Trump administration makes AI top priority for government efficiency, IRS and more in sights

The Trump administration has officially designated artificial intelligence as a key priority in its fiscal year 2027 science and technology agenda, formalizing what many agency leaders have already identified as crucial for streamlining government operations. This White House directive comes as federal agencies increasingly view AI as essential for maintaining efficiency while operating with reduced workforce levels.

What you should know: The administration’s AI focus reflects broader government efficiency goals aimed at doing more work with fewer federal employees.

• Agency leaders across government have previously discussed how AI can streamline operations and reduce staffing requirements.
• The formal designation in the FY 2027 budget priorities signals a coordinated, government-wide approach to AI implementation.

Agency implementation challenges: Several departments are struggling to balance modernization efforts with current workforce constraints.

• The U.S. Forest Service has delayed major modernization plans for tracking and mapping wildfires due to recent staffing losses from the administration’s workforce overhauls.
• While the Government Accountability Office (GAO), a congressional watchdog agency, reports the Forest Service has restored staffing to previous levels, the next steps for actually improving wildfire tracking technologies remain unclear.

Key developments across agencies: Multiple departments are advancing technology initiatives despite broader efficiency pressures.

• The Department of the Air Force will now manage Software as a Service (SaaS) subscriptions—cloud-based software accessed online rather than installed locally—as commodity-based services rather than licensed software assets, requiring vendors to guarantee unrestricted government data ownership and transfer rights.
• The Senate confirmed Mike Dodd as the first assistant secretary of defense for critical technologies, making him the Pentagon’s chief advocate for unifying defense technology investments.
• The Census Bureau plans to test using postal workers as census takers for the 2030 Census, despite a 2011 GAO report finding the approach wouldn’t be cost-effective due to postal employees’ higher pay.

Workforce impacts: The efficiency agenda is creating significant changes in federal employment practices.

• The Federal Bureau of Prisons ended its union contract with the American Federation of Government Employees (AFGE), affecting over 30,000 correctional officers and eliminating collective bargaining abilities.
• AFGE officials warn that losing union protections will worsen existing workforce challenges like understaffing and low pay.

IT modernization progress: The IRS is making headway on technology upgrades but faces ongoing legacy system challenges.

• The Treasury Inspector General for Tax Administration reports “major progress” on IT modernization initiatives, though no legacy systems have been decommissioned yet.
• About 63% of IRS IT systems are considered legacy systems—outdated computer programs that are expensive to maintain but difficult to replace—with the agency spending over $39 million in fiscal 2024 to maintain and operate these outdated platforms.