WASHINGTON, Feb XX - President Donald Trump has pursued

a radical overhaul of the U.S. government since taking office on

January 20, aiming to slash spending and dramatically downsize

the 2.3 million strong civil service. He has deputized

billionaire Elon Musk to head a "Department of Government

Efficiency" that is combing through payment and personnel

records.

Trump told reporters on Tuesday that the effort could cut $1

trillion from the federal budget, which totaled $6.75 trillion

in the most recent fiscal year.

Independent budget experts, meanwhile, warn that Trump's tax

cut plans could worsen the nation's long-term fiscal picture.

WHAT IS THE PROBLEM?

The U.S. government has spent more money than it has

collected every year since 2001, leading to annual budget

deficits and a steadily growing debt load.

The country has borrowed heavily to fight wars in Iraq and

Afghanistan, finance tax cuts, respond to natural disasters, and

help Americans weather the 2007-2009 recession and the COVID-19

pandemic. But Washington has run deficits even when the country

is not in crisis.

Debt held by the public now stands at $28.9 trillion, equal

to 100% of GDP, and the nonpartisan Government Accountability

Office predicts it will reach 107% of GDP, a record high, by

2027.

Total debt, which includes obligations to government benefit

programs, stands at $36.2 trillion, according to the Treasury

Department.

The growing debt load and rising interest rates have pushed

up borrowing costs. The government spent $881 billion on

interest payments in the most recent fiscal year, more than

triple the amount it spent in 2017. Borrowing costs now exceed

defense spending and are projected to account for a growing

share of the budget in the years to come. That will leave less

funding available for other uses.

Increased government borrowing could also slow economic

growth and increase the likelihood of a fiscal crisis.

An aging population will push up spending on retirement and

health programs, while the labor force that provides income tax

revenue is projected to grow more slowly.

Over the years, both Democrats and Republicans have floated

budget plans to tame the debt, with Democrats typically calling

for higher taxes on the wealthy and Republicans calling for

spending cuts to domestic programs.

WHAT HAS TRUMP DONE?

Since taking office on January 20, Trump has launched a

radical downsizing effort that has sparked street protests and

accusations that he is overstepping his authority as president.

His point person on that effort, billionaire Elon Musk, has led

a small team that has combed through payment and personnel

records, raising security and privacy concerns.

Labor unions and Democrats have managed to temporarily block

many of his policies in court.

Nevertheless, Trump has effectively dismantled the U.S. Agency

for International Development, which dispenses foreign aid in

130 countries.

That has closed refugee clinics in Thailand, shut off

anti-malaria programs in Africa, and furloughed thousands of

workers.

But any budget savings would be limited: the agency spent

$42 billion in the 2023 fiscal year, equal to 0.6% federal

outlays that year.

Trump's lieutenants have also shuttered the Consumer

Financial Protection Bureau. That would also yield minimal

savings for taxpayers, as the watchdog agency spent $777 million

last year, funded through the Federal Reserve.

Trump has ordered the government to cut off spending on

diversity efforts and green-energy programs across the

government. The extent of those savings is unclear at this

point.

Trump and Musk say they also aim to cut off fraudulent

payments, a perpetual problem that ballooned when fraudsters

targeted poorly designed COVID-19 relief programs.

Federal agencies reported $236 billion in improper payments

in the 2023 fiscal year, with the majority through the Medicare

and Medicaid health plans and unemployment aid.

GAO estimates the total of fraud and improper payments could

be as high as $521 billion annually, equal to 8% of spending

last year.

FEDERAL WORKERS

Trump also is pushing to dramatically reduce the size of the

federal civilian workforce through layoffs or voluntary

buyouts.

The government spent $271 billion on salary and benefits for

those workers in the 2022 fiscal year, according to CBO, equal

to 4.3% of total spending that year.

Trump's buyout proposal would not yield immediate savings,

as it would pay workers through September 30, the end of the

fiscal year.

A dramatic reduction in the federal workforce could disrupt

government services. Roughly 70% of the civil service works at

national security agencies like the Department of Homeland

Security and the Justice Department.

WHAT PROGRAMS ARE OFF LIMITS?

Before Trump entered politics in 2015, Republicans

occasionally called for scaling back the Social Security

retirement program and the Medicare health plan for retirees.

Trump has declared both of those popular benefit programs

off limits, which will make it more difficult to cut overall

spending.

Social Security and Medicare accounted for 35% of the $6.75

trillion federal budget in the last fiscal year and are

projected to equal 43% of the budget 10 years from now,

according to the nonpartisan Congressional Budget Office.

Trump likewise can do little to reduce debt service

payments, which accounted for 13% of the budget last year,

without risking a default that would rattle global financial

markets and risk economic turmoil at home.

Those three categories alone accounted for nearly half of

all spending last year.

WHAT IS CONGRESS DOING?

The U.S. Constitution gives Congress authority over spending

matters, and Democrats argue that Trump does not have the

authority to shutter agencies and cancel spending programs that

have been authorized by law. But Republicans who control both

the U.S. House of Representatives and the Senate have cheered

his efforts.

Republicans are preparing budget plans of their own that would

boost military and border-security spending and cut domestic

spending, though they have yet to agree on the details.

They are also laying the groundwork to extend Trump's 2017

tax cuts, which are due to expire at the end of this year, and

enact new tax cuts that Trump promised during his presidential

campaign.

If they succeed, that would likely worsen the United States'

fiscal picture. The Committee for a Responsible Budget projects

that the tax package would reduce revenues by $5 trillion to $11

trillion over the coming 10 years. That would boost the nation's

debt load to as high as 150% of GDP by that point, the

nonpartisan group says.