What’s in the US debt ceiling deal?

The bipartisan deal agreed by US President Joe Biden and Republican House Speaker Kevin McCarthy has one main objective: preventing the US from defaulting on its debt as early as June, when the Treasury will run out of cash to pay all its bills. is estimated. Here are the key provisions of the fiscal treaty as it heads to Congress for a vote.

credit limit

The legislation extends the US $31.4tn debt ceiling for two years. Technically, this is a suspension of borrowing limits until 2025, but the effect will be similar, removing the threat of self-imposed default at least until after next year’s US presidential and congressional elections.

Expenditure

The deal applies to household discretionary spending, setting caps for the next two years. In fiscal year 2024, spending levels would have to be flat, and they could only increase by 1 percent in fiscal year 2025. Republicans have long wanted deep cuts but still argue that this kind of fiscal restraint is important. In particular, the spending limit does not include the defense budget or outlays for Social Security, the government pension plan, or Medicare, the government healthcare plan.

social safety net

The deal also includes some changes to eligibility criteria for anti-poverty programs — a key Republican demand. The deal raises the maximum age at which recipients without dependents would need to meet stricter work requirements to be eligible for food assistance from 49 to 55.

energy and environment

The deal preserves the sweeping Clean Energy Tax Credit from the Inflation Reduction Act that Republicans tried to gut. But it includes reforming permitting rules designed to speed up environmental reviews for major energy infrastructure projects.

The deal also includes a provision to expedite completion of the controversial Mountain Valley Pipeline to shuttle gas between Virginia and West Virginia, which has faced fierce opposition from environmentalists but was backed by influential Democratic Senator Joe Manchin.

tax collection fund

The legislation cuts a small portion of additional funding for the Internal Revenue Service, which was passed last year to crack down on tax evasion by wealthy families and big businesses but triggered a conservative uproar. While this reduces spending in the short term, it can increase losses in the long run.