WASHINGTON — President Joe Biden signed a bipartisan debt limitation package on Saturday afternoon, averting a calamitous default shortly before the nation ran out of maneuvers to pay its bills on Monday.
Biden called the deal he brokered with House Speaker Kevin McCarthy, R-Calif., a necessary compromise that protected top Democrat priorities while cutting some of the spending Republicans oppose.
Biden thanked McCarthy, Democratic House Leader Hakeem Jeffries, Senate Majority Leader Chuck Schumer and Senate Minority Leader Mitch McConnell for their partnership, according to a White House statement.
More importantly, the agreement prevents a blow to the economy from a federal default. It’s also a political boost for Biden whose road to re-election would have been much more difficult with a faltering economy.
The deal bolsters Biden’s credentials as a bipartisan negotiator.
But it’s also a victory for McCarthy.
Biden had insisted that Congress send him a bill to raise the debt ceiling with no strings attached, betting that Republicans wouldn’t be able to get a package of spending cuts through the House.
In fact, however, the GOP-controlled House in April narrowly passed a bill to raise the debt ceiling in exchange for $4.8 trillion in spending cuts.
Biden was forced to negotiate.
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The deal he accepted will cut $1.5 trillion from the federal budget over the next decade, according to the nonpartisan Congressional Budget Office.
That’s far less than the original House GOP plan. And he’s also spending more, not less, on food stamps — the exact opposite of the Republicans’ goal. Indeed, while Biden agreed to a scaled-down version of the work requirements sought by Republicans, he also provided exemptions for the homeless, veterans, and people ages 18 to 24 who were with family from work. reception at the age of 18. As a result, more people overall will receive food aid once the changes are in place, according to the Congressional Budget Office.
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Still, McCarthy called the spending cuts “historic.”
Although the package easily passed both the House and the Senate, it was criticized by both left and right.
Far-right Republicans wanted deeper spending cuts. Defense hawks wanted more military spending.
Progressives have complained about expanded work requirements for low-income relief programs, fast-track permits for oil and gas projects and caps on future spending.
Spending caps do not apply to Social Security and Medicare, popular programs that both sides have agreed are irrelevant despite their huge effect on the federal deficit.
About $30 billion in unspent coronavirus relief funds will be forfeited. Billions of dollars of funding recently approved for the IRS to improve customer service and tackle tax evasion will be repurposed, reducing the amount of taxes that would have been collected with full funding.
Student borrowers, who got pauses in their monthly payments during the pandemic, are expected to resume payments after August.
But the package did not include Republican measures to stop Biden’s agenda to cancel student loan debt for millions of Americans and end many of the historic renewable energy tax breaks included in the Cutback Act. from last year’s inflation, the Climate Act and Biden’s prescription drugs.
While the agreement suspends the debt ceiling until January 2, 2025, more budget fights lie ahead.
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If Congress does not agree on how to cut next year’s budget to the spending limits set by the agreement, the federal government could temporarily shut down later this year.
The Treasury Department has been using “extraordinary measures” to pay the nation’s bills since mid-January, when the nation hit the $31.381 billion limit on how much it can borrow.
The Treasury borrows money to pay all its bills because the government spends more than it collects in revenue. The amount the government can borrow is set by law, making it a separate process from decisions made in annual spending bills and policy measures that determine the amount of funds spent and the amount of taxes and other revenues. .
This article originally appeared on USA TODAY: Debt limitation agreement signed by Biden to avoid catastrophic US default