WASHINGTON — The bipartisan agreement reached by Democratic President Joe Biden and Republican House Speaker Kevin McCarthy extends the debt ceiling by two years alongside modest federal spending cuts and a series of policy provisions.
The 99-page Fiscal Responsibility Act, which McCarthy said will pass in the Republican-led House on Wednesday, will need to pass the Democratic-controlled Senate before the June 5 deadline set by the Treasury Department for act or risk a default.
Here’s what’s in the law:
Extension of the debt ceiling until 2025
The heart of the deal is a suspension of the debt ceiling — currently at $31.4 trillion — until Jan. 1, 2025. The Treasury Department can then use “extraordinary measures” to pay the bills, which last usually months.
This effectively solves the problem until the 2024 election, leaving it to the next president and the new Congress to deal with.
Spending levels
The agreement includes spending caps for the next two years in order to establish the process for allocating funds. In fiscal year 2024, it limits military spending to $886 billion and non-military discretionary spending to $704 billion. In fiscal year 2025, these numbers will increase to approximately $895 billion and $711 billion.
McCarthy called the deal “historic” because it would “reduce year-over-year spending for the first time in more than a decade.”
Taking the adjustments into account, the White House projects that when setting aside veterans funding, non-defense spending will barely change — with a slight overall reduction from 2023 to 2024.
“It’s flat. It’s a difference of about $1 billion,” a White House official said. “In a divided government, we won’t get the kind of [non-defense discretionary] increases we were hoping to get.”
Conservative political measures
What do House Republicans get?
The bill cancels about $28 billion in unspent Covid relief funds. It cancels $1.4 billion in IRS funding and transfers about $20 billion to non-defense funds. It is restarting federal student loan repayments after a long “pause” that began at the start of the pandemic. It also imposes working conditions for Americans under age 55 (the current threshold is 50) to qualify for benefits under the Supplemental Nutrition Assistance Program and Temporary Assistance for Needy Families, with exclusions for former fighters and the homeless.
The Bill revises the National Environmental Policy Act with the aim of streamlining permitting for projects; House Republicans tout it as “the first major NEPA reforms since 1982.”
What’s in it for the Democrats?
The White House is presenting this as a budget deal — not a ransom payment for a debt ceiling extension — and stresses the modesty of the spending cuts despite the showdown with a GOP-led House. He also notes that the bill makes “no changes to Medicaid” and leaves Social Security and Medicare intact. White House says bill fully preserves climate and clean energy provisions of last year’s Cut Inflation Act and leaves Biden’s executive action on canceling intact student debt.
And it avoids a catastrophic default for the rest of Biden’s first term.
“We believe that removing the threat of default in 2025 is a significant benefit to the economy, a significant achievement,” the White House official said.
This article originally appeared on NBCNews.com