As the U.S. is preparing for a change in presidency in January, GSA Schedule contractors, businesses, and citizens alike may be wondering how this shift in the nation’s leadership could impact government spending trends. With the incumbent party leaving office and a new party entering, agencies might experience potential increases or decreases in their budgets and a different emphasis on future initiatives than the previous four years. While current government Fiscal Year (FY) budgets for agencies have been set, a new president can influence the type of contract opportunities emerging from agencies and how their funds will be directed depending on the polices the Trump administration plans to enforce.
Since we have already experienced a Trump Administration, from 2017 to 2021, we can look to previous spending data and additional resources to predict government spending shifts as President-elect Donald Trump returns for a second term in 2025. In this blog, we will first discuss the spending tendencies and related monetary policies during the first Trump administration. Later, we will address the spending policies expected over the next four years.
A Recap of Trump Administration Policy Changes and Focuses During the First Term
By looking at a few Executive Orders, laws, and policies the Trump administration enacted between 2017 and 2021, we can anticipate how government spending could generally be affected in the New Year.
You are likely familiar with Trump’s tax reform efforts in 2017. Known as the Tax Cuts and Jobs Act (TCJA), this law lowered tax rates for individuals and businesses, among other tax-related impacts. Overall, an increase or decrease in tax rates for individual taxpayers and corporate entities impacts government revenue and spending capabilities.
The first Trump Administration created high government spending in the defense sectors. In 2018, Congress passed a bill increasing the military’s budget by $1.3 trillion, with $700 billion allocated for defense spending. Trump’s first-term initiatives related to defense spending did not stop there; for the government FY 2020, he signed a defense bill totaling $738 billion dollars, with funds supporting the Pentagon and other entities.
Relating to trade policies, Trump leveraged tariffs on steel and aluminum imports, with the goal of increasing U.S.-based manufacturing opportunities being one of the intentions of this action.
Additionally, Trump released multiple Executive Orders relating to cybersecurity initiatives. Early in his presidency, Trump signed Executive Order 13800 which had the goal of modernizing the security of federal networks and critical infrastructure. Further, Executive Order 13870, which was released in 2019, encouraged the development of cybersecurity personnel’s skills and knowledge to remain competitive. Nearing the end of his initial term, Trump penned an Executive Order detailing the implementation of trustworthy Artificial Intelligence (AI) for federal use.
Now that we have addressed a few revenue and spending trends of the previous Trump administration, let’s discuss what this means for the next term’s expenditures.
Recent News About Projected Government Spending Trends
After the 2024 presidential election ended, the media has further analyzed President-elect Trump’s platform. Specifically, media coverage on Trump has identified various potential policies and initiatives for both slashing and boosting government spending that his administration may implement when he takes office. A few of the prominent spending-related topics are detailed below.
Department of Government Efficiency (DOGE)
As highlighted more recently in the media, the Department of Government Efficiency (DOGE) may impact agencies’ current programs and spending capabilities. Through DOGE, the Trump administration plans to reduce government inefficiencies. These “inefficiencies” mainly refer to wasteful expenditures, unnecessary regulations, and the amount of personnel in agencies. While DOGE is not an official government agency, the individuals comprising this group will have the ability to influence the president and other leaders within the White House in a consulting role.
Currently, it is unclear how any government inefficiencies will be identified, but potential plans include reviews of agencies’ operations. According to the Federal News Network, the State Department may be a target of government spending and hiring cuts, similar to the first Trump administration. With the overarching idea of this team being to increase government efficiency and reduce ineffective government spending, federal government contracting vehicles could be impacted through limited sales opportunities with less contract programs or increased opportunities that align with DOGE’s mission.
Department of Defense (DoD) Budget
A large portion of the government’s FY budget is allocated to the Department of Defense (DoD), regardless of the political party associated with a current president. During the last Trump administration, the DoD maintained a consistent percentage of between about 16-18% of total government spending by agencies, with a decrease to 12.4% in FY 2020 and 11.4% in FY 2021.
Breaking down DoD spending by the top three departments and projects during the first full FY of the Trump Administration, which was FY 2018, the DoD Working Capital Fund, Defense accounted for about $142.9 billion of agency spending; payments to military retirement fund, defense represented about $82.9 billion of agency spending; and operations and maintenance, Army totaled about $71.4 billion of DoD spending.
Looking ahead to the next Trump administration, the Associated Press reported on Trump’s plans of “expansion of the military.” This investment in national defense is expected based on his previous term. However, with Trump’s DOGE initiative, contractors should understand that DoD spending trends could be limited to align with the administration’s goal of reducing ineffective spending habits.
Technology Initiatives
As noted, DOGE is expected to heavily impact the Trump administration’s plans for government spending. President-elect Trump released a few Executive Orders during his first term regarding cybersecurity, and it appears technology is a policy that will remain a focus for his upcoming term.
If DOGE becomes a reality, the team’s leadership have led discussions about the requirement for a more streamlined and connected government IT infrastructure; this suggests an increased spending trend or reliance on IT-related updates or overhaul projects for contractors.
Similarly, a technology support program initiated during the Obama administration, the United States Digital Service (USDS), could potentially be used or eliminated depending on DOGE’s impact. During the tail end of the first Trump administration, USDS operations were being assessed. If this service is restructured or government reliance on this program is decreased, vendors may be receiving more opportunities if internal USDS spending is lowered.
The Broadband Equity Access and Deployment (BEAD) program’s funding is also in question. This $42.5 billion effort provides financial assistance to states looking to expand broadband internet access. President-elect Trump’s appointment of a new lead for the Federal Communications Commission (FCC) and statements regarding satellite internet could impact states’ receipt of funds in this area.
In 2019, Trump signed Executive Order 13859 which highlighted plans for AI within the government, including research investment, creating resources, setting technical standards, and engaging with international allies. Following this, the National AI Initiative Act of 2020 was introduced. Today, AI remains a heavily covered topic for spending trends, as President-elect Trump plans to continue exploring AI initiatives.
How Should GSA Contractors Prepare for Potential Trump Administration Policies?
Although we may not know the exact government spending changes associated with a new president and which policies will become a reality, it’s important to consider the potential new projects or contract opportunities that may arise from specific agencies with a different party entering the presidential office.
By researching spending trends and contract opportunities by agency that emerged during the first Trump administration, you can prepare your GSA Schedule contract or your business for potential government spending increases or decreases; this can help you stay ahead of policy or fund allocation shifts that may be repeated for agencies that you frequently receive contract awards from on the GSA Multiple Award Schedule (MAS).
Some government spending near the end of Trump’s presidency was related to the COVID-19 pandemic, but it’s important to consider emergency response spending trends as well. While unknown changes can be overwhelming, our expert consultants are available to help you maintain your contract’s compliance with current requirements and prepare for any changes, especially with GSA MAS regulations.
