The Senate passed President Trump’s $9 billion rescission spending bill in the early morning hours on a 51-48 vote, a major win for the Trump administration’s cost-cutting agenda. The bill, which will go back to the House for a final approval before a Friday deadline, is the first successful rescission package in decades and a dramatic shift in congressional spending authority to the executive branch.
The reductions are aimed mostly at two wide categories: some $8 billion from foreign aid programs, especially those of the U.S. Agency for International Development (USAID), and $1.1 billion from the Corporation for Public Broadcasting (CPB), which supports NPR and PBS. The provision opposed by only two Republican senators, Susan Collins of Maine and Lisa Murkowski of Alaska, was due to concerns regarding congressional power and not getting specific information on the effect of each program.
Foreign aid cutbacks: A real blow to international development
The deepest reductions are in foreign assistance, and USAID will be hit the hardest. The agency, which spent $44 billion during fiscal 2023, already had been largely gutted under the Trump administration’s across-the-board foreign aid freeze. The reductions are part of a larger initiative by the Department of Government Efficiency (DOGE), first spearheaded by Elon Musk but now supported by Budget Director Russell Vought, to cut federal outlays.
The reach goes far beyond Washington. International Rescue Committee sees 13 of the world’s most vulnerable countries disproportionately affected by funding cuts, including Afghanistan, Sudan, Yemen, and some African countries, where aid cuts will especially hurt poor and vulnerable people already suffering from conflict, climate change, and poverty. Cuts will extend from maternal health to HIV/AIDS treatment with implications for global health security.
Stocks in the crosshairs: Defense and government contractors
The budget cuts and more comprehensive DOGE program have ushered in extreme market volatility, especially on government-contract-reliant firms. Defense contractors have been some of the most severely affected, with fears over looming Pentagon budget cuts by the new administration.
Some troubled large defense contractors are:
- Lockheed Martin (LMT) – falling on weapon system reduction fears
- Northrop Grumman (NOC) – targeted for expensive programs
- General Dynamics (GD) – down 7% after DOGE news
- RTX Corporation (RTX) – previously Raytheon, under scrutiny of efficiency audits
IT service companies and government contractors have also fallen sharply:
- Leidos Holdings (LDOS) – fell 19% in a week, largest fall in more than four years
- Booz Allen Hamilton (BAH) – down 3% in contractor concerns
- Science Applications International (SAIC) – fell 6% on efficiency concerns
- Palantir Technologies (PLTR) – beset with robust AI growth opportunities
USAID contractors confront existential threat
The USAID reductions represent an existential threat to the majority of global development contractors. A few of the largest USAID contractors that would be severely impacted are:
- Chemonics International – traditionally the largest USAID contractor, with more than $1 billion in 2016
- DAI Global – perennially one of the top three USAID contractors
- Tetra Tech (TTEK) – recently awarded a $5 billion USAID contract for democracy initiatives
- Creative Associates International – received $146 million in 2016
- Research Triangle Institute – a member of a series of USAID consortiums
These contractors are exposed to bankruptcy when US Aid programs technically lapse over 80%, with employee-owned companies especially at risk as their Employee Stock Ownership Plans (ESOPs), which link worker retirement funds with company performance, put them in a sensitive position. The effect spreads beyond direct contractors to smaller NGOs and local groups whose operational budgets are tied to USAID appropriations.
Public broadcasting impact: Rural stations most vulnerable
The $1.1 billion cut to the Corporation for Public Broadcasting represents the complete elimination of federal funds for public media for the first time since 1967. Rural and smaller-market stations, which are more reliant on federal subsidies than urban stations that are diversified in their revenue streams, will feel the pinching of the cuts.
PBS President Paula Kerger cautioned that stations will be “forced to make tough choices in the weeks and months to come,” and a number of small stations will be pushed off the air. The reductions begin effective October 2025, cutting CPB’s funds through September 2027.
While NPR and PBS themselves are not-for-profit entities, the reductions might indirectly impact publicly traded media firms by lessening competition and possibility of gaining viewers who are moving away from public broadcasting.
The broader DOGE impact and market implications
The $9 billion rescission package is just a part of the overall Trump administration’s spending cut objective. DOGE reported hitting $190 billion in savings as of June 2025, and this is not even close to Elon Musk’s initial objective of $2 trillion. The agency reported it reduced non-defense annual federal obligations by 22.4% in 2024.
Russell Vought, OMB Director of the cuts, has said that this is just the beginning. He has indicated a desire to produce follow-on rescission packages and has offered $9 trillion in ten-year reductions. This “slash and burn” methodology, as characterized by Trump administration officials, implies ongoing pressure on federally funded programs and government contractors.
Congressional power struggle and future implications
The successful passage of the rescission package is a rare delegation of congressional appropriations power to the executive. The bill advanced in spite of some opposition among Republicans due to abdicating too much power to the White House without sufficient examination. Senator Collins cautioned that “nobody really knows what program reductions are in it,” which indicated the shortage of transparency for the cuts.
The bill then goes back to the House, which has to approve it by Friday or the administration will be compelled to spend the money as originally authorized. House Speaker Mike Johnson will reportedly call for a speedy vote, though some intraparty wrangling has occurred about procedure.
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