Here’s what’s in the Biden-McCarthy deal to raise the debt ceiling

WASHINGTON, DC – MAY 24: Speaker of the House Kevin McCarthy (R-CA) departs after speaking to members of the media gathered at National Statuary Hall at the United States Capitol on Wednesday, May 24, 2023 in Washington, DC.  (Kent Nishimura/Los Angeles Times)

Speaker of the House Kevin McCarthy (R-Bakersfield) departs after speaking to members of the media gathered at the National Statuary Hall of the United States Capitol on Wednesday in Washington, DC (Kent Nishimura/Los Angeles Times)

Over the weekend, President Biden and House Speaker Kevin McCarthy announced an agreement to raise the government’s debt ceiling, allowing the nation to avoid default and economic turmoil. .

Biden, McCarthy and their allies are touting the deal as victories for their respective parties. Notably, McCarthy (R-Bakersfield) touts the deal in the face of Biden’s past and insistent refusal to negotiate on the debt ceiling. Speaking from the White House on Sunday, Biden said the deal avoids default while protecting “our hard-earned and historic economic recovery.”

Here’s what’s in the deal:

A two-year deal, nondefense spending remains (mostly) stable

In exchange for temporary budget changes, McCarthy agreed to extend the debt ceiling increase for two years, allowing the government to continue borrowing above its current debt of $31.4 trillion. The extension ensures Biden won’t have to face that battle again until the next presidential election. The deal also keeps non-military spending levels “about flat with 2023 levels into 2024,” a White House official said. By 2025, these spending levels and defense spending levels will increase by 1%.

COVID-19 Relief Fund

The deal recovers $30 billion in unused funds from COVID-19 emergency relief programs. The Biden administration is able to keep $5 billion to fund housing assistance and COVID-19 treatments and vaccines for uninsured Americans, a White House source says.

IRS funding cuts

Last year, Democrats pumped $80 billion into the Internal Revenue Service through the Cut Inflation Act, allowing the service to significantly modernize its operations and become more aggressive in its fundraising. taxes on big business and wealthy Americans. Democrats hailed the increased funding as a way to help pay for Biden’s signature program to lower the cost of prescription drugs and invest in clean energy.

Republicans had balked at increasing funding for the service, saying, without evidence, that middle-income Americans could see an increase in auditing.

McCarthy managed to gradually recoup $20 billion of that money, reallocating much of the funds to non-defense discretionary spending.

Democrats don’t like the proposed IRS cut in the deal, arguing it will benefit wealthy people and end up ballooning the deficit, but many prefer it over threatened cuts in entitlements for low-income people or d other items on Biden’s agenda, including tackling climate change. . And while the cut falls well short of many Republicans’ goals, conservative lawmakers might be able to sell it to their base as a victory, given the issue’s prominence on Fox News and other conservative outlets. .

No more student loan repayment extensions

While the deal did not reverse Biden’s $400 billion student loan cancellation, it bars his administration from unilaterally suspending student loan payments after the end of August.

Federal borrowers have not had to repay their student loans since President Trump suspended payments in March 2020, amid the economic fallout from the COVID-19 pandemic.

Biden has repeatedly extended that suspension and last August announced the limited cancellation program. This decree quickly came up against legal challenges, particularly from the right.

One of the challenges in February reached the U.S. Supreme Court, and conservative justices during oral arguments questioned the legality of Biden’s plan. A decision on Biden’s program is expected this summer.

SNAP job requirements

The bill will phase in temporary work requirements for adults up to age 54, according to a White House official. Current law requires adults under the age of 49 to meet work requirements.

Homeless Americans, veterans, and adults formerly in foster programs (up to age 24) will be exempt from these changes. Updates to the low-income food assistance program will end in 2030, at which time Congress can keep or adjust the changes.

Times writer Noah Bierman contributed to this report.

This story originally appeared in the Los Angeles Times.

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