President Biden and House Speaker Kevin McCarthy (R., Calif.) reached an agreement to raise the debt ceiling, and the bill’s language was disclosed late Sunday. The agreement, reached after several days of negotiations, extended the debt cap to January 2025, past the next presidential election.
The Congressional Budget Office estimates that the agreement will lower deficits by around $1.5 trillion over a decade, relative to its baseline prediction.
Spending
After minor appropriations tweaks, the agreement keeps nonmilitary expenditure essentially unchanged for the fiscal year 2024 beginning this year. The agreement caps budget growth at 1% for the fiscal year 2025. Republicans in the House described the 2023 expenditure level as a decrease from fiscal 2022 levels.
The agreement also involves a 1% drop in federal spending if all 12 appropriations bills are not completed by the end of the year.
According to a summary of the agreement and talking points distributed to Democratic members, military spending in fiscal 2024 would be about at the level of Biden’s fiscal 2024 budget request, a 3% rise to $886 billion. Veterans’ programs will receive $121 billion. The agreement called for $637 billion in nondefense spending, which the White House described as roughly flat with current 2023 levels after appropriations changes.
According to the CBO, spending limitations account for nearly $1.3 trillion of the bill’s total deficit impact.
The IRS Provides Funding
The agreement would save the Internal Revenue Service up to $21.4 billion in funding for a decade-long endeavor to improve tax enforcement and upgrade its systems. Last year, Congress allocated $80 billion to these schemes. About $1.4 billion of that money would be returned to the agency immediately, with the remainder to be used to prevent cuts to other government programs in 2024 and 2025. The IRS had intended to spend the money over many years, and White House officials claimed the adjustments would have no immediate impact on the tax agency’s plans.
According to the CBO, eliminating IRS financing will lower tax income by around $2.3 billion over a decade.
Covid-19 Assistance
The agreement recoups around $27 billion in unspent funds appropriated by Congress to combat the pandemic.
Workplace Requirements
The White House agreed to a key GOP demand: strengthening job requirements for federal aid, chiefly by temporarily raising the age at which people must work to obtain food assistance under the Supplemental Nutrition Assistance Program, or SNAP.
The agreement would primarily require able-bodied, low-income persons without dependents between the ages of 18 and 54 to work in order to receive food assistance, an increase from the existing top age of 49. Currently, under regulations that will be reinstated in all states by July, these adults can only get benefits for three months in a three-year period unless they are working or participating in a work program.
The agreement reduces job requirements for veterans, homeless individuals, and young people leaving foster care in an effort to make the reform more appealing to Democrats. Both the additional exclusions and the increased age restriction would expire in October 2030.
The combination of phased-in additional work requirements and new exemptions for veterans, the homeless, and adolescents exiting foster care is likely to raise federal spending by $2.1 billion over ten years, according to a CBO projection issued Tuesday night. CBO estimates that once all of the adjustments are implemented, approximately 78,000 persons will obtain benefits in an average month.
The agreement also makes certain technical changes to how governments might decide whether to grant individuals exemptions from the existing employment requirements for food aid. States can currently elect to waive work requirements for up to 12% of recipients, which would be reduced to 8% under the deal.
The Agriculture Department, which oversees the food-aid program, will also be obliged to post state applications for exemptions, which are used to exclude a region, such as a county or state, from labor requirements.
The agreement will also change the methodology used by states to compute financial assistance for low-income families under the Temporary Assistance for Needy Families program. Negotiators decided against requiring Medicaid recipients to work.
Energy Project Approvals, Including the Mountain Valley Pipeline
The bill mandates a two-year timeline for the most complex environmental studies required for large-scale energy and infrastructure projects, and it provides project developers the ability to sue if the deadline is not met. Republicans have made expediting reviews, which presently take an average of 4.5 years, a primary objective.
The agreement also calls for a single federal agency to oversee an environmental study for a project, as well as responsibility for the review’s schedule. Currently, several agencies frequently do their own, individual environmental assessments, which prolongs the review process.
Both parties have previously voiced support for this change. It is similar to a provision in the 2021 infrastructure spending bill that assigned environmental reviews for transportation projects to a single federal agency.
The bill also expedites the remaining permits for the Mountain Valley Pipeline, a 303-mile natural-gas pipeline that runs across West Virginia and Virginia. West Virginia Senators Joe Manchin, a Democrat, and Shelley Moore Capito, a Republican, have sought to expedite the pipeline’s completion.
