By John Hood
RALEIGH — For universities, state governments, localities, medical providers, and other institutions receiving lots of federal money, it’s time to batten down the hatches. Storm’s a-brewing.
Last month, the U.S. House of Representatives narrowly approved a plan to extend the federal tax cuts enacted during the first Trump administration. It calls for up to $2 trillion in budget savings to (partially) offset the effect on our already yawning federal deficits. The U.S. Senate is currently trying to come up with its own plan. “We have a lot of people who would like to go a lot farther,” Majority Leader John Thune (R-South Dakota) said of his caucus, along with “some who would like not to go that far.”
Meanwhile, the second Trump administration is already pursuing a strategy of withholding authorized spending and downsizing the federal workforce. In the context of a roughly $7 trillion budget, the fiscal impact of DOGE and related efforts is, so far, rather modest. But given that more than a quarter of that $7 trillion is funded by borrowing, perhaps someone in the administration will muster the courage to push harder and cut deeper.
Make no mistake: it will take courage. Most voters want Washington to get its fiscal house in order. It’s no coincidence that the last time Congress had a net-positive approval rating, during the late 1990s, the federal budget was running a surplus — modest and fleeting though it proved to be.
But most voters also underestimate both the magnitude of the current fiscal crisis and what will be required to address it. Over the past two months, they’ve been treated to largely negative media coverage of what were admittedly confusing and often shambolic attempts by DOGE to reduce spending. Two recent polls of North Carolinians found respondents less than impressed by the federal initiative so far.
Given a list of 14 federal agencies — ranging from public broadcasting, the IRS, and the EPA to the departments of Justice, Agriculture, and Defense — few respondents to an Elon University poll favored elimination or major reductions in spending. And in the latest Carolina Journal poll, more respondents expressed disapproval of DOGE (50%) than approval (46%), although most said they welcomed a DOGE-like effort to save money in our state government.
I say all that because it is possible the institutions I listed earlier as worried about losing federal funds will take a look at such polling, breathe a sigh of relief, and go back to business as usual. They’d be making a potentially disastrous mistake.
Facts are facts. The federal government cannot continue to add one or two trillion dollars a year to the country’s already staggering debt load. “Immediate action is required,” states a new report from the Joint Economic Committee of Congress, “before it is too late to prevent serious damage to not only the nation’s fiscal health but also its economic health and geopolitical power.”
Everything will be on the table — because everything has to be on the table. That includes relatively small slices of the pie such as research funding and the federal payroll as well as the primary drivers of federal spending: entitlement checks, defense procurement, and payments to medical providers from Medicare and Medicaid.
Here in North Carolina, policymakers need to get ready for what’s coming. In the General Assembly, for example, state legislators and staffers need to stop talking about the General Fund as if it is “the state budget.” It’s not. Setting aside transportation, North Carolina spent nearly $70 billion last year on education, health and human services, public safety, and other services. Only $31 billion came from General Fund revenues. The rest was financed by federal funds, user fees, and other receipts.
I happen to think funding for scientific and medical research is essential. But recipients still ought to expect some reductions. In defense spending, policymakers will at least need to cut in some areas to fund priorities elsewhere.
The storm is coming, like it or not.
John Hood is a John Locke Foundation board member. His books Mountain Folk, Forest Folk, and Water Folk combine epic fantasy with American history (FolkloreCycle.com).
John,
The so-called “storm” of budget cuts isn’t some unavoidable crisis—it’s the direct result of deliberate choices that benefit the ultra-rich at the expense of everyone else. The federal deficit didn’t balloon out of nowhere. It exploded after the Trump administration passed massive tax cuts that gave billions in breaks to corporations and the wealthiest Americans. Now, those same lawmakers are trying to make working families, students, and seniors pay for it through cuts to education, healthcare, and public services. That’s not fiscal responsibility—it’s a calculated transfer of wealth from the public to the private elite.
Your article talks about courage, but where was that courage when it came time to hold billionaires accountable? Where’s the scrutiny of corporate welfare—billions in subsidies and tax breaks handed to the likes of Elon Musk with no transparency or oversight? While average Americans are bracing for service cuts, the richest Americans continue to dodge taxes, collect government money, and walk away with the lion’s share of the nation’s wealth.
Let’s be honest about what this is: a strategy to remake the government into a tool of the ultra-rich. Trump and his allies are laying the groundwork for an oligarch-run state—one where billionaires with no experience in public service call the shots, while the rest of us are told to tighten our belts. This approach places an undue burden on average Americans, all while enriching those who need help the least.
But here’s the truth: these cuts don’t have to hurt. We don’t have to slash services for the sick, the elderly, and our kids. The solution is simple—stop giving our tax dollars to the ultra-rich. Close the loopholes. End corporate giveaways. Reverse the tax cuts that created this mess. If we’re serious about fixing the budget, we start at the top—not by gutting the institutions that make life livable for the rest of us.
And let’s be real—you guys aren’t even pretending anymore that this is about “trickle-down economics.” That excuse has worn thin. This isn’t about stimulating growth or balancing budgets. The federal government is openly robbing the American people, plain and simple—gutting public services so billionaires and corporations can hoard even more wealth and power. There will be severe repercussions as a result of Trumps and Musk’s actions and I have a feeling Americans are going to let you know about it in the courts and in the polls.
Exactly. It’s all intended to privatize everything possible so they can squeeze every last dollar out of the American people, while slashing any regulations that stand in their way to do so.
Well spoken. With Trump, Musk and our elected officials this country is going to explode. When they start cutting checks for veterans and retirees the pot will boil over.
“It’s no coincidence that the last time Congress had a net-positive approval rating, during the late 1990s, the federal budget was running a surplus — modest and fleeting though it proved to be.”
As usual Mr Hood fails to mention which political party was in the White House when the country had this budget surplus