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After several weeks of tense negotiations, President Joe Biden and House Republicans have reached an agreement in principle to raise the debt ceiling and cap spending. However, the drama is far from over, as lawmakers on each side of the aisle must convince enough of their members to vote for the agreement, which contains provisions that not all of them support. Additionally, not all the details of the agreement are available yet. The bill text is scheduled to be released on Sunday.
Debt Ceiling Increase and Non-Defense Spending Caps
According to a fact sheet circulated by House Republicans and a source familiar with the negotiations, the agreement would increase the debt limit for two years. Non-defense spending would remain relatively flat in fiscal 2024 and increase by 1% in fiscal 2025, after certain unspecified adjustments to appropriations were made. After fiscal 2025, there would be appropriations targets, but they would not be enforceable.
The House GOP fact sheet says that non-defense discretionary spending would be rolled back to fiscal 2022 levels, and topline federal spending would be limited to 1% annual growth for the next six years. The debt ceiling bill that House Republicans passed last month would return discretionary spending to fiscal 2022 levels and then limit the growth in spending to 1% for a decade. Nevertheless, defense spending would not be affected.
Support for Veterans and Work Requirements
The deal would maintain full funding for veterans’ health care and would increase support for the PACT Act’s toxic exposure fund by almost $15 billion for fiscal year 2024. Concerning work requirements for certain adults receiving food stamps, the agreement calls for temporarily broadening the work requirements. The deal would raise the age to 54, according to the source, although the GOP fact sheet says it would apply to those up to age 55. The agreement would also make changes to the current work requirements in the Temporary Assistance for Needy Families program. Work requirements would not be introduced in Medicaid, which House Republicans had called for in their debt ceiling bill.
Claw Back of Unspent COVID-19 Relief Funds and IRS Funding Cut
The deal would rescind unobligated funds from the Covid-19 relief packages that Congress passed to respond to the pandemic. As for the Internal Revenue Service funding, the agreement would cancel the total fiscal year 2023 staffing funding request that the House GOP says would go for new IRS agents, according to the fact sheet. House Republicans have been determined to cancel the roughly $80 billion in IRS funding contained in the Inflation Reduction Act that Democrats passed last year.
Student Loan Repayments and Debt Relief
The deal would require borrowers to pay back their student loans again, although when repayments would begin is not specified. They have been paused since the Covid-19 pandemic began. However, the agreement would maintain Biden’s plan to provide up to $20,000 in debt relief for qualifying borrowers, according to a source. The measure is currently before the Supreme Court, which is expected to rule on it in the coming weeks.
In summary, after several weeks of negotiations, President Joe Biden and House Republicans have reached an agreement in principle to raise the debt ceiling and cap spending. The agreement contains several provisions with both parties not supporting, and lawmakers must convince enough members to vote for the agreement. Although not all the details of the agreement are available yet, a fact sheet provides an overview. The deal would, among other parts, increase the debt limit for two years, maintain full funding for veterans’ health care, temporarily broaden work requirements for certain adults receiving food stamps, claw back unspent Covid-19 relief funds, and cut the total fiscal year 2023 staffing funding request for new IRS agents, among other measures.
