U.S. President Joe Biden delivers remarks on the bipartisan budget agreement within the Roosevelt Room of the White House on May 28, 2023.
Yuri Gripas | Bloomberg | Getty Images
President Joe Biden and Republican House Speaker Kevin McCarthy on Sunday signed off on an agreement to temporarily suspend the debt ceiling and cap some federal spending in an effort to prevent a U.S. debt default.
The deal, written into legislative text that they hope might be passed by the House of Representatives and Senate in the approaching days, was formally posted on an official congressional website.
A cap on discretionary spending
The deal would suspend the $31.4 trillion debt ceiling until Jan. 1, 2025, allowing the U.S. government to pay its bills.
In exchange, non-defense discretionary spending can be “roughly flat” at current 12 months levels in 2024, “when factoring in agreed upon appropriations adjustments,” in keeping with White House officials.
They estimated that total non-defense discretionary spending excluding advantages for veterans would total $637 billion for the 2024 fiscal 12 months, down marginally from $638 billion the 12 months before. That total would also increase by 1% in 2025.
A breather for the 2024 election
The debt limit extension lasts past 2024, meaning Congress wouldn’t need to deal with the deeply polarizing issue again until after the November 2024 presidential election.
Still, tough conversations about how one can allocate money under the brand new spending caps might want to happen in Congress this 12 months.
Increased defense spending
The deal would boost total defense spending to $886 billion, in keeping with Biden’s 2024 budget spending proposal.
That’s a couple of 3% increase from the $858 billion allocated in the present budget for the Pentagon and other defense-related programs in other agencies.
Moving special IRS funding
Biden and Democrats secured $80 billion for a decade in recent funding to assist the Internal Revenue Service implement the tax code for wealthy Americans in last 12 months’s Inflation Reduction Act, a move the administration said would yield $200 billion in additional revenue over the following 10 years.
The IRS earmarked the cash for hiring hundreds of recent agents, and the additional tax revenue they generated was expected to offset a slew of climate-friendly tax credits.
The brand new laws and subsequent appropriations would shift $10 billion in each of calendar years 2024 and 2025 in funding away the Internal Revenue Service. But administration officials imagine the IRS could make do within the near term because it was funded over a 10-year period.
Covid Clawback
Biden and McCarthy agreed to claw back much of the unused Covid relief funds as a part of the budget deal. The estimated amount of unused funds is between $50 billion and $70 billion.
White House officials said some funds can be retained, including items related to vaccine funding, housing assistance and support for Native Americans.
Work requirements
Biden and McCarthy battled fiercely over imposing stricter work requirements on low-income Americans for being eligible for food and healthcare programs.
No changes were made to Medicaid within the deal, however the agreement would impose recent work requirements on some low-income individuals who receive food assistance under this system often called SNAP as much as age 54, as an alternative of as much as age 50.
Student loans
The brand new bill would require the Biden administration to follow through with a plan to finish the present pause on student loan repayments by late August.
‘Paygo’
Republicans secured a budgeting mechanism often called “Paygo,” which is brief for pay-as-you-go, that claims recent government agency actions affecting revenues and spending must be offset by savings.
However the law would give Biden’s budget director the chance to issue waivers to that requirement and it will also limit judicial review of the selections.
Energy permitting
Biden and McCarthy agreed to recent rules to make it easier for energy projects — including fossil-fuel based ones — to achieve permit approval. McCarthy and his Republicans had identified permitting reform as one in every of the pillars of any deal and the White House threw its support behind the plan earlier this month.
