President Biden and Speaker Kevin McCarthy reached an agreement on Saturday raise the debt ceiling while imposing new restrictions on federal spending. If passed by Congress, it would end the partisan deadlock and avert the possibility of a potentially devastating national default.
The deal will not only resolve a high-octane dispute over debt and spending issues that has dogged Washington for weeks, but also enact important changes to environmental permits, work requirements for the Internal Revenue Service’s tax enforcement and social safety net programs.
The deal, described as an agreement in principle cemented in a phone call between Mr Biden at Camp David and Mr McCarthy in Washington, still needs to be translated into the official legislative language before it can be considered. official. Details only began to emerge on Saturday night, and many questions remain open.
But here are some takeaways based on the initially available information.
The debt ceiling will be increased until 2025, after the next election.
The federal government hit the $31.4 trillion debt ceiling under the law in January, but the Treasury Department used a variety of accounting tricks to avoid the breach. Treasury Secretary Janet L. Yellen said on Friday that her department those measures will expire by June 5at that point the government will not be able to meet its obligations.
The deal signed by Mr Biden and Mr McCarthy will raise the debt ceiling for two years to get past the 2024 election, so neither side will have to deal with the issue again during the current term. Republicans had originally proposed a year. Both sides are hoping to win the 2024 election and have a stronger political position when the cap is reached next time.
Domestic spending will be limited, but not as much as Republicans would like.
McCarthy’s Republicans insist that any increase in the debt ceiling is subject to spending cuts, so the deal he struck with Mr Biden would limit certain programs’ drag. two years in which the debt ceiling will be raised. Republicans initially sought a 10-year timeframe for the spending cap but agreed to a shorter deadline.
The agreement keeps non-defense spending in 2024 at the same level as in 2023 and increases 1% in 2025, in part by redirecting funding from other programs. Among other things, the deal will cut about $10 billion of the $80 billion Biden previously secured to help the IRS track down wealthy tax cheaters and will use that money to maintain domestic programs that should have been cut.
Some of the billions of dollars remaining from the Covid-19 pandemic relief package transferred shortly after Mr. Biden took office will be withdrawn. A New York Times analysis found the limits would reduce overall federal spending by about $650 billion over a decade — a fraction of the cuts Republicans initially sought — if spending increases at the expected rate of inflation after lifting the cap for two years.
Defense, social security, health care and veterans programs will be protected.
The deal would protect the military and benefits like Social Security and Medicare from cutting spending on other parts of the government. It will also fully fund medical care for veterans, including extended services for those exposed to toxic burn pits.
This deal will effectively preserve the substantial gains the Biden administration has won over the past two years in areas such as Title I education funding for low-income students, Development Block Grants, and more. and Child Care, cancer research and other presidential priorities. It won’t affect Mr. Biden’s efforts to write off $400 billion worth of student loan debt over the coming decades, though that faces a challenge. challenge at the Supreme Court. But it would not include the tax increases on the wealthy and corporations that Mr. Biden sought in his original budget proposal.
Some government aid recipients will face new job requirements.
New work requirements will apply to some recipients of government aid, including food stamps and the Temporary Assistance for Needy Families program. Among other things, the agreement will limit how long childless people under 54 can get food stamps, though those limits will expire in 2030 unless extended by Congress. The package will also expand access to food stamps for veterans and the homeless.
Large energy projects will be granted a streamlined review process.
Environmental permits for major energy projects will be streamlined. A single governing body will be responsible for developing a single review document over a publicly available timeline. The Agreement will enact these changes without reducing the overall scope of the existing review process, cutting the statute of limitations, imposing barriers to standing, or removing the ban or judicial measures. other law.