What’s in Biden and McCarthy’s debt ceiling deal – and what’s not? Here are 7 takeaways

WASHINGTON — Just days before a possible default, President Joe Biden and House Speaker Kevin McCarthy struck a deal Saturday night to raise the debt ceiling in exchange for caps on future spending and spending. Other Republican Demands.

Yet the White House was able to avoid the more sweeping budget cuts that House Republicans imposed in their own legislation while keeping the president’s signature national programs intact.

The deal now faces an unclear prospect in Congress, where progressive Democrats and hardline Republicans have both criticized the deal’s components. McCarthy, who has dubbed the bill “The Fiscal Responsibility Act,” is considering a vote in the House on Wednesday.

Here are seven takeaways about what’s in the debt ceiling agreement — and what’s not.

Raises the debt ceiling until 2025

The tentative deal would raise the debt ceiling on how much the government can borrow until the end of 2024, avoiding a default that could come on June 5 if the debt ceiling is not raised.

This has always been Biden’s top priority. The president could not afford an economic disaster to occur as a result of a default.

The two-year extension would mean that Congress would no longer have to deal with the debt ceiling before the 2024 election, which could undermine power in Congress and control of the White House. If Biden wins re-election and Democrats regain control of the House, this year’s trick would be averted.

Two-year spending cap

The agreement caps annual discretionary spending for two years, keeping non-defence spending levels stable next year and increasing them by 1% in 2025. This means that funding for national programs in all areas – in plus Social Security and Medicare – will stay the same next time. year.

Perhaps the biggest sticking point in the talks, spending caps were a top priority for Republicans, who first fought for 10 years of annual spending limits, then six years as negotiations continued. .

In the end, what emerged was a classic exchange.

The agreement sets out six years of “target” appropriations, but unlike the first two years of capping, the target spending levels are not enforceable. The agreement also includes funding increases to improve medical care for veterans.

Speaker of the House Kevin McCarthy of California speaks at a press conference after Speaker Joe Biden and McCarthy reached a

House Speaker Kevin McCarthy of California speaks at a press conference after President Joe Biden and McCarthy reached an “agreement in principle” to resolve the looming debt crisis on Saturday, May 27 2023, on Capitol Hill in Washington. Rep. Patrick McHenry, RN.C., right back, and Rep. Garret Graves, R-La., left, listen.

Changes to work requirements for food stamps and other aids

The last heist before Biden and McCarthy secured a deal was a fight over expanded work requirements for welfare programs, which Republicans pushed and the White House resisted.

The final agreement revises the Supplemental Nutrition Assistance program by setting time limits during which able-bodied adults 54 or younger without dependent children can receive food stamps if they fail to meet certain work requirements.

But in a win for the White House, the deal would increase food benefits for the homeless and veterans.

The agreement contains additional work requirements for recipients of the Temporary Needy Family Assistance program, but no changes to Medicaid, which Biden said he would not support.

Recovers part of the funding from the IRS

In another concession to Republicans, the deal reverses $10 billion of $80 billion in IRS funding approved in Biden’s Inflation Cut Act last year, which was designed to crack down on wealthy Americans and corporations that evade taxes.

Additional IRS funding has long been a line of attack for Republicans in Congress, who have warned of 87,000 new IRS auditors and regulators meddling in the lives of American workers.

The money is intended to modernize an understaffed tax collection agency in a bid to crack down on wealth tax evaders.

The tax gap – the difference between the amount of taxes owed and what is actually collected – has increased dramatically, from $441 billion per year between 2011 and 2013 to $584 billion in 2019. Over the next decade , it is estimated to reach $7 trillion.

President Joe Biden speaks with reporters on the South Lawn of the White House in Washington, Friday, May 26, 2023, as he travels to Camp David for the weekend.  Biden and House Speaker Kevin McCarthy reached an 'agreement in principle' to raise the country's statutory debt ceiling late Saturday as they rushed to strike a deal to limit federal spending and avoid a potentially disastrous default by the United States.

President Joe Biden speaks with reporters on the South Lawn of the White House in Washington, Friday, May 26, 2023, as he travels to Camp David for the weekend. Biden and House Speaker Kevin McCarthy reached an ‘agreement in principle’ to raise the country’s legal debt ceiling late Saturday as they raced to strike a deal to limit federal spending and avoid a potentially disastrous US default.

Cancels unspent COVID-19 rescue funds

Answering another Republican rallying cry, the deal would claw back billions in unspent COVID-19 relief funds that were approved by Congress during the Biden and Trump presidencies.

A memo circulated by House Republican leaders said the rollbacks include a $400 million cut to the Centers for Disease Control and Prevention’s “Global Health Fund.”

Public health advocates have expressed concern that canceling the funds will hurt preparedness efforts for the next virus and rob a persistently underfunded public health system of money. House Democrats said money was still needed to keep the National Strategic Stockpile full of essential medical supplies.

A Democratic source familiar with the negotiations said Biden’s priority with COVID-19 funds was to “protect public health money, which we were able to do.”

No taxes on the wealthy or corporations

Biden hoped to limit spending cuts with increased revenue by reversing former President Donald Trump’s 2017 tax cuts for the wealthiest Americans and businesses and ending tax loopholes used by the super-rich.

But the deal with McCarthy doesn’t deal with taxes at all.

With the tax system intact, Biden is likely to make his call for wealthy Americans to “pay their fair share” of taxes a centerpiece of his re-election campaign.

Cut Inflation Act, Student Loan Forgiveness Left Untouched

The White House managed to keep the Inflation Reduction Act — the presidential climate and prescription drug bill — and the president’s program to write off the student loan debt of millions of Americans intact. .

Republicans have proposed eliminating both in legislation the GOP-controlled House passed last month.

The biggest change to student loans would require borrowers, who have gotten breaks in their monthly payments during the pandemic, to start repaying the government. The change would effectively codify Biden’s plan to restart payments after the Supreme Court resumes its student loan forgiveness program.

President Joe Biden walks with House Speaker Kevin McCarthy, R-Calif., as he leaves the Capitol after the annual St. Patrick's Day rally, in Washington, Friday, March 17, 2023. Facing the risk of a failing the government as early as June 1, President Joe Biden invited the four top congressional leaders to a meeting at the White House for talks.

President Joe Biden walks with House Speaker Kevin McCarthy, R-Calif., as he leaves the Capitol after the annual St. Patrick’s Day rally, in Washington, Friday, March 17, 2023. Facing the risk of a government default as early as June On January 1, President Joe Biden invited the four top congressional leaders to a meeting at the White House for talks.

Join Joey Garrison on Twitter @joeygarrison.

This article originally appeared on USA TODAY: Debt ceiling deal details: What’s in Biden, McCarthy’s deal?

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