House Speaker Kevin McCarthy (R-CA) and President Joe Biden seem to have reached a tentative deal on the debt ceiling on Saturday, with both sides claiming victory. This deal extends the $31.4 trillion debt ceiling until Jan. 1, 2025, when it becomes the problem of a new Congress and president.
Republicans scored a small win with defense military spending caps of $886 billion, with nonmilitary discretionary spending capped at $704 billion. While McCarthy heralds this as a “historic” win, the White House says the victory is small. After adjustments for veteran funding, nondefense spending will remain nearly the same. A White House official explains, “It’s flat. It’s a difference of about $1 billion.”
Republicans will also recoup the unspent COVID funds, about $28 billion. IRS funding was cut by $1.4 billion, with an additional $20 billion in IRS funds, promised through the Inflation Reduction Act, to non-defense funding.
Republicans scored a victory by adding work requirements to recipients of funds through Supplemental Nutrition Assistance Program and Temporary Assistance for Needy Families. Apart from the homeless and veterans, most recipients up to age 55 will have new work requirements to receive assistance, upping the requirement by 5 years from its current age of 50.
Another Republican score involves increases in veteran funding by $15 billion for the PACT Act’s toxic exposure fund. The deal is also set to greenlight a natural gas pipeline in West Virginia.
And for student loan borrowers skating through the past few years without repaying their financial obligations, federal student loan payments are set to resume.
Democrats left the table with few victories, although the spin machine states otherwise. The White House is taking credit for protecting Medicare and Social Security, even though Republicans had no desire to go after these programs. The biggest Democrat win is that funding cuts were smaller than the GOP had desired.
Many parts of the onerous “Inflation Reduction Act” were left untouched, including the alleged climate and energy provisions included in the bill. But Republicans did ensure that measures were introduced in the National Environmental Policy Act to designate a single agency to develop a streamlined review document and schedule agencies to hold environmental reviews for simple projects within a year, with complex projects to be reviewed in two years. These measures improve the predictability, certainty, and coordination within federal agencies.
The deal did not touch Biden’s executive action on student loan debt forgiveness, but with that legal battle resting in the Supreme Court’s hands, this victory may only be temporary.
But Biden is taking his bows on the public stage, announcing late Saturday, “The agreement represents a compromise, which means not everyone gets what they want. That’s the responsibility of governing.” He goes on to explain, “And, this agreement is good news for the American people because it prevents what could have been a catastrophic default and would have led to an economic recession, retirement accounts devastated, and millions of jobs lost.”
For Biden, who recently announced his plans to run for a second term in office, there was never any real choice. Despite his earlier position that he would not negotiate on the debt ceiling, it was always understood that letting America default on its debt would render Biden even less viable for reelection than he already is.
Accepting the deal is a smart move for Biden. With America’s short attention span, Biden’s compromises will be forgotten by the time the 2024 votes are cast, and while he did compromise, he was able to block Republicans from larger spending caps and cuts and still look like a hero.
Now that the deal has been struck, both parties need to get their members to support it on the final vote on Wednesday, May 31, 2023. This is not going to be an easy sell, with members on both sides claiming the bill didn’t go far enough. The outcome of the deal rests in Congress’ ability to put the needs of the nation in front of their own agendas, both liberal and conservative alike.
For Americans already struggling to pay bills, a default will be financially catastrophic. Congress has shown again and again that the financial needs of individual Americans don’t matter, however, and only time will tell if idealism trumps the needs of the American people.