No one is happy with the agreement reached late Saturday to raise the debt ceiling: House Speaker Kevin McCarthy failed to win the most destructive cuts sought by the right, and Democrats’ proposals aimed at increasing revenue has never been taken seriously. However, with the risk of a serious economic default less than a week away, Congress should pass the deal as quickly as possible.
Mr. McCarthy and President Biden have reached an agreement that will suspend the debt ceiling until January 1, 2025. Mr. Biden and the nation should be relieved by the outcome. He should also feel the urgency to ensure that such partisan deadlock is never repeated.
Mr. Biden has said he will not negotiate a debt ceiling, which limits federal borrowing after funds have been appropriated, and he has asked Congress to raise the ceiling without conditions. The House responded by passing a bill raising the ceiling for a year in exchange for strict cuts to non-defense spending. That bill would roll back many of the president’s outstanding achievements and end benefits for millions people who get their health insurance through Medicaid, as well as those who rely on food and cash assistance.
As the deadline for the nation’s first credit default draws ever closer – the Treasury Department now says it will run out of money on… June 5 – Mr. Biden set aside his previous position and began closed negotiations with Mr. McCarthy about those demands.
The final consent reflects this one-sided bargaining, with Mr. McCarthy refusing to really care about any of the Democrats’ proposals to boost revenue: No Trump tax cuts in 2017, which added $1.8 trillion to the deficit to 2029 for the interests of corporations and the wealthy, will be restored. Republicans reject eliminating the realized interest rate loophole, which benefits of hedge fund managers and private equity funds, and end fossil fuel tax subsidies that Mr. Biden proposed in his 2024 budget.
In fact, no revenue enhancement measures were included; the deal is all about cutting spending. Reducing the national debt is an important long-term goal. A much more responsible form of fiscal discipline is collecting taxes owed, making thoughtful spending cuts where appropriate, and reversing tax cuts that benefit only the rich.
The details of the deal, released on Sunday, suggest it is a stripped-down version of the Republican wish list. Spending on most domestic programs in fiscal year 2024 will be about the same as in 2023 and 1 percent increase by 2025. That’s actually a cut in both years, given the pace of inflation and the possibility of a recession hovering. (Medicare and Social Security will not be affected.)
Under the agreement, the Pentagon will be allowed to develop, as well as, programs for veterans. The two-year limit will come at the expense of many important investments in education, housing, infrastructure and disease prevention. Still, it’s a significant improvement over the drastic cuts proposed in Mr. McCarthy’s bill — 860 billion USD compare with 3.2 trillion USD over a decade – and roughly in line with what might be expected in regular budget negotiations with the House of Representatives.
That price may be inevitable given that Democrats lost in the boardroom last year and failed to raise or remove the debt ceiling during the lame duck session.
The White House should have insisted that military and domestic spending be kept at the same level, following a pattern established under the Obama administration. At least the military budget in this deal will be close to what Biden proposed in his 2024 budget. The deal also includes a useful mechanism that makes it harder for Republicans to spend less on domestic programs or more on the military when it comes time to write this year’s appropriations bills.
The most unfortunate aspect of the deal was the change in eligibility for nutritional assistance, commonly known as food stamps, and a cash benefit program called Temporary Assistance for Needy Families. In spite of Almost all studies show Given that the job requirements for these benefits are not the driving force behind productive employment, Republicans are willing to let the government default if they don’t get them. During the negotiations, Mr. Biden rejected strict new job requirements for Medicaid participants, but he agreed to changes in the other two programs.
Under the concession, 50- to 54-year-olds with no dependents will be limited to three months of food stamps every three years unless they meet new work requirements, according to the Center for Political Priorities. Books and Budgets. speak will affect hundreds of thousands of older people. State requirements for those receiving cash benefits from the TANF program will also be tightened. The only good news here is that, for the first time, the food stamps program will not be time-limited to homeless people, veterans, or young people in foster care, under an agreement that Mr. Biden won.
One of the Republican Party’s most pointless demands is to cut $80 billion in new funding to the Internal Revenue Service to hire investigators to reduce tax fraud. The IRS expansion will have reduce the budget deficit, according to the Congressional Budget Office, because it would bring in new tax revenue. Republicans refuse to reduce the deficit by any means other than spending cuts. Mr. Biden has agreed to reduce new IRS spending by about $21 billion over two years, though the money could be funneled into the general fund to reduce the impact of the new spending limit.
The blunt instrument of the debt ceiling allows for this stalemate and its concessions. With Republicans in control of the House, Democrats in Congress have abandoned the path of changing this for the moment. The president appeared to acknowledge that this month when he told reporters he would consider declaring the debt ceiling unconstitutional under the law. 14th Amendment Debt Clause and let the court decide whether he is right or not. “Once we get this, I’m thinking of looking – in a few months – to see if, what the courts will say about – it works,” he said. he say.
If Congress passes the deal, the threat of default will end in the next two years. At that point, Mr. Biden and his legal experts need to follow through on his interest in testing a constitutional solution and trying to prevent the debt crisis from returning in 2025 or later. .
