As the draft deal was being worked on, sources from both the Democratic and Republican parties revealed the broad outlines, and here’s a review of the information available so far:
Estimated spending limit
The deal will suspend compliance with the debt ceiling, which currently stands at $31.4 trillion, until January 2025, allowing the US government to pay its obligations. By contrast, maximum non-defence discretionary spending will be maintained at current year levels in 2024 and increased by only 1% in 2025.
According to the Office of Management and Budget, the US government will spend $936 billion on non-military discretionary spending in 2023, money that will go to housing, education, traffic safety and other federal programs. .
Breathe before the 2024 elections
The extension would continue beyond 2024, meaning Congress would not need to take up the contentious issue until after the November 2024 presidential election.
It would also prevent another political showdown that would shake the confidence of investors and global markets until a Republican president is elected or Biden wins a second term.
Increase defense spending
The deal is expected to raise defense spending to about $885 billion, in line with Biden’s spending proposal in the 2024 budget.
This includes an 11% increase from the $800 billion allocated in the current budget.
Transfer private funds to the Internal Revenue Service
Biden and Democrats provided $80 billion in new funding over 10 years to help the Internal Revenue Service collect taxes from wealthy Americans under the Cut Inflation Act passed last year, a decision which the administration says would generate $200 billion in additional revenue over the next 10 years. .
Republicans and Democrats have already fought to shift that funding, which was earmarked under the Cut Inflation Act as ‘compulsory spending’ to keep it out of the political wrangling that blights the budget process. annually, in “discretionary expenditures” appropriated by Congress.
The Internal Revenue Service plans to use the funding to hire thousands of new employees, and the additional tax revenue they collect is expected to offset a slew of climate change-related tax breaks.
Republicans oppose it and believe listeners will eventually follow middle-class Americans, but the Treasury and Biden have confirmed they will focus on high-income families, according to Reuters.
Covid Benefits Restoration
Biden and McCarthy are expected to agree to resume unused funds previously earmarked for COVID relief as part of the budget deal, including funding for vaccine research and disaster relief. The lapses are estimated to be between $50 billion and $70 billion.
Work requirements
Biden and McCarthy have argued over imposing tougher work requirements on low-income Americans to be eligible for food and health programs.
No changes were made to Medicaid, but the agreement will impose new work requirements on low-income people receiving food assistance under the Supplemental Nutrition Assistance Program, known as SNAP. It will apply to beneficiaries up to age 54, not age 56, as Republicans have proposed.
SNAP is a federal food assistance program that serves more than 40 million people.
Energy Project Permits
Biden and McCarthy agreed on new rules to make it easier to get the permits needed to operate energy projects, including those based on fossil fuels.
McCarthy and the Republicans have confirmed that allowing these amendments is one of the pillars for reaching an agreement. The White House backed the plan earlier this month.
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