Details of the deal between Joe Biden and Kevin McCarthy take the form of a 99-page bill that would suspend the nation’s debt limit into 2025 in order to avoid an unprecedented federal default, which the White House said on Monday would be “catastrophic for the American people”, while limiting government spending.
The Democratic president and Republican House speaker are trying to win over lawmakers to the plan in time to avert a default that would shake the global economy. But Congress will be scrutinizing and debating the legislation fiercely this week.
McCarthy said the House will vote on the legislation on Wednesday, giving the Senate time to consider it before 5 June, the date when the treasury secretary, Janet Yellen, said the US could default on its debt obligations if lawmakers did not act in time.
With the details of the deal now clear, here’s what’s in and out:
Two-year debt limit suspension, spending limits
The agreement would keep non-defense spending roughly flat in the 2024 fiscal year and increase it by 1% the following year, as well as suspend the debt limit until January 2025 – past the next presidential election.
For the next fiscal year, the bill matches Biden’s proposed defense budget of $886bn and allots $704bn for non-defense spending. It also requires Congress to approve 12 annual spending bills or face a snapback to spending limits from the previous year, which would mean a 1% cut.
Overall, the White House estimates that the plan would reduce government spending by at least $1tn, but official calculations have not yet been released.
Care for military veterans
The agreement would fully fund medical care for veterans at the levels included in Biden’s proposed 2024 budget blueprint, including a fund dedicated to veterans who have been exposed to toxic substances or environmental hazards. Biden sought $20.3bn for the toxic exposure fund in his budget.
Unspent money from Covid-19 pandemic
The agreement would rescind about $30bn in unspent coronavirus relief money that Congress approved through previous bills, including federal programs for rental assistance, small business loans and broadband internet for rural areas.
The legislation protects pandemic funding for veterans’ medical care, housing assistance, the Indian Health Service and developing the next generation of Covid-19 vaccines and treatments.
Funding for the Internal Revenue Service
Republicans targeted money that the federal tax agency was allotted last year to crack down on tax fraud. The bill bites into some Internal Revenue Service (IRS) funding, rescinding $1.4bn.
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Work-for-benefits requirement
The agreement would expand work requirements attached to the Supplemental Nutrition Assistance Program, Snap, formerly known as food stamps – a longtime Republican priority. But the changes are pared down from a hardline debt ceiling bill previously generated and passed in the House, which are a huge no for progressive Democrats.
Work requirements already exist for most able-bodied adults between the ages of 18 and 49. The bill would phase in higher age limits, bringing the maximum age to 54 by 2025. But the provision expires, bringing the maximum age back down to age 49 five years later, in 2030.
Democrats also won some new expanded benefits for veterans, homeless people and young people ageing out of foster care. The agreement would also make a small boost to the Temporary Assistance to Needy Families program, which gives cash aid to families with children, making it harder for states to avoid paying.
Energy projects
The deal puts in place changes in the National Environmental Policy Act for the first time in nearly four decades that would designate “a single lead agency” to develop and schedule environmental reviews, in hopes of streamlining the process for approval for energy projects – both involving fossil fuels and renewable energy.
The bill also gives special treatment to the controversial Mountain Valley pipeline, a West Virginia natural gas pipeline championed by pivotal Democratic senator Joe Manchin, and Republican senator Shelley Moore Capito, by approving all its outstanding permit requests.
Student loans
Republicans have long sought to reel back Biden’s temporary relief on student loans during the coronavirus pandemic. Biden has agreed that the pause in loan repayments will end in late August. Meanwhile, a GOP proposal to rescind the White House’s plan to waive $10,000 to $20,000 in debt for nearly all student borrowers is not in the debt ceiling package. The conservative-dominated US supreme court is due to rule next month on whether Biden has the power to waive the debt.
What’s left out?
House Republicans passed legislation last month that would have created new work requirements for some Medicaid recipients, but the White House successfully blocked that from the deal. Also absent is a GOP proposal to repeal many of the clean energy tax credits Democrats passed in party-line votes last year.