense request incorporates $113.3 billion in mandatory reconciliation funding for FY26 and assumes remaining reconciliation funds ($36.7 billion) will be spent through FY29. Similarly, the Department of Homeland Security request includes $43.8 billion in mandatory reconciliation funding for FY26 and assumes remaining reconciliation funds (approximately $125 billion) will be spent through FY29.
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