How to enforce a debt agreement: through ‘meat-axe’ cuts no one wants
Bipartisan legislation passed by the House on Wednesday to suspend the debt ceiling and impose spending caps contains a secretive but important provision aimed at forcing both sides to honor the deal struck by President Biden and Chairman Kevin McCarthy .
The 99-page measure would suspend the $31.4 trillion borrowing limit until January 2025. According to the Congressional Budget Office, it would cut federal spending by $1.5 trillion over a 10-year period, by dividing some of the funding that expected to rise next year and beyond to effectively freeze. limit spending to 1 percent growth in 2025.
But it also contained a number of side agreements that never appear in the text, but were crucial to forging the bipartisan compromise, allowing both sides to claim they got what they wanted out of it. To get Congress to stick to the agreement, the negotiators used a time-tested technique that legislators have used for decades to force deficit reduction efforts: the threat of automatic, blanket cuts if they not finish their work.
This is how it works.
A 1 percent discount unless bills are approved.
Congress is supposed to pass 12 individual spending bills each year to keep the government funded. But for decades, lawmakers, unable to agree on those measures, lumped them into one huge piece of legislation called an “omnibus” spending bill and pushed them through against the threat of a shutdown.
The debt limit agreement would mandate an automatic 1 percent cut on all spending — including on military and veterans programs, which were exempt from the limits in the compromise law — unless all dozens of bills are passed and signed by the end of the calendar. year. Mandatory spending on programs such as Medicare and Social Security would be exempt.
One wrinkle is that because the fiscal year that drives Congress’s spending cycle ends before the calendar year ends — on September 30 — Congress must still pass a short-term bill to fund the government from October to December to avoid a shutdown. prevent.
Republicans and Democrats both fear the cuts.
The measure is a version of a plan offered by Representative Thomas Massie, Republican of Kentucky, a key voice in getting the bill through the Rules Committee, who said he believed it would help the Democrat-controlled Senate avoid the specter of a shutdown used to force the House to swallow an inflated bill at the end of the year.
“You are threatened and ransomed with a closure,” Mr Massie said in an interview in late April describing the plan. “They’ll tell you, ‘If you don’t pass the Senate bill, there’s going to be a shutdown.’ “I think we need to take that influence away from anyone who would risk a shutdown to spend more. Take that off the table.”
Some Republicans, including defensive hawks, are outraged by the measure, arguing that it would subject the Pentagon to irresponsible budget cuts. Maine Senator Susan Collins, the top Republican on the Appropriations Committee and its Defense Subcommittee, called it a “damaging” provision that would leave a “threat hanging over the Department of Defense.”
“It would trigger an automatic, ruthless, arbitrary, blanket cut in our already inadequate defense budget and in domestic, discretionary non-defense funding,” Ms Collins said.
Democrats, too, have an important reason to avoid the cuts, as they have all along resisted cutting funding for federal programs.
Without issuing bills, large parts of the debt agreement will disappear.
Both sides risk losing victories gained through handshake deals during negotiations if Congress cannot pass its appropriations bills. Neither the White House nor House Republicans have published a full account of the agreements not in the bill, but some have become apparent.
The deals would allow Republicans to claim deep cuts in certain spending categories, while Democrats could ease the pain of those funding bill cuts.
An unwritten but agreed compromise would allow proprietors to reuse $10 billion a year from the IRS in 2024 and 2025 — a top priority for Republicans, who had opposed the additional enforcement funding championed by Mr Biden and Democrats .
Another side deal, sought by Democrats, that would evaporate if the spending bills weren’t written, labeled $23 billion a year in domestic spending outside of military funding as “emergency spending,” effectively exempting that money from the limits in the deal.
Jim Tankersly reporting contributed.