6 min read

Breaking down the debt ceiling deal

The key details you should know from the Biden-McCarthy deal to raise the debt ceiling and cut spending.
Breaking down the debt ceiling deal
President Biden laughs with Senate Majority Leader Chuck Schumer as House Speaker Kevin McCarthy looks on. (White House)

Good morning! It’s Tuesday, May 30, 2023. The 2024 elections are 525 days away.

Welcome back from Memorial Day weekend. Hopefully you got some time to step away from the news over the long weekend, but in case you missed it: a debt ceiling deal has been inked. Later in the week, I’ll be offering some broader analysis of the deal and how each party is walking away from it.

But first: I don’t like to write anything about a complex legislative package like this until I first tell you what’s in it. Some of these provisions can be confusing, but they’re also important — so I’ve tried to condense the deal’s main points into an explanation that will hopefully be digestible for all readers, as is always my goal. If you have any lingering questions, feel free to reply to this email and ask them!

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What’s in the Biden-McCarthy debt ceiling agreement?

After weeks of high-stakes negotiating, President Joe Biden and House Speaker Kevin McCarthy unveiled a deal on Sunday night — the Fiscal Responsibility Act — to raise the debt ceiling and cut federal spending.

In case you didn’t have a chance to read all 99 pages over Memorial Day weekend, here’s an overview of what’s in the final agreement:

Suspending the debt ceiling until January 1, 2025. This is the big-ticket item, and it will push away the debt limit until after the 2024 elections. (Instead of raising the ceiling by a specific dollar amount, the bill simply eliminates the limit until 2025.) In their original offer, House Republicans had proposed raising the debt ceiling by $1.5 trillion or through March 2024, whichever came first. The longer extension is a victory for the White House; it means President Biden will not have to worry about the debt limit for the rest of his first term.

Federal spending caps for the next two years. In return for suspending the debt ceiling, House Republicans succeeded in setting limits on federal spending in the 2024 and 2025 fiscal years. Although the GOP had pushed for substantial cuts, non-defense domestic spending will stay roughly flat in FY 2024 — falling by about $1 billion, after some accounting maneuvers — and then increase by 1% in FY 2025. Defense spending, meanwhile, will increase by about 3% next year, roughly in line with President Biden’s proposed budget.

New work requirements for social safety net programs. The major changes here are to the Supplemental Nutrition Assistance Program (SNAP), better known as food stamps. Currently, most SNAP recipients between the ages of 18 and 49 are required to work at least 20 hours a week to receive assistance. This bill would apply those requirements to recipients up to age 54 as well. The legislation would also increase SNAP access for veterans and the homeless; according to the White House, this means the program will be expanded overall. The percentage of recipients of another welfare program — Temporary Assistance for Needy Families (TANF) — that must be employed in each state would also be increased. All of these changes sunset in 2030.

Changes to the federal energy permitting process. For years, members of both parties have been pushing for an update to the laborious process required for an energy project to be approved. While most permitting reform proposals were left on the cutting room floor — Biden and McCarthy agreed to revisit the topic with a broader bipartisan bill in the future — this deal would streamline the process by ensuring each project has a designated lead agency and setting a one-year deadline for environmental impact assessments and a two-year deadline for environmental impact statements. In addition, the deal would specifically speed approval of the Mountain Valley Pipeline, a natural gas project in West Virginia championed by the state’s Democratic senator, Joe Manchin.

Plus, a grab-bag of other GOP priorities to sweeten the deal: About 1/4 of the $80 billion in IRS funding Democrats secured last year will be rescinded ... Around $30 billion in previously appropriated Covid relief funds that has yet to be spent will be clawed back ... The freeze on student loan repayments will end in September (when the White House had been planning to end it anyway).

Now what happens?

Both parties are now furiously whipping support for the package — and facing opposition from their most extreme members. Progressive Democrats are upset with Biden for bending on work requirements; conservative Republicans are disappointed that McCarthy didn’t secure more stringent spending cuts.

There are three major hurdles left:

  1. The House Rules Committee. Almost nothing lands on the House floor without first receiving a rule from the all-important Rules Committee. During the House speakership balloting earlier this year, McCarthy agreed to give three of the GOP’s nine spots on the panel to members of the right-wing Freedom Caucus. At least one of the Freedom Caucus members would have to back the bill to ensure it will advance out of the Rules Committee. (If not, the panel’s four Democrats could also come to the rescue, although it is uncommon for minority party members to vote for a rule.) The Rules panel is set to meet at 3 p.m. ET today.
  2. The full House. If the package makes it out of the Rules Committee, it would then face a vote in the full House tomorrow. (McCarthy promised to give members 72 hours to read the bill before voting on it.) McCarthy is working hard to keep his right flank on board, but it is possible slightly more Democrats could end up supporting the deal than Republicans — an embarrassing outcome for the speaker, but one that would still push his deal with Biden toward the finish line.
  3. The Senate. If the deal survives in the House, it will likely pass the Senate as well. Like any bill, it will need 60 votes in the Senate to survive a filibuster, which would require at least 10 Republican supporters if all Democrats back the agreement. The main question here is timing: in the Senate, if all 100 senators cooperate, bills can move impressively fast. If even one senator objects, headaches start to emerge. Some Republican senators have already threatened to slow things down once the deal reaches this point.

Treasury Secretary Janet Yellen’s latest estimate is that the U.S. will run out of money to pay its bills on Monday, June 5, giving lawmakers six more days to speed this package through Congress and get it to Biden’s desk.

The Rundown

A drone attack targeted Moscow this morning, for the first time since Russia’s war against Ukraine began. According to the capital city’s government, the drones only caused “insignificant damage” to a handful of buildings; no injuries were reported. The Ukrainian government has yet to comment on the attack, although Russia has already pointed the finger in their direction. The attack came after days of continued Russian missile strikes against Kyiv.

Texas Attorney General Ken Paxton (R) was impeached on Saturday. The Republican-controlled state House voted 121-23 in favor of ousting the prominent conservative legal warrior over allegations of bribery and other misconduct. Paxton, who has led several lawsuits against the Biden administration, is now temporarily suspended from office until the state Senate votes on whether to permanently remove him.

In 2024 news: Florida Gov. Ron DeSantis will make his first visit to Iowa since joining the presidential field today ... Former New Jersey Gov. Chris Christie’s allies are forming a super PAC for him ahead of a “likely campaign kickoff in the next two weeks,” per the New York Times.

A jarring headline, also courtesy of the Times: “A.I. Poses ‘Risk of Extinction,’ Industry Leaders Warn”


President Biden will return to the White House from Delaware ... VP Harris will headline a Democratic fundraiser in New York City ... First Lady Biden will leave for Jordan.

The Senate will vote on confirmation of a district judge nominee.

The House will vote on six pieces of legislation:

  1. H.R. 835, the Fair Investment Opportunities for Professional Experts Act
  2. H.R. 2792, the Small Entity Update Act
  3. H.R. 2795, the Enhancing Multi-Class Share Disclosures Act
  4. H.R. 2796, the Promoting Opportunities for Non-Traditional Capital Formation Act
  5. H.R. 2797, the Equal Opportunity for All Investors Act
  6. H. Res. 382, a resolution “condemning the rise of antisemitism and calling on elected officials to identify and educate others on the contributions of the Jewish American community”

Before I go...

In honor of Memorial Day, here’s one story worth reading: “Black people may have started Memorial day. Whites erased it from history.”

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