With the United States just days away from hitting the debt ceiling and running out of funds to pay the country’s bills, House Speaker Kevin McCarthy and President Biden have reached an agreement suspend the debt limitand Congress is expected to vote this week.
The text of the bill has yet to be made public, but broadly, here’s what the deal is about:
Suspension of the debt ceiling
Under the agreement, the debt limit would be suspended until the first quarter of 2025, beyond the 2024 elections. Rather than raising the debt ceiling of a specific dollar amount, its suspension allows Congress to set a period of time before the debt limit will have to be addressed again. Adopting this approach ensures that it cannot be used for political purposes during campaigns. That leaves the next fight over the debt ceiling for the new administration and Congress shortly after the 2024 election.
Spending limits
Republicans initially called for a 10-year cap on spending at fiscal year 2022 levels and called for drastic cuts to non-defense domestic spending. The White House has proposed holding spending at fiscal year 2023 levels for two years.
The deal does not bring spending back to 2022 levels and instead keeps non-defence spending roughly stable, with current 2023 levels for 2024. There is no budget cap after 2025 – just spending targets. For 2025, the agreement authorizes a slight increase in non-defence spending of around 1%.
Energy for Reform
The White House and McCarthy’s negotiating team have agreed to revise the country’s licensing laws, an issue long championed by moderate Democrats like Senator Joe Manchin.
The provision aims to streamline the environmental review process, designating a single lead agency responsible for environmental review that matches a clear and public timeline. Changes to energy permits are expected to speed up the time it takes for new projects to be approved, which environmentalists have opposed.
Republicans are touting the change to the accord as the first major reform of the National Environmental Policy Act since 1982.
Unspent COVID Funds
Unspent COVID relief funds will be clawed back in the deal, a proposal made by Republicans and accepted by the White House. The COVID public health emergency officially finished may’s beginning.
The exact amount available is unclear, but the Congressional Budget Office has estimated it at around $30 billion.
Work requirements
Republicans have sought to toughen and add work requirements for able-bodied adults without minor dependents applying for entitlements and benefits, including Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program ( SNAP) and Medicaid. The White House pushed back.
The agreement does not add work requirements for Medicaid.
Currently, those eligible for SNAP have no work requirements after age 50. The agreement would raise that age to 54. At the same time, SNAP would see temporary changes that would eliminate work requirements for veterans and homeless people, regardless of age. .
Tax cuts
Republicans wanted about $71 billion in IRS funding over the next decade cut, passing legislation to do so after winning a majority in the House and including the same cut in the bill. debt ceiling legislation that the House GOP passed last month. They targeted tens of thousands of new agents funded by the Inflation Reduction Act, and even campaigned in midterm elections on cutting additional IRS funding, which was intended to modernize the IRS and improve enforcement against high-income tax evaders.
Republicans told voters midterm that Mr. Biden and the Democrats planned to send an army of 87,000 IRS agents to audit ordinary Americans, to dig deeper into their pockets to pay for liberal programs not financed, such as the cancellation of student loans.
According Rep. French Hill, Republican of Arkansas, who appeared on CBS News’ “Face the Nation” the day after the deal was announced, the deal “would stop the first year of the 10-year budget increase for the IRS”. That, he continued, would be “nearly $2 billion in stopped spending of that $80 billion that was to be spent over 10 years to hire IRS agents.”
Veterans medical care
The agreement fully funds medical care for veterans, including for the toxic exposure fund at levels the president has requested for fiscal year 2024, an increase from current levels. This has been a significant issue for Mr Biden, who has linked his late son Beau’s exposure to toxic burns to his cancer diagnosis.
What was rejected: Repealing the climate provisions of the Inflation Reduction Act
The agreement makes no changes to the clean energy and climate provisions of the Cut Inflation Act, such as clean energy projects in low-income communities. The Republicans had wanted to repeal the main provisions of the IRA.
New taxes
There are no new tax increases in the deal, which Mr Biden had suggested, and Republicans have rejected.
Cancellation of Biden’s student debt relief
Republicans demanded that Mr. Biden student debt relief be repealed, but the bill leaves it in place.
Scott MacFarlane, Ellis Kim, Nikole Killion and Zak Hudak contributed to this report.
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