First takeaways from the spending and debt ceiling deal
President Biden and Chairman Kevin McCarthy reached an agreement Saturday to raise the debt ceiling while imposing new restrictions on federal spending. If passed by Congress, it will end a partisan deadlock and prevent a potentially devastating national default.
The deal will not only resolve the raging dispute over debt and spending issues that has gripped Washington for weeks, but will also make significant changes to environmental permits, work requirements for social safety net programs and Internal Revenue Service tax enforcement.
The accord, described as an agreement in principle that came about during a phone call between Mr Biden at Camp David and Mr McCarthy in Washington, has yet to be translated into formal legislative language before it is considered final. Details only began to trickle out on Saturday evening, and many questions remained unanswered.
But here are some takeaways based on the information initially available.
The debt ceiling would be raised until 2025, after the next election.
The federal government hit its $31.4 trillion statutory debt ceiling in January, but the Treasury Department has used several accounting tricks to avoid breaching it. Treasury Secretary Janet L. Yellen said on Friday that her department would run out of those measures by June 5, after which the government would be unable to meet its obligations.
The deal struck by Mr Biden and Mr McCarthy would raise the debt ceiling for two years to make it past the 2024 election, so neither would need to tackle the issue again in the current term. Republicans had originally proposed a year. Both parties are counting on winning the 2024 elections and taking a stronger political position when the ceiling is reached next time.
Domestic spending would be capped, but not as much as Republicans wanted.
Mr. McCarthy’s Republicans insisted that any increase in the debt ceiling would be contingent on spending cuts, so the deal he reached with Mr. Biden would limit certain programs to the same two years for which the debt ceiling would be raised. Republicans had originally sought a 10-year time frame for spending limits, but agreed to the shorter horizon.
The deal keeps nondefense spending in 2024 at about 2023 levels and increases it by 1 percent in 2025, in part by redirecting funding from other programs. Among other things, the deal would save about $10 billion from the $80 billion Mr Biden previously obtained to help the IRS crack down on wealthy tax evaders, and use that money to preserve domestic programs that would otherwise have been cut.
Some of the billions of dollars left over from the Covid-19 pandemic relief package passed shortly after Biden took office would be recovered. A New York Times analysis suggests that the caps will cut federal spending overall by about $650 billion in a decade — a fraction of the cuts Republicans originally sought — if spending grows at the expected rate of inflation after the caps lift in two years.
Defense, Social Security, health care and veterans programs would be shielded.
The agreement would protect the military and entitlements such as Social Security and Medicare from cuts imposed on other parts of the government. It would also fully fund veterans’ medical care, including expanded services for those exposed to toxic burns.
The deal would preserve the substantial increases the Biden administration has made over the past two years in areas such as Title I education funding for low-income students, block grants for childcare and development, cancer research and other presidential priorities. It would leave intact Mr Biden’s efforts to cancel $400 billion in student loan debt over the next several decades, though that faces a challenge in the Supreme Court. But it would include none of the tax increases for the wealthy and businesses that Mr Biden sought in his original budget proposal.
Some government aid recipients would face new work requirements.
New job requirements would be imposed on some recipients of government assistance, including food stamps and the Temporary Assistance for Needy Families program. Among other things, the agreement would limit how long people under age 54 without children could receive food stamps, though those limits would expire in 2030 unless extended by Congress. The package would also expand access to food stamps for veterans and the homeless.
Large energy projects would have a streamlined assessment process.
Environmental permits for large energy projects would be streamlined. A single lead agency would be tasked with developing a single assessment document on a public timeline. The agreement would implement these changes without limiting the overall scope of the current review process, shortening the statute of limitations, creating impediments or removing injunctions or other remedies.