Trump Looks to Slash Health Department Funding by 30%

Trump and RFK Jr. (Reuters)
Reuters
By Yuval Rosenberg and Michael Rainey

Happy almost Friday! Here's what's going on.

Trump Looking to Slash Health Department Funding by 30%: Reports

The Trump administration is looking to slash the discretionary budget for federal health programs by about a third as it works to scale back and restructure the Department of Health and Human Services, according to a proposal first reported by The Washington Post.

About $40 billion in cuts: The plan, outlined by the White House Office of Management and Budget, reportedly would cut fiscal 2026 discretionary funding for the Department of Health and Human Services from about $117 billion to roughly $80.4 billion. It calls for a broad reorganization and consolidation of the department that would eliminate dozens of programs, including Head Start. It would also slash funding for the National Institutes of Health and the Centers for Disease Control and Prevention by more than 40%.

What's on the chopping block: "Public health initiatives aimed at HIV/AIDS prevention would no longer exist," Politico's Adam Cancryn reports. "Major parts of the National Institutes of Health would be abolished. The Food and Drug Administration would cease routine inspections at food facilities. And funding for many of the administration's priorities are on the chopping block, including federal programs focused on autism, chronic disease, drug abuse and mental health."

The budget also calls for the creation of a new agency called the Administration for a Healthy America, which would receive about $20 billion in funding and would house some programs from other agencies that are being consolidated. The Post reports that the new agency would get $500 million in funding for Secretary Robert F. Kennedy Jr.'s initiatives, but "many specific programs would be eliminated under AHA, according to the document, including programs focused on preventing childhood lead poisoning, bolstering the health-care workforce, advancing rural health initiatives and maintaining a registry of patients with amyotrophic lateral sclerosis, or ALS."

'Difficult decisions': The proposal is still preliminary and details could change as the White House prepares President Donald Trump's 2026 budget request to Congress, but the Post reports that agencies have been told they cannot change the bottom line. "Many difficult decisions were necessary to reach the funding level provided," OMB reportedly wrote in the document, dated April 10.

Under Kennedy, HHS has reportedly already cut some 20,000 employees through layoffs and buyouts.

Anand Parekh, chief medical adviser at the Bipartisan Policy Center think tank, noted to the Post that some of the prevention-focused programs that Kennedy had said he would prioritize are targeted for cuts. "These are the efforts that try to get ahead of health-care problems," he said. "You can expect the costs of the Medicare and Medicaid program just to go up. That's the shortsightedness of reducing the sliver of the budget that is discretionary when that is the main opportunity you have to reduce health burden in America and get ahead of health problems."

White House also eyeing cuts to housing aid: Separately, The New York Times reports that the White House is also considering steep cuts to federal housing programs for the poor as part of the president's budget request.

"The potential changes primarily concern federal housing vouchers, including those more commonly known as Section 8. The aid generally helps the poorest tenants cover the monthly costs of apartments, town homes and single-family residences," Times reporter Tony Romm writes. "Administration officials recently discussed cutting or canceling out the vouchers and other rental assistance programs and potentially replacing them with a more limited system of housing grants, perhaps sent to states, according to three people familiar with the matter, who spoke on the condition of anonymity to describe the confidential discussions."

The bottom line: Again, no final funding decisions have been made - and Trump's budget request this spring only kicks off a process in which Congress, controlled by Trump's allies, will ultimately have to decide on spending levels, cuts and appropriations. But the early details coming out about Trump's budget proposal reinforce what Elon Musk's DOGE effort has already made clear: The administration is looking to drastically shrink federal programs and dramatically reshape the government in ways that will have profound consequences for the American public.

Trump Calls for Fed Chief's 'Termination'

In an early morning post on his social media platform Thursday, President Trump harshly criticized Federal Reserve Chairman Jerome Powell and indicated that he may try to fire the nominally independent central bank leader.

Powell said Wednesday that he is in no hurry to cut interest rates in an economy being buffeted by Trump's unprecedented tariff hikes, which could increase inflationary pressure even as they drag on growth, but the president made it clear that he wants to see interest cuts immediately.

Referring to the Fed chief as "'Too Late' Jerome Powell" while claiming that his view of the economy is a "typical, complete 'mess,'" Trump argued that with oil prices down and the country "getting RICH ON TARIFFS," it was time for the Fed to lower rates, following the lead of the European Central Bank, which cut rates again today (see more on the ECB below). Trump cited lower grocery and egg prices as a reason to cut rates, too, but grocery prices rose last month and egg prices hit record highs.

"Too Late should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now," Trump wrote.

Trump also suggested that he may fire the Fed chief, saying, "Powell's termination cannot come fast enough!"

A long-simmering anger: Powell was appointed by Trump to lead the Fed in 2018, and his current term runs until May 2026. The Fed is generally seen as apolitical and independent, with the president lacking the authority to remove its top officials, but during his first term Trump hinted that he may fire Powell, who he picked to replace Janet Yellen. At the time Trump voiced a similar complaint about interest rate policy, at one point saying Powell may be a bigger enemy of the U.S. than China's president, Xi Jinping.

Asked about the possibility of Trump removing him from his position, Powell said last year that he would not resign even if Trump asks him to leave, and that the removal of top Fed officials is "not permitted under the law." He repeated that claim Wednesday, saying, "Our independence is a matter of law. We're not removable except for cause."

However, according to a new report from The Wall Street Journal's Brian Schwartz and Nick Timiraos, Trump has been talking for months about getting rid of Powell and replacing him with former Fed governor Kevin Warsh.

Warsh has reportedly cautioned against firing Powell and advised Trump to allow him to serve out his term. Any effort to remove Powell prematurely would likely be challenged legally, and the dispute could end up before the Supreme Court. Some have speculated that the Trump administration would welcome the dispute, with the hope that the high court would back the president and thereby expand his control over other nominally independent federal agencies and officials.

Asked about Powell this afternoon, Trump accused the Fed chief of "playing politics" with interest rates and insisted that he had the power to remove him. "If I want him out, he'll be out of there real fast, believe me," he told reporters in the Oval Office.

Chart of the Day

President Trump said in a Fox Noticias interview this week that it may be possible that his tariffs will raise enough revenue to allow for the elimination of income taxes. "There is a chance that the money is so great that it could replace" income taxes, Trump said.

The right-leaning Tax Foundation posted the chart below, previously published last year, to again point out that there is no chance of that.

Tax Foundation Chart

IMF Sees Slower Growth From Tariffs, but No Recession

The International Monetary Fund said Thursday that President Trump's tariff policies will produce slower growth and higher inflation in the global economy this year, but an economic contraction will probably be avoided.

"Our new growth projections will include notable markdowns, but not recession," IMF chief Kristalina Georgieva said Thursday, referring to a report coming out next week. "We will also see markups to the inflation forecasts for some countries."

International trade will continue even as Trump's tariffs shake up existing networks of exchange. "Ultimately, trade is like water," Georgieva said. "When countries put up obstacles in the form of tariff and non-tariff barriers, the flow diverts. Some sectors in some countries may be flooded by cheap imports; others may see shortages. Trade goes on, but disruptions incur costs."

**Rate cut in Europe: **In the face of soaring uncertainty driven by Trump's tariffs, the European Central Bank on Thursday lowered its key rate a quarter of a point, to 2.25%. The ECB, which sets rates for the 20 countries that use the euro, has now lowered interest rates at seven consecutive meetings.

"The economic outlook is clouded by exceptional uncertainty," said Christine Lagarde, the president of the central bank. "The euro area economy has been building up some resilience against global shocks, but the outlook for growth has deteriorated owing to rising trade tensions."

Lagarde said the uncertainty from Trump's trade war will weigh on the European economies, but noted that there may be a silver lining to the conflict as the dollar weakens and the euro grows stronger. "Investor sentiment has proven more resilient towards the euro area than towards other economies," Lagarde said.

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