(CTN News) – The debt ceiling deal between President Joe Biden and House Speaker Kevin McCarthy would suspend the United States debt limit through 2025 to avoid a federal default while limiting government spending, but its details aren’t likely to appeal to hard-right Republicans or progressive Democrats.
In time to avert a global recession, the Democratic president and Republican speaker are working to win lawmakers over to their plan.
Congress will scrutinize and debate the legislation, which also changes work requirements for some recipients of government aid and streamlines environmental reviews for energy projects.
According to McCarthy, the House will vote on the legislation on Wednesday, giving the Senate time to consider it before June 5, when Treasury Secretary Janet Yellen warned the US could default on its debt obligations if lawmakers don’t act.
Conservatives are worried the compromise doesn’t cut future deficits enough, while Democrats are worried about work requirements in food stamp programs.
Here’s what’s in and out of the Debt Ceiling deal, released on Sunday:
Two-year debt limit suspension, spending limits
Spending on non-defense would stay about the same in 2024 and increase by 1% in 2025, and the debt limit would be suspended until January 2025.
It matches Biden’s proposed defense budget of $886 billion and allocates $704 billion for non-defense.
It also requires Congress to approve 12 spending bills or face a one percent cut to spending limits from last year.
Federal budget growth will be limited to one percent for the next six years, but that won’t apply until 2025.
Official calculations haven’t been released yet, but the White House estimates the plan would reduce government spending by at least $1 trillion.
Biden’s proposed 2024 budget blueprint fully funds medical care for veterans, including a fund dedicated to veterans exposed to toxic substances or environmental hazards. In his budget, Biden asked for $20.3 billion for the toxic exposure fund.
Unspent COVID money
Congress would rescind $30bn in unspent Coronavirus relief money as part of the agreement. Hundreds of federal programs that received aid during the pandemic are now being clawed back, including rental assistance, small business loans and broadband for rural areas.
Funds will be protected for veterans’ medical care, housing assistance, Indian Health Service, and some $5bn for COVID-19 vaccines and treatments.
Last year, Republicans targeted IRS money for cracking down on tax fraud. There’s a $1.4 billion cut to IRS funding in the bill.
A longtime Republican priority, the agreement would expand work requirements for the Supplemental Nutrition Assistance Program. There aren’t as many changes as in the House-passed debt ceiling bill.
Most able-bodied adults between 18 and 49 already have work requirements. By 2025, the age limit would be raised to 54. After five years, 2030 the provision expires, bringing the maximum age back to 49.
The Democrats also won new benefits for veterans, homeless people, and foster kids. According to the agreement, that’ll also expire in 2030.
In addition, the agreement would make it harder for states to waive work requirements for SNAP. Currently, states can give some people exemptions to the work rules on a discretionary basis, but how many can they give? Under the agreement, states can issue fewer exemptions and can’t carry over exemptions from month to month.
The agreement would also change the Temporary Assistance for Needy Families program, which gives cash aid to low-income families. The deal would adjust a credit that allows states to require fewer recipients to work, updating and readjusting the credit so it’s harder for states to avoid.
Speeding up energy projects
For the first time in nearly four decades, the deal changes the National Environmental Policy Act to designate “a single lead agency” to schedule and develop environmental reviews. Also, it simplifies some environmental review requirements, like limiting environmental assessments and impact statements to a certain length.
Environmental reviews will take one year, and projects with complex environmental impacts will take two years.
As part of the bill, all Mountain Valley Pipeline permits are approved – a natural gas pipeline championed by Democratic Senator Joe Manchin and Republican Senator Shelley Moore Capito.
During the Coronavirus pandemic, Republicans have tried to roll back the Biden administration’s efforts to provide student loan relief.
Though the GOP proposal to rescind the White House’s plan to waive $10,000 to $20,000 in student loan debt didn’t make it into the package, Biden agreed to end the pause.
In August, student loan repayments will resume.
Student loan relief will be decided by the Supreme Court, which is 6-3 conservative. Several justices expressed deep skepticism about Biden’s plan during oral arguments. We’re expecting a decision by the end of June.
What’s left out
Republican lawmakers passed a bill last month that would have created new work requirements for Medicaid recipients, but it wasn’t included in the final deal. Congress and the White House fought the idea, saying it would lead to fewer people being able to afford food or healthcare.
The GOP proposal to repeal some clean energy tax credits Democrats passed in party-line votes last year to boost clean energy production and consumption is also not in the final deal. McCarthy and Republicans say the tax breaks “distort the market and waste taxpayer dollars”.
According to the White House, thousands of manufacturing jobs have been created in the US because of these tax credits.