Biden-McCarthy struck debt ceiling deal to avert US default
- In Reports
- 03:29 PM, May 29, 2023
- Myind Staff
President Joe Biden and House Republicans have reached a deal to temporarily suspend the debt ceiling and cap some federal spending in order to prevent a U.S. debt default.
The deal, written into legislative text that they hope will be passed by the House of Representatives and Senate in the coming days, was formally posted on an official congressional website.
The agreement enables both parties to declare some type of triumph following days of protracted, challenging negotiations. Republican House Speaker Kevin McCarthy referred to it as "worthy of the American people," while President Joe Biden labeled it a "compromise."
The 99-page text was released Sunday night and the agreement will be subject to scrutiny and debate in the coming days.
Some proposals on both sides were rejected, such as the elimination of certain tax loopholes requested by Democrats, and the repeal of clean energy tax credits sought by Republicans.
The Fiscal Responsibility Act of 2023, as it is officially titled, raises the debt ceiling to $31.4 trillion for a two-year period, ensuring that Biden won't have to broach the subject again before the presidential election in November 2024.
In exchange, non-defense discretionary spending would be “roughly flat” at current year levels in 2024, “when factoring in agreed-upon appropriations adjustments,” according to White House officials.
They estimated that total non-defense discretionary spending excluding benefits for veterans would total $637 billion for the 2024 fiscal year, down marginally from $638 billion the year before. That total would also increase by 1% in 2025.
The U.S. government will spend $936 billion on non-defense discretionary spending in 2023.
The deal sets six years of appropriations "targets," but unlike the first two years of caps, the targeted spending levels aren't enforceable. The agreement also includes funding increases to improve medical care for military veterans.
The agreement also limits government spending, which will delight some Republicans, but it falls short of the significant cutbacks that conservatives demanded and that progressive Democrats would have objected to.
In another concession to Republicans, the deal rolls back $10 billion of $80 billion in IRS funding approved in Biden's Inflation Reduction Act last year which was designed to crack down on wealthy Americans and corporations that evade taxes.
The deal would also take back some funding that Congress allocated for the coronavirus pandemic but did not spend. A statement from McCarthy's office said the deal would rescind "billions in unspent Covid funds" but offered no further specificity.
A memo circulated by House Republican leadership said the rollbacks include slashing $400 million from the Centre for Disease Control and Prevention's "Global Health Fund."
No changes will be made to Medicaid, the government's health insurance program for the most disadvantaged Americans.
The deal establishes work requirements for people who are receiving federal food assistance or on family welfare, in a victory for the Republican side. It is set to raise the age at which childless adults will be required to work to receive food stamps from 49 to 54.
The White House succeeded in keeping intact the Inflation Reduction Act − the president's signature climate and prescription drug bill − and the president's program to forgive student loan debt for millions of Americans.
The biggest modification to student loan policy would be to force borrowers who have been given suspensions of their regular payments due to the pandemic to start repaying the government. The modification would effectively put into law Biden's proposal to resume payments following the Supreme Court's consideration of his student loan forgiveness program.
Republicans were successful in securing a pay-as-you-go budgeting system, or "Paygo," which stipulates that any new government agency activities influencing revenues and spending should be offset by savings.
However, the measure would allow Biden's budget director to grant exceptions to that rule and it would also restrict judicial review of the judgments.
McCarthy and Biden concurred on new regulations to make it simpler for energy projects, particularly those using fossil fuels, to obtain permit approval. Permitting reform was one of the pillars of any agreement, according to McCarthy and his Republicans, and the White House backed the proposal early this month.
Image source: Reuters
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