Over the Memorial Day weekend, President Joe Biden and U.S. House Speaker Kevin McCarthy reached a deal to raise the debt ceiling and avert what many predict would lead to an economic catastrophe.
The deal would raise the debt ceiling by $4 trillion in exchange for cutting over $2 trillion in government spending and capping discretionary spending to 1% for the next 6 years.
Far-left lawmakers are up-in-arms over the deal, feeling that it cuts too much from domestic spending and institutes expanded work requirements for able-bodied workers, which they oppose.
Some conservatives do not think the deal goes far enough to reduce spending given the big price tag. House Republicans passed the Limit, Save, Grow debt-ceiling bill weeks ago. Unfortunately, concessions made in this deal water down many of those common-sense ideas.
Here’s what’s in the deal and what to make of it.
What’s in the deal
Named the Fiscal Responsibility Act, this deal has a number of different provisions:
Spending
- Cuts over $2 trillion in government spending
- Non Military spending remains flat for the 2024 fiscal year
- 1% cap on discretionary spending increases for the next six fiscal years
Reigning in Agencies
- Claws back nearly $30 billion of unobligated, unspent COVID funds
- Cuts $400 million from the CDC “Global Health Fund” which sends taxpayer money to China and billions in other programs
- Implements a first-ever Pay-Go for agencies by requiring the full cost of Executive rules and regulations be covered
- Cuts $21.4 billion of IRS funding by rescinding the entire FY23 staffing funding request for new IRS agents
- Restarts student loan repayments, saving taxpayers an estimated $5 billion per month
Prioritizing work
- Expands welfare work requirements for childless, able-bodied adults by adjusting the age of existing SNAP work requirements from 18-49 (current law) to 18-54
- Reduces waivers and closes loopholes that states use to exempt their citizens from SNAP and TANF work requirements
Streamlines energy-permitting reforms
- Speeding up environmental reviews required for large-scale energy and infrastructure projects, which currently take an average 4.5 years
- Limits the scope of NEPA to reduce the federal government’s regulatory footprint.
- Greenlights the completion of the Mountain Valley Pipeline in West Virginia
https://www.foxnews.com/video/6328480430112
What they’re saying
Members of Congress have 72 hours to review the bill before voting on it–expected tomorrow, May 31, 2024. They are busy digesting the 99-page agreement.
So far, most of the response has come from either leadership or some on the far left or fiscal conservatives.
In a Wall Street Journal op-ed Speaker McCarthy explained:
… with the introduction of the Fiscal Responsibility Act, we are changing the direction in Washington with a responsible debt limit increase that cuts spending, saves taxpayers money, and restores growth to the economy.
Perhaps the most historic and foundational change is cutting spending year-over-year for the first time in over a decade.
…
In other words, we will spend less money next year than we did this year – stopping inflationary spending while fully funding our national defense, meeting our obligations to our veterans, and preserving and protecting Social Security and Medicare.
Not all conservatives are on board:
Democratic Progressive Caucus leader Rep. Pramila Jayapal claimed there will be “backlash… in the streets”:
What to make of it
This deal will be rejected by some, but most members will likely swallow it even if they don’t like it to avert a debt default.
This negotiated bill is not the Limit, Save, Grow debt-ceiling bill passed solely by House Republicans. Despite being a common-sense approach that would set us on a path to fiscal sanity, the House-passed bill likely would not have gained enough liberal votes to pass the Senate or overcome a veto by President Biden.
There are many concessions in this deal, the biggest being the headline $4 trillion limit increase with far fewer spending cuts than many conservatives agreed to. They may find this unpalatable, but if enough moderate Democrats are willing to go along with the deal, the bill can advance.
Nonetheless, Speaker McCarthy negotiated a deal that does make progress on important reforms: six years of spending caps, clawing back about $30 billion in unspent Covid funds, cutting or repurposing over $21 billion of Internal Revenue Services funding, expanding the number of people who must meet work or work training requirements for food assistance, and instituting pay-for requirements for some executive-driven regulations.
Again, these priorities don’t go as far as House Republicans wanted on the priorities above. Plus, the deal leaves out other demands like repealing climate-change tax breaks for corporations and the REINS Act forcing regulations to be greenlighted by Congress.
Bottom Line
Part of proving that one can govern is to lead and get things done for the American people. House Republicans have been leading in these debt-ceiling negotiations. Let’s see what they can get over the finish line.