by Brandon Reiter
Today, the U.S. House of Representatives will vote on a bill would suspend the government’s debt ceiling of $31.4 trillion. This vote is crucial to avoid a potential default, which could occur early next week if no action is taken by Congress.
If passed, the legislation would suspend the U.S. debt limit until January 1, 2025, allowing Biden and lawmakers to postpone dealing with this politically sensitive issue until after the November 2024 presidential election. The bill also includes provisions to cap certain government spending over the next two years, expedite the permitting process for specific energy projects, reclaim unused COVID-19 funds, and expand work requirements for food aid programs.
The Treasury Department has warned that without Congress raising the limit, it will be unable to cover all of the government’s obligations by Monday.
Late on Tuesday, the non-partisan Congressional Budget Office estimated that the legislation would lead to $1.5 trillion in savings over the next ten years.
If the bill successfully passes the House, it will proceed to the Senate, where debate and voting may extend into the weekend, if any of the 100 senators attempt to impede its progress.
The legislation contains the following key provisions:
Debt ceiling extension until 2025
The primary aspect of the deal is the suspension of the current $31.4 trillion debt ceiling until January 1, 2025. During this period, the Treasury Department would employ “extraordinary measures” to cover expenses, which typically last for several months. This effectively resolves the issue until the 2024 election, shifting the responsibility to address it to the next president and Congress.
Spending Levels
The agreement includes spending caps for the next two years to facilitate the appropriations process. For the fiscal year 2024, military spending would be limited to $886 billion, while nonmilitary discretionary spending would be capped at $704 billion. These figures would increase to approximately $895 billion and $711 billion, respectively, for the fiscal year 2025.
What Did Republicans Get?
The bill would rescind approximately $28 billion in unspent Covid relief funds. It would also eliminate $1.4 billion in funding for the IRS and redirect $20 billion of the $80 billion allocated to the agency under the Inflation Reduction Act towards non-defense purposes. Additionally, the legislation would reinstate federal student loan payments after the extended pause that began during the pandemic. Work requirements for Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF) benefits would be imposed on individuals up to 55 years old, compared to the current threshold of 50, with exceptions for veterans and homeless individuals.
What Did Democrats Get?
The White House emphasizes that the legislation is a budget deal, not a payment made in exchange for a debt ceiling extension. The bill makes “no changes to Medicaid” and leaves Social Security and Medicare untouched. The White House states that the legislation fully preserves the climate and clean energy provisions of the Inflation Reduction Act from last year and does not interfere with President Biden’s executive action on student debt forgiveness.
Additionally, the bill would prevent a catastrophic default for the remainder of Biden’s first term. The White House official views removing the threat of default until 2025 as a significant achievement that positively impacts the economy.
