The Trump administration is once again pursuing deep spending cuts for most federal agencies.
The White House’s fiscal 2027 budget proposal, released Friday, would cut discretionary spending at 10 Cabinet-level agencies and increase the discretionary budgets for the remaining five.
Overall, the Trump administration is proposing a 10% cut to nondefense discretionary spending — a $73 billion reduction. The White House says it would prioritize programs for veterans, seniors and law enforcement, and target “woke, weaponized and wasteful programs.”
A Republican-controlled Congress rejected most of the Trump administration’s plans for deep spending cuts in a comprehensive spending plan for fiscal 2026, settling instead on a more modest reduction in spending that reflected a shrinking federal workforce.
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Here’s a closer look at what the FY 2027 spending plan would mean for agencies:
IRS faces $1.4B cut and shrinking workforce
The Trump administration is proposing a $9.8 billion budget for the IRS — a $1.4 billion cut from current spending levels.
The White House touted cutting the IRS workforce by 27% last year and “unwinding” the Biden administration’s staffing surge that added 20,000 employees to its headcount, after more than a decade of workforce and budget cuts.
“The bureaucratic morass at this bloated agency has been weaponized against the American people, small businesses, and non-profit organizations,” the White House wrote.
The administration’s FY 2027 budget request calls for further cuts to IRS staffing. Under this proposal, the agency’s public-facing taxpayer services division would see a net reduction of nearly 500 employees, an additional 1.5% cut to its workforce. The IRS already saw 22% of taxpayer services employees leave last year.
After missing several of its hiring goals for this year’s filing season, the IRS put about 1,500 of its IT and human resources employees on 120-day details to cover frontline taxpayer service work.
The FY 2027 budget proposal would also cut more than 1,110 employees from the total headcount for IRS enforcement — a nearly 4% cut from current staffing levels.
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The White House suggested its budget plan will streamline IRS operations by “utilizing technology improvements to help focus the IRS on providing high-quality customer service while ensuring the tax laws are fairly administered.”
The administration’s proposal includes modest funding year-over-year increases for two sources of IRS IT funding — business systems modernization and technology and operations support. However, IRS IT funding is still substantially lower than FY 2025 levels prior to the start of the Trump administration.
Meanwhile, the agency lost about 40% of its IT workforce and 80% of its tech leadership last year, according to the IRS chief information officer.
The Government Accountability Office recently reported that major staffing reductions at the IRS “could greatly affect its ability to use AI.”
The White House also celebrated shutting down Direct File, a free, online tax filing platform the IRS launched in 2024. The Trump administration said IRS spent over $41 million on the project, but only accepted 300,000 returns from taxpayers who used the platform last year — costing the agency about $140 per return.
Bigger VA budget, smaller workforce
The Trump administration is proposing a nearly $145 billion increase in discretionary spending for the Department of Veterans Affairs, despite its first-ever net decrease in staffing last year. The VA cut its headcount by about 30,000 positions last year.
The FY 2027 budget request endorses the VA’s reorganization plans for its Veterans Health Administration. The White House says the VHA reorganization, internally referred to as the Restructure for Impact and Sustainability Effort (RISE), “would streamline VHA’s organization to improve healthcare for veterans, empower local hospital directors, and eliminate duplicative layers of bureaucracy.”
The president’s budget proposal shows a significant decrease in the VA’s health care workforce across three key areas — medical services, medical facilities and medical support and compliance.
Across these three categories, VA staffing has shrunk from 324,542 full-time employees in fiscal 2025 to about 198,267 employees this year — a nearly 40% headcount reduction.
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The FY 2027 budget plan would further shrink this workforce to just over 184,000 full-time employees — about a 43% staffing reduction compared to FY 2025 levels.
The White House plans to give the VA $4.2 billion in discretionary funding for the ongoing rollout of a new Electronic Health Record — an increase of about $800 million. The department is planning to resume EHR rollouts later this month, after a three-year pause to address persistent outages and usability issues that have frustrated VA medical providers.
VA’s Office of Information and Technology would receive a $6.3 billion budget in fiscal 2027, a $389 million increase from current spending levels.
The budget plan would give the Veterans Benefits Administration $130 million for automation and artificial intelligence investments to modernize claims processing. The White House said AI and automation would reduce errors and deliver benefits to veterans more quickly.
VBA has reduced its claims backlog by more than 60% under the Trump administration, after bringing back mandatory overtime for its employees.
“These tools limit the costly practice of relying on surge staffing and extra labor costs while using taxpayer dollars more efficiently. The result — faster decisions for veterans delivered with greater accuracy,” the White House wrote.
The budget request would also stand up a Warrior Independence and Self-Sufficiency Ethos (WISE) Office that would oversee the VA’s programs for at-risk and homeless veterans.
WISE stems from an executive order Trump signed in May 2025. According to the budget, WISE would “align the VA enterprise’s effort to help veterans achieve long-term self-sufficiency, independence, and stability.”
Renewed push for reorganizations not backed by Congress
Education Department dismantling proceeds
The Trump administration is still pursuing several agency reorganizations across the federal government, even though Congress rejected many of those proposals in a spending package for the current fiscal year.
The administration is proposing much smaller budget cuts for the Education Department, but is moving forward with plans to dismantle the agency and move its core programs to other Cabinet agencies.
“The budget advances efforts underway to dismantle the federal education bureaucracy, including reducing ED’s staff and transferring programs to other agencies that can deliver better results,” the White House wrote.
The White House proposes moving the Education Department’s career and technical education programs to the Labor Department, which has already taken on several of Education’s core activities.
Overall, the administration is proposing a $76.5 billion discretionary budget for the Education Department — a nearly 3% cut from current spending levels.
The Labor Department, however, would see the elimination of a watchdog office that ensures federal contractors aren’t discriminating against their employees.
The FY 2027 budget proposal would defund the Office of Federal Contract Compliance Programs (OFCCP). The Labor Department already cut its staffing by about 90% last year.
The White House said the Labor Department would fold what’s left of OFCCP into the Office of Civil Rights, and would carry out its mission “in a more rational manner.”
“For decades, OFCCP has used arbitrary, legally dubious rules to promote discriminatory, quota-based employment practices by companies doing business with the federal government,” the White House wrote.
HHS tries again for AHA reorganization
The Trump administration is once again asking Congress to consolidate several major agencies and programs into a new Administration for a Healthy America (AHA) championed by HHS Secretary Robert F. Kennedy, Jr.
AHA would pull together programs within the Centers for Disease Control and Prevention, the Substance Abuse and Mental Health Services Administration, the Health Resources and Services Administration and the Office of the Assistant Secretary for Health.
As part of this consolidation, the administration plans on cutting $5 billion in spending across these programs.
“These programs duplicate other federal spending, promote radicalized DEI ideologies, or use taxpayer funds to support radical nonprofits that are not aligned with administration policies,” the White House wrote.
Push to merge DOI and USDA wildfire programs
The administration is still looking to merge wildfire personnel and programs divided across the departments of Agriculture and Interior.
The White House said the 2025 fire season was the costliest on record, despite an average level of fire incidents.
“The legacy approach to federal wildland fire risk mitigation and response is fractured and has led to significant coordination and cost inefficiencies, which endanger lives,” the White House wrote.
President Donald Trump signed an executive order last summer requiring the Interior Department and USDA to consolidate their wildland fire programs “to the maximum degree practicable and consistent with applicable law.”
In February, the Interior Department blazed ahead with a reorganization plan to consolidate its wildland firefighting operations. Those plans, however, stop short of merging with wildland fire personnel or programs at the Agriculture Department’s Forest Service.
A comprehensive spending deal to fund the Interior Department through the end of fiscal 2026 did not endorse the Trump administration’s plans to consolidate federal wildland firefighting operations into a single agency.
The White House concedes in its FY 2027 budget plan that merging Forest Service and Interior Department wildfire operations into a single agency is “contingent upon the enactment of legislation” from Congress.
According to the budget request, it will cost USDA more than $25 million to dispose of the South Building and consolidate employees to the nearby Jamie L. Whitten and Sidney R. Yates Federal Buildings.
However, the Trump administration said relocating many of USDA’s headquarters employees to regional hubs “will bring USDA closer to the Americans it serves and eliminate unnecessary bureaucratic layers, honing in on the Administration’s priority to increase the efficiency of the federal government.”
TSA privatization & Homeland Security
The White House proposes privatizing airport screening by the Transportation Security Administration at small airports. The FY 2027 budget plan would require small airports to enroll in the Screening Partnership Program. Under this program, TSA pays for private screeners at designated airports.
These private security personnel have been paid on time throughout an ongoing partial government shutdown impacting the Department of Homeland Security, and airports in the program have not yet seen the surge in sick-outs and resignations that occurred when TSA employees were not getting paid on time.
The White House says airports enrolled in the program have demonstrated cost savings and that expanding the program would save $52 million.
“The move would yield cost savings compared to federal screening and begin reform of a troubled federal agency,” the White House wrote.
The Department of Homeland Security expects to save another $53 million by consolidating several major offices into the Office of the Secretary and Executive Management — including the Management Directorate, the Office of Intelligence and Analysis and the Office of Situational Awareness.
The White House is doubling down on last year’s proposal to eliminate the Office of Civil Rights and Civil Liberties, as well as ombudsmen for the Office of Immigration Detention and Office of Citizenship and Immigration Services.
The Trump administration would give the State Department $35.6 billion in discretionary spending in fiscal 2027 — a 30% decrease from current levels.
The budget proposal focused on the department’s “border security mission,” and would spend $5.6 billion in consular fees, “to promote the welfare of American citizens at home and abroad.”
The department would see billion-dollar cuts in humanitarian assistance, international food aid and global health programs.
If you would like to contact this reporter about recent changes in the federal government, please email jheckman@federalnewsnetwork.com, or reach out on Signal at jheckman.29
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