Trump's 2027 Budget Guts IRS and VA Workforces While Claiming to Help Veterans and Taxpayers

The Trump administration released its fiscal 2027 budget proposal Friday, doubling down on agency reorganizations that Congress already rejected once -- and demanding even deeper cuts to the federal workforce under the guise of eliminating "woke, weaponized and wasteful programs."

The budget calls for a $73 billion reduction in nondefense discretionary spending, a 10% cut that would hit hardest at agencies Republicans have spent years demonizing. Ten Cabinet-level agencies would see their budgets slashed, while five would receive increases.

Congress already said no to most of these cuts when Republicans controlled both chambers during fiscal 2026 negotiations. The White House is trying again anyway.

IRS Faces Another Round of Gutting

The administration wants to cut the IRS budget to $9.8 billion -- $1.4 billion below current levels -- while celebrating last year's 27% workforce reduction that eliminated 20,000 employees hired during the Biden administration.

The White House called the IRS a "bureaucratic morass" that has been "weaponized against the American people, small businesses, and non-profit organizations." This rhetoric conveniently ignores that the Biden-era hiring surge was designed to improve customer service and crack down on wealthy tax cheats, not harass ordinary Americans.

Under the fiscal 2027 plan, the IRS would lose nearly 500 more employees from its taxpayer services division -- a 1.5% cut on top of the 22% of customer service staff who already left last year. The agency's enforcement division would shed more than 1,100 positions, a nearly 4% reduction.

The timing could not be worse. The IRS missed several hiring goals for this year's filing season and had to pull 1,500 IT and human resources employees off their regular jobs to cover frontline taxpayer assistance work. The agency lost 40% of its tech workers and 80% of its technology leadership last year, according to the IRS chief information officer.

The Government Accountability Office recently warned that major staffing reductions at the IRS "could greatly affect its ability to use AI." But the White House insists the agency will somehow improve service by "utilizing technology improvements" -- even as it slashes the workforce needed to implement and maintain those systems.

The budget does include modest year-over-year increases for two IT funding streams, but both remain substantially below fiscal 2025 levels before Trump took office.

The administration also bragged about shutting down Direct File, a free online tax filing platform that processed 300,000 returns last year. The White House claimed the program cost $140 per return, framing it as wasteful. Left unsaid: commercial tax prep companies charge customers similar or higher fees, and eliminating Direct File forces taxpayers back to those private services.

VA Workforce Decimated Despite Budget Increase

The Department of Veterans Affairs presents an even starker contradiction. The White House is requesting a nearly $145 billion increase in discretionary spending for the VA while simultaneously gutting its healthcare workforce.

The VA cut its headcount by about 30,000 positions last year -- the agency's first-ever net decrease in staffing. The fiscal 2027 budget would make those cuts permanent and go much further.

Across three key healthcare categories -- medical services, medical facilities, and medical support and compliance -- VA staffing has already plummeted from 324,542 full-time employees in fiscal 2025 to about 198,267 this year. That is a nearly 40% reduction.

The new budget would shrink this workforce to just over 184,000 employees -- a 43% cut compared to two years ago.

How does the administration square eliminating 140,000 VA medical jobs with its claim to prioritize veterans? By endorsing the Veterans Health Administration's internal reorganization plan, known as the Restructure for Impact and Sustainability Effort (RISE). The White House says RISE will "streamline VHA's organization to improve healthcare for veterans, empower local hospital directors, and eliminate duplicative layers of bureaucracy."

Translation: fewer people doing more work, with "local empowerment" serving as cover for understaffing.

The budget does allocate $4.2 billion for the VA's new Electronic Health Record system -- an $800 million increase. That system has been plagued by persistent outages and usability issues that frustrated medical providers so badly the VA paused its rollout for three years. The department plans to resume EHR deployments later this month.

Throwing more money at a troubled IT project while slashing the workforce that has to use it is a recipe for disaster.

The VA's Office of Information and Technology would receive $6.3 billion in fiscal 2027, a $389 million increase. The Veterans Benefits Administration would get $130 million for automation and AI investments to modernize claims processing.

The White House argues these tools will "reduce errors and deliver benefits to veterans more quickly" while limiting "the costly practice of relying on surge staffing and extra labor costs." In other words, replace human workers with automation and call it efficiency.

The VBA has reduced its claims backlog by more than 60% under the Trump administration -- but it did so by bringing back mandatory overtime for employees. Now the administration wants to replace those overworked humans with AI systems and claim the faster processing times as a win for automation.

The Pattern Is Clear

This budget reveals the administration's actual priorities. Cut the IRS so it cannot audit wealthy tax cheats. Gut VA healthcare staffing while claiming to support veterans. Eliminate jobs, call it streamlining, and trust that automation will somehow fill the gaps.

Congress rejected these cuts once. The question is whether they will do it again -- or whether the second time around, with a smaller workforce already in place, lawmakers will treat the damage as a fait accompli and move on.