of Full text of law House Speaker Kevin McCarthy has agreed in principle with President Biden to suspend the nation’s borrowing limit, revealing important new details about the deal that lawmakers are set to vote on this week.
A centerpiece of the deal remains a two-year suspension of the debt ceiling, which limits the amount the government can borrow. The government will continue to borrow as long as Congress passes the deal by June 5, when the Treasury Department claims that suspending that cap, currently set at $31.4 trillion, will dry up U.S. money. Bills can be paid by .
Republicans demanded a wide range of policy concessions from Biden in exchange for suspending the cap. Chief among these are restrictions on the growth of federal discretionary spending over the next two years. Biden also agreed to new work requirements for certain beneficiaries of food stamps and temporary assistance programs for needy families.
Both sides agreed to modest efforts aimed at accelerating the permitting of some energy projects, and in a surprising move, a new West Virginia to Virginia move that has been backed by Republican lawmakers and leading centrists. Agreed on a fast track to the construction of natural gas pipelines. Democratic Party.
Here’s what the law does:
Suspend Debt Limitation
The deal suspends the country’s $31.4 trillion borrowing limit until January 2025. Suspending a debt limit for a period of time is different from setting it to a new fixed level. This essentially allows the Treasury Department to pay its citizens’ bills within a few months of reaching the limit, in addition to doing accounting tricks to keep payments going within that period. You are given the discretionary power to borrow as much money as you need.
This differs from the bill passed by House Republicans, which would raise the cap by $1.5 trillion or by March 2024, whichever comes first.
Under the new law, the debt limit will be set at the level reached when the suspension ends. For political reasons, Republicans tend to prefer to suspend the debt ceiling rather than raise it. By doing so, it can be said that raising the debt ceiling has technically not been the go-ahead.
The suspension opens the next potential battle over the country’s debt burden through 2025, past the next presidential election.
Limit and reduce spending
The bill cuts so-called non-defense discretionary powers through fiscal 2024, including domestic law enforcement, forest management, and scientific research. It caps all discretionary spending at 1% growth in 2025, which is expected to be slower than inflation, effectively cutting the budget.
Legislative texts and White House officials have given mixed tales of just how large these cuts really are.
Some parts are clear. The proposed military spending budget is set to increase to $886 billion next year, which is in line with what Biden requested in his 2024 budget proposal, and is set to increase to $895 billion in 2025. Veterans exposed to toxic burns will also be funded at the level of Biden’s budget proposal.
Legislative text suggests that non-defense discretionary spending outside of the Veterans Affairs Program will shrink to roughly last year’s spending levels in 2024. But White House officials say a series of collateral deals with Republicans, including funding for the Internal Revenue Service, could allow the actual amount raised to approach this year’s levels.
Republicans initially called for a 10-year spending cap, but the bill would only include a two-year cap, after which it would switch to unbound spending targets — essentially just a proposal. Only.
The White House estimates that the deal will cut discretionary spending and save $1 trillion over 10 years.
An analysis of the proposal by The New York Times suggests it would cut federal spending next year by about $55 billion compared to the Congressional Budget Office’s projections. If spending then returns to growth, as projected by the Budget Office, the total savings over 10 years will be about $860 billion.
Get your IRS money back
The bill is aimed at tackling one of President Biden’s top priorities: tax fraud and strengthening the IRS to make sure businesses and the wealthy pay what they ought to pay.
Democrats included $80 billion in last year’s Inflation Control Act to help the IRS hire thousands of additional workers and update outdated technology. The Debt Restriction Agreement will immediately cancel $1.38 billion from the IRS and ultimately recycle another $20 billion of the $80 billion received through the Inflation Control Act.
Administration officials announced Sunday that they had agreed to reprogram additional IRS funding of $10 billion each in fiscal years 2024 and 2025 to maintain funding for some nondefence discretionary programs.
The clawback will undermine efforts by the Department of Revenue to crack down on tax fraud among the wealthy. It’s also a political victory for Republicans, who have been enraged by the prospect of a stronger IRS and have approved a bill in the House that would cancel the entire $80 billion.
Still, the IRS has discretion over when and how it spends the money, so clawbacks may not affect the IRS’ plans for the next few years. Officials said in a background call with reporters that they do not expect any disruption from the loss of that money in the short term.
Perhaps this is because the $80 billion mandated by the 2022 law was allotted all at once, but the agency planned to spend it over eight years. Officials suggested the IRS could simply front-load some of the funds allocated for later years and return to Congress later to request additional funds.
New Labor Requirements for Government Benefits
The measure would impose new employment requirements on older Americans who receive food stamps through the Supplemental Nutrition Assistance Program and receive assistance from the Needy Families Temporary Assistance Program.
The bill would impose new food stamp work requirements on adults aged 50 to 54 who do not have children living at home. Under current law, these work requirements apply only to people between the ages of 18 and 49. The age limit will be phased in over three years from fiscal 2023. It also includes technical changes to TANF’s funding scheme that cause some states to divert funds from the program.
The bill would also exempt veterans, homeless people, and former foster children from food stamp work obligations. White House officials say the move will offset the program’s new requirements and move about the same number of Americans eligible for nutritional assistance. Forward.
Still, the addition of new labor requirements has drawn outrage from supporters of safety-net aid, saying it punishes vulnerable adults in need of food.
“The deal will put hundreds of thousands of people aged 50 to 54 at risk of losing food aid, including many women,” said Sharon Parrott, director of the Center for Priority on Budget and Policy. . said in a statement.
approve the reform
The agreement includes new measures to get energy projects approved faster by creating a lead agency to oversee reviews and requiring completion in one to two years.
The bill also included a victory for Democratic centrist Senator Joe Manchin III (WV) by approving a permit application for the Mountain Valley Pipeline, a natural gas project in West Virginia. there is The $6.6 billion project aims to transport gas about 300 miles from the Marcellus shale field in West Virginia across nearly 1,000 streams and wetlands before reaching Virginia.
Environmental activists, civil rights activists, and many Democratic legislators have opposed the plan for years.
The bill declares that “the timely completion of the construction and operation of the Mountain Valley Pipeline is necessary in the national interest.”
Manchin said on Twitter that he was proud to have secured the bipartisan support he needed to “cross the finish line”. Republicans on the West Virginia delegation also claimed credit.
Student Loans and Covid-19 Unspent Funds
The bill would formally end Biden’s student loan freeze by the end of August and limit his ability to resume the moratorium.
A bill House Republicans wanted to pass that would block Mr. Biden’s policy of forgiving most borrowers from $10,000 to $20,000 in student-loan debt won’t move forward. The initiative, launched last year by the Biden administration, is currently under review by the Supreme Court and may eventually be blocked.
The bill would also recover about $30 billion in unused funds from the last coronavirus relief bill Biden signed into law, which was a top priority for Republicans entering negotiations. Some of that money will be repurposed to increase discretionary spending outside defense.
prevent government shutdowns
The agreement only sets parameters for spending over the next two years. Congress needs to fill them by passing a number of spending bills this year. A major battle looms over the details of these bills, raising the possibility that lawmakers will not be able to agree on a spending plan on time and the government will be shut down.
The Biden-McCarthy deal aims to force Congress to pass all spending bills and avoid a government shutdown by threatening to cut spending that is important to both parties. If lawmakers don’t approve all 12 ordinary funds bills by the end of the year, the deal will tighten spending caps. Non-defense discretionary spending will be set at 1% below this year’s level, and the IRS may not repurpose next year’s $10 billion for other programs.
The same levels would apply to defense spending and veterans spending, effectively resulting in a significant reduction in these programs compared to the agreed caps. Democrats see impending disarmament as a particularly strong incentive for Republicans to reach a deal to pass the appropriations bill by the end of the year.
Anything not stated on the invoice
The final deal includes far fewer future debt reductions than both sides have proposed.
Republicans wanted even bigger spending cuts and tighter labor requirements. They also wanted to speed up the transition to low-emission energy sources and scrap the hundreds of billions of dollars in tax incentives Biden signed to fight climate change. Mr. Biden wanted to take new steps to raise taxes on corporations and high-income earners and reduce Medicare’s spending on prescription drugs. None of them came to a deal.
