Hours after President Joe Biden and Speaker of the House of Representatives Kevin McCarthy announced a deal on the national debt ceiling to avoid a default — expected to be catastrophic not only for the U.S. but for the global economy — , no, it is certain that the document will get through the most extreme wings of Republicans and Democrats on Wednesday’s vote. The Treasury predicts that without a deal, the federal government will run out of money to make payments by June 5.
The heart of the matter
Sources close to the talks say the deal lifts the $31.4 billion two-year debt ceiling, meaning Biden won’t have to renegotiate it before the 2024 presidential election.
In contrast, the deal also places limited restrictions on federal spending, which will please some Republicans but does not provide the big cuts that the far right wanted and that progressive Democrats would have refused.
Did someone win?
After days of long and tedious talks, the agreement allows both sides to claim some sort of victory. Biden called it a “compromise”, while McCarthy described it as “worthy of the American people”.
The text has not yet been published and the agreement will be the subject of intense scrutiny and debate in the coming days. Sources and reports suggest that some demands from both camps were not accepted, such as the elimination of certain tax loopholes requested by Democrats and the repeal of clean energy tax credits intended by Republicans.
Expenditure
The deal keeps non-military spending virtually unchanged for fiscal year 2024 as of this year. It also limits the increase to one percent for 2025. The deal maintains the Biden administration’s plans to increase spending for the military and veterans in line with inflation.
The agreement also reduces the funds allocated to the expansion of the tax department by $10 billion. Last year, Congress approved $80 billion for the IRS to bolster its ranks.
Medicaid, the government’s health insurance program for the most underprivileged Americans, will not change.
If the Republican side wins, the deal will limit who can receive food stamps or social assistance. As a concession to Democrats, the deal is expected to ease requirements for veterans and the homeless.
Source: DN
