Debt ceiling deal: What’s in the cliffhanger deal struck by Biden and McCarthy to raise the debt limit?
Weeks of back-and-forth between the White House and the Republican majority in the House of Representatives have finally resulted in an agreement: America will default on its debt obligations if Congress successfully passes the bill this week.
The House of Representatives passed the law by a majority of 314 to 117 votes. It now goes to the Senate.
Late on Saturday, Speaker of the House of Representatives Kevin McCarthy and Joe Biden announced the end of negotiations and the agreement on an agreement, with the text of the law itself to follow soon. The new compromise touches on both Republican priorities and preserving Joe Biden’s legislative accomplishments.
But it comes after weeks of bitter fighting. Blaming the White House and Congressional Democrats for out-of-control spending, Republicans have ignored their rivals’ taunting admonitions about the debt created by a 2017 GOP-led tax cut that benefited wealthier Americans in particular. Meanwhile, Democrats have accused Republicans of holding the country’s creditworthiness and ability to pay its loans hostage and seeking cuts in welfare programs such as food aid for needy families.
As we near the debt ceiling deadline, let’s take a look at what leaders in Washington have come up with to break the impasse.
No more debt drama (for now)
The first and most significant achievement of this deal: It raises the debt ceiling through the end of 2024. That guarantees Republicans can’t have another argument on the issue, especially as the presidential campaign season heats up later this year and into the next.
Any battle over the debt ceiling during the campaign, particularly in the summer or fall of 2024, would take Joe Biden off the campaign trail and keep his focus firmly on Washington, at a time when one of his likely general election opponents, Donald Trump and Ron DeSantis would be free to continue her political work.
Overall, the deal provides for a $4 trillion increase in America’s debt ceiling. Signing this leverage for next year is already proving to be one of the hardest pills for congressional conservatives in both the House and Senate, especially in the absence of other key concessions in upcoming legislation.
Spending Caps
A major Republican victory in the negotiation process, this bill would freeze federal spending at current levels, with the exception of military funding, until 2024. And growth in that spending will be capped at 1 percent if Congress fails to agree on a stopgap deal in January 2025.
This places a significant constraint on the federal government over the next year, and notably results in significantly tighter spending limits than Congressmen agreed to in the last debt-limit fight in 2019.
The wording, which allows defense spending to increase while domestic programs face a spending freeze, already angers progressives, who have long argued that the US military’s bloated budget should be high on the list of reforms.
The ceilings established by this compromise are simultaneously the Republicans’ greatest victory and failure; While the spending caps certainly go beyond what Democrats were asking for, they also preclude the possibility of Republicans using the debt cap to make real cuts to programs the Biden administration is already implementing under the Inflation Reduction Act and other legislation has.
That means Mr. Biden’s legislative agenda for 2021-2022 will remain largely intact, despite calls from Conservatives to roll back large parts of it, such as efforts to waive student loans or expand green energy production.
Working requirements for food stamps
One of the Republicans’ efforts to stem the tide of federal spending is focusing on the issue of providing food aid to low-income families. The new legislation seeks to expand the work requirements for the SNAP program from the current age limit of 49 to a new maximum age of 54, meaning Americans in this age group must have employment to receive benefits.
For Republicans, the issue might seem oddly specific when it comes to maintaining America’s ability to pay off its debts, but tightening restrictions on federal aid has long been a Republican goal, and originally the party wanted those labor requirements, too expand to Medicaid.
The new work requirements expire in 2030 unless extended before then by a GOP convention.
IRS funding has been discontinued
The other specific demand that Republicans won in their compromise with the White House was that a plan to fund new hiring initiatives at the Internal Revenue Service (IRS) be halted, at least in part.
The ailing agency should get more funding for agents who the federal government says should assist taxpayers with filing issues and strengthen IRS capabilities; Republicans instead portrayed the matter as an attempt to hire an army of IRS inspectors to prosecute taxpayers on suspicion of fraud, a failure for the party that has long sought, particularly in the conservative wing, to weaken the power and capabilities of both IRSs and other federal agencies.
But some conservatives are already complaining that the cuts are not enough. Congressman Chip Roy exclaimed angrily after the deal was announced that “98 percent” of the funds to expand IRS services would continue to flow.
Covid help
The deal brings with it another small benefit for Republicans — a provision to return Covid aid funds that has yet to be approved. Millions of dollars of that aid are still not being spent by the federal government, although Democrats have so far used it to fund a number of federal health programs that they say face cuts if aid is scaled back completely.
Energy Permit Reform
One of, if not the most serious, violations of the bill in the eyes of progressives is a sweet deal (allegedly) introduced by Sen. Joe Manchin aimed at streamlining the permitting process for a controversial natural gas pipeline, the Mountain Valley project.
Expect this to be a red line for many on the left, who argue that any expansion of fossil fuels is unwise given the current state of the fight against climate change.
