Kevin McCarthy agreement in principle With President Biden suspending the country’s borrowing limit, new and important details were revealed about the deal, which House lawmakers are expected to vote on this week.
The centerpiece of the agreement remains the two-year suspension debt ceiling, which limits the total amount the government is allowed to borrow. Suspending that cap, which is now set at $31.4 trillion, would allow the government to borrow money and pay its bills on time — as long as Congress passes the agreement before June 5, when Treasury has said The United States will run out of cash.
In exchange for suspending the limit, Republicans demanded a number of policy concessions from Mr. Biden. Chief among them are limits on the growth of federal discretionary spending over the next two years. Mr. Biden also agreed to some new work requirements for some recipients of food stamps and the Temporary Assistance for Needy Families program.
The two sides agreed on modest efforts to speed up permitting for some energy projects – and, in a surprise move, a fast track to construction new natural gas pipeline From West Virginia to Virginia that has been championed by Republican lawmakers and a prominent centrist Democrat.
Here’s what the law would do:
temporarily suspends the credit limit
The deal suspends the country’s $31.4 trillion borrowing limit until January 2025. Suspending a loan limit for a certain period is different from setting it at a new fixed level. This essentially gives the Treasury Department the latitude to borrow the money it needs to pay the nation’s bills during that time period, as well as the months after the limit expires, as the department performs accounting maneuvers to keep up with the payments. .
This is separate from the bill passed by House Republicans, which extended the cap to $1.5 trillion or until March 2024, whichever comes first.
Under the new law, the debt ceiling will be set at whatever level it has reached when the suspension ends. For political reasons, Republicans prefer to suspend the debt limit rather than raise it, as it allows them to say that they did not technically greenlight the higher debt limit.
The suspension will set in motion the next possible battle over the country’s debt burden due by 2025, before the next presidential election.
caps and spending cuts
The bill cuts so-called non-defense discretionary funds, which include domestic law enforcement, forest management, scientific research and more, for the 2024 fiscal year. It would limit all discretionary spending to 1 percent growth in 2025, effectively cutting the budget as it is projected to be slower than the rate of inflation.
Legislative texts and White House officials tell different stories about how big those cuts really are.
Some parts are clear. The proposed military spending budget would rise to $886 billion next year, in line with what Mr. Biden requested in his 2024 budget proposal, and to $895 billion in 2025. Veterans health care spending, including newly approved measures to assist veterans toxic burn pitsIt would also be funded at the level of Mr. Biden’s proposed budget.
The legislative text suggests that non-defensive discretionary spending outside of veterans’ programs will be reduced in 2024 to last year’s spending level. But White House officials say a series of side deals with Republicans, including one related to funding for the Internal Revenue Service, will allow actual funding to be closer to this year’s level.
Although Republicans initially called for a 10-year spending cap, this law includes just a 2-year cap and then switches to spending goals that are not tied to the law — essentially, just suggestions.
The White House estimates that the agreement will save $1 trillion over the course of a decade from reduced discretionary spending.
A New York Times analysis The proposal — using White House estimates of actual funding levels in the agreement, not just the levels in the legislative text — suggests it would cut federal spending next year by about $55 billion compared to Congressional Budget Office forecasts. and another $81 billion in 2025. If spending is on the rise again as the Budget Office forecasts, the total savings over a decade would be around $860 billion.
Claws Withdraws IRS Funding
The legislation takes aim at one of President Biden’s biggest priorities — the IRS going after tax cheats and making sure companies and wealthy individuals are paying what they’re owed.
Democrats included $80 billion in last year’s Inflation Reduction Act to help the IRS hire thousands of employees and update its antiquated technology. The debt ceiling agreement would immediately cancel $1.38 billion from the IRS and reappropriate $20 billion from the $80 billion ultimately obtained through the Inflation Reduction Act.
Administration officials said Sunday that they have agreed to reprogram an additional $10 billion of IRS money in each of the 2024 and 2025 fiscal years to maintain funding for some non-defense discretionary programs.
The clawback would eat into the tax collection agency’s efforts to crack down on wealthy tax cheats. It’s also a political victory for Republicans, who are incensed by the prospect of a stronger IRS, and have approved the legislation in the House. cancel the entire $80 billion,
Still, because of leeway the IRS has about how to spend the money, the clawback may not affect the agency’s plans for the next few years. Officials said in a background call with reporters that they did not expect any disruption from the loss of that money in the short term.
This is likely because the 2022 law appropriated all $80 billion at once, but the agency planned to spend it over eight years. Officials suggested that the IRS could simply carry forward some of the earmarked money to later years, then come back to Congress later to ask for more money.
New Work Requirements for Government Benefits
The legislation would impose new work requirements on older Americans who receive food stamps through the Supplemental Nutrition Assistance Program and those who receive assistance from the Temporary Assistance for Needy Families program.
The bill imposes new work requirements for food stamps on adults ages 50 to 54 who do not have children living in the household. Under current law, those work requirements only apply to people ages 18 to 49. Starting with fiscal year 2023, the age limit will be phased in over three years. And it includes a technical change to the TANF funding formula that let some states divert dollars from the program.
The bill would also exempt veterans, the homeless and people in foster care from food-stamp work requirements — a move White House officials say would meet new requirements for the program, and increase the number of Americans eligible for nutrition assistance. will allow approximately the same number to proceed. Ahead.
Still, the inclusion of the new work requirements has drawn an outcry from advocates of the safety net aid, who say it penalizes vulnerable adults who need food.
“The agreement puts hundreds of thousands of older adults aged 50-54 at risk of losing food assistance, including a large number of women,” said Sharon Parrott, president of the Center on Budget and Policy Priorities. said in a statement,
allow correction
The agreement includes new measures to approve energy projects more quickly by creating a lead agency to oversee reviews and require that they be completed in one to two years.
The legislation also marks a victory for West Virginia Senator Joe Manchin III, a Democratic centrist, by approving permitting requests for the Mountain Valley Pipeline, a natural gas project in West Virginia. The $6.6 billion project aims to carry gas about 300 miles from Marcellus Shale fields in West Virginia across about 1,000 streams and wetlands before ending in Virginia.
Environmentalists, civil rights activists and several Democratic state lawmakers have opposed the project for years.
The bill declared that “the timely completion of the construction and operation of the Mountain Valley Pipeline is essential in the national interest.”
Mr Manchin said on Twitter that he was proud to have the bipartisan support needed to “get us across the finish line”. Republican members of the West Virginia delegation also claimed credit.
student loans and unused covid funds
The bill officially ends Mr. Biden’s moratorium on student loan repayments by the end of August and restricts his ability to reinstate such a moratorium.
It does not move forward with a measure that House Republicans wanted to include, which would block Mr. Biden’s policy to forgive between $10,000 and $20,000 in student loan debt of most borrowers. That initiative, which the Biden administration launched last year, is currently under review by the Supreme Court and could eventually be blocked.
The bill also withdraws nearly $30 billion of unspent money from a previous Covid relief bill signed by Mr Biden, which was a top Republican priority entering the negotiations. Some of that money would be redeployed to boost non-defensive discretionary spending.
prevent government shutdown
The agreement only sets norms for spending for the next two years. Congress must fill them by passing a raft of spending bills later this year. Big fights occur over the details of those bills, raising the possibility that lawmakers won’t agree on spending plans in time and the government will shut down.
The compromise between Mr. Biden and Mr. McCarthy seeks to sway Congress to pass all of their spending bills and avoid a shutdown by threatening to slash spending critical for both sides. The agreement tightens its spending limits if lawmakers haven’t approved all 12 regular funding bills by the end of the year. Nondefense discretionary spending would be set at one percent below the current year’s level, and it is possible that the IRS will not reuse the $10 billion in funding for next year for other programs.
The same levels would apply to defense and veterans spending – which would effectively be a significant cut compared to the agreed cap for those programs. Democrats see rising military cuts as a particularly strong incentive for Republicans to sign an agreement to pass appropriations bills by the end of the year.
Here’s What’s in the Debt Limit Deal – Guide Post US
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