The U.S. federal government opened fiscal year 2026 with a $284 billion budget deficit in October 2025 — a 10% jump from the $257 billion shortfall recorded the same month last year. Government revenues rose to $404 billion, up 24% year-over-year, while spending surged to $689 billion, an 18% increase, according to Treasury Department data released November 26, 2025. The numbers reveal a troubling pattern: even as tax collections hit record highs — largely fueled by new tariff revenues — the government is spending even faster. The full-year deficit for FY2025 ended at $1.775 trillion, down just 2% from the prior year, suggesting the fiscal squeeze isn’t easing. Behind the numbers lies a deeper crisis: the proposed $18 billion cut to the National Institutes of Health threatens to unravel decades of biomedical progress.
The Budget That Wasn’t
The federal government had been running on a continuing resolution since March 2025, keeping agencies funded at last year’s levels to avoid a shutdown. That temporary fix expired on September 30, 2025. Now, with no full-year appropriations passed, agencies are operating under a patchwork of temporary measures — and the Donald J. Trump administration’s FY2026 budget request, submitted on May 2, 2025, is shaping the debate. The White House Office of Management and Budget released a series of politically charged fact sheets: "Cuts to Woke Programs," "Ending the Green New Scam," "Defunding the Open Border." But the most consequential proposal was buried in the technical annex: slashing National Institutes of Health funding from $47 billion in 2024 to $29 billion in 2026 — a 38% reduction.
Research in the Crosshairs
Dr. Barbara Slusher, Director of the Drug Discovery Division at the Johns Hopkins University School of Medicine, didn’t mince words: "Scientific innovation in the US is in jeopardy." Her lab, like hundreds across the country, depends on NIH grants to fund early-stage cancer therapies and rare disease treatments. With those funds evaporating, her team has already paused two Phase I clinical trials. PhD admissions at top-tier institutions have dropped 15% since July. Small biotech firms — the unsung engines of drug discovery — are shuttering labs or pivoting overseas. "We’re not just losing money," Slusher said. "We’re losing momentum. A drug that might have reached patients in 2032 could now take 15 years — if it gets funded at all." The ripple effects are immediate. The National Science Foundation has halted new grants for AI-driven medical diagnostics. The National Aeronautics and Space Administration delayed its Mars sample-return mission planning. Even the U.S. Department of Agriculture cut funding for climate-resilient crop research. These aren’t abstract budget lines — they’re lifelines for thousands of scientists, lab technicians, and graduate students.
Defense Spending Soars While Science Starves
While NIH faces cuts, the U.S. Department of Defense is getting a record $1.01 trillion request for FY2026 — a 5% increase over the previous year. The proposal, detailed in a Pentagon briefing by senior officials, includes funding for hypersonic weapons, AI-driven surveillance, and expanded nuclear modernization. Congress has already moved swiftly: the Defense Appropriations Bill (H.R. 4016) cleared the Senate Appropriations Committee 26-3 on July 31, 2025. The Senate Armed Services Committee approved it 36-27 on June 12. By contrast, the NIH’s budget proposal hasn’t even made it to a full committee vote.
The disparity isn’t accidental. The administration’s "Ending Weaponization of the Federal Government" fact sheet explicitly targets "non-defense scientific agencies" as bureaucratic overreach. Meanwhile, the Department of Homeland Security appropriation (H.R. 4213) passed the Senate 36-27 on June 24, 2025 — nearly matching the defense vote. The message is clear: national security is prioritized over public health research.
What’s at Stake Beyond the Lab
The commercialization of new drugs takes nearly a decade. That timeline assumes steady, predictable funding at the earliest stages — the very stage NIH supports. Small biotech firms, which account for over 60% of new drug candidates in development, rely on NIH grants to prove concepts before private investors step in. Without those grants, innovation stalls. A promising Alzheimer’s therapy at the University of California, San Francisco, was shelved in August after losing its NIH funding. A gene-editing startup in Boston laid off 40% of its staff in September. These aren’t isolated incidents.
Experts warn that the damage isn’t just economic — it’s generational. Young scientists are leaving the field. Foreign researchers are choosing Canada, Germany, or Singapore over U.S. labs. The U.S. once led the world in biomedical breakthroughs. Now, it risks becoming a consumer of innovation, not a creator.
What Comes Next?
With Congress still debating FY2026 spending, a new continuing resolution is likely before year-end — delaying the full impact but not preventing it. The House and Senate appropriations committees are working in parallel, but partisan gridlock remains high. Senate Minority Leader Chuck Schumer has called the NIH cuts "a public health time bomb," while House Appropriations Chair Tom Cole insists the cuts are "necessary to reduce waste." Meanwhile, scientists are adapting. Dr. Slusher’s lab has begun licensing early-stage technologies directly to venture capital firms — skipping the traditional grant pipeline. Other researchers are partnering with private hospitals or foreign institutions. But these are stopgaps, not solutions. The ecosystem built over 70 years is cracking.
Why This Matters to You
Next time you hear about a breakthrough cancer treatment or a new vaccine, remember: it likely started in a university lab funded by NIH. Those labs are now under siege. The cuts aren’t just about science — they’re about who gets treated, who gets healed, and who gets left behind. The next pandemic, the next antibiotic-resistant superbug, the next breakthrough in diabetes care — they won’t wait for Congress to find consensus.
Frequently Asked Questions
How will NIH funding cuts affect everyday healthcare?
The cuts will delay or cancel development of new drugs for cancer, Alzheimer’s, rare diseases, and antibiotic-resistant infections — conditions that affect millions. Clinical trials are already being paused, meaning patients who could have benefited from experimental therapies won’t get access for years, if ever. The U.S. currently leads the world in new drug approvals; that lead is shrinking.
Why is defense spending increasing while science funding is cut?
The Trump administration’s FY2026 budget prioritizes national security over domestic research, framing NIH and other agencies as bureaucratic overreach. Defense spending is politically popular and backed by powerful lobbying interests. Meanwhile, scientific funding lacks a unified advocacy base, making it vulnerable to cuts during fiscal tightening.
What’s the timeline for these budget changes to take effect?
The FY2026 budget cycle officially began October 1, 2025. While Congress hasn’t passed full appropriations, agencies have already begun reducing grants and halting hiring. NIH has frozen 90% of new applications since August. Layoffs at federal research labs and universities began in September. The full impact will unfold over the next 12–24 months as existing grants expire.
Are there alternatives to NIH funding for researchers?
Some labs are turning to private investors, state-level grants, or international partnerships. Others are licensing early-stage discoveries directly to biotech firms. But these options favor profitable areas like oncology and ignore rare diseases or basic science. Most small labs lack the legal or business infrastructure to navigate commercialization — and the funding gap is too wide to fill with piecemeal solutions.
Has this kind of funding cut happened before?
Yes. In 2013, sequestration cut NIH’s budget by 5%, leading to a 10-year decline in new investigator grants. The U.S. lost an estimated 10,000 researchers during that period. The current proposed cut — 38% — is far more severe. Even during the 2008 recession, NIH funding rose. This is the first time since the 1970s that research funding is being deliberately slashed during a period of economic growth.
What’s the long-term economic impact of cutting science funding?
Every $1 invested in NIH generates $2.70 in economic activity, according to a 2024 study by the Milken Institute. Cutting $18 billion could cost the U.S. economy over $48 billion in lost innovation, productivity, and healthcare savings over the next decade. The U.S. biotech sector, worth $1.4 trillion, could shrink by 15–20% if early-stage research collapses — eliminating hundreds of thousands of high-wage jobs.