The Debt Limit Deal Has Been Cut
Over the weekend, Democrats and Republicans reached a tentative deal on the debt limit. This was good news that sent foreign financial markets higher on Monday as American markets stayed closed for Memorial Day.
As predicted, the deal on the debt limit is being forged in the middle. My first clue that a deal had been reached was a Twitter friend’s Sunday morning tweet that “the Republicans folded like a cheap card table again and basically got steamrolled.” Then I saw reports that progressives were upset about the deal as well.
It’s axiomatic that a good compromise often leaves both sides unhappy. If that’s the case, this deal seems to fit the definition of fairness.
So, what is in the deal?
- A suspension of the debt limit through January 2025
- A limit of one percent for Fiscal Year 2024 for increases in nondefense spending
- A three-percent increase in military spending to $886 billion
- Veterans programs will be fully funded for FY 2024 at $121 billion, which includes $20.3 billion for a toxic exposure fund
- $637 billion for other nondefense programs
- Cuts of up to $21.4 billion in funds previously authorized for IRS enforcement. About $1.4 billion is rescinded immediately and the rest over several years.
- Rescission of up to $29 billion in unspent COVID funds
- An increase in the maximum age of able-bodied, low-income adults who are required to work in order to qualify for food aid through SNAP. The maximum age will be increased to 54 from 49.
- Eliminating work requirements for the homeless, veterans, and young people leaving foster care
- Lowering the share of exemptions from work requirements that states can grant from 12 percent of recipients to eight percent
- Forces a one-percent cut in government spending if all 12 appropriations bills are not passed by the end of the year
As you can see, there’s a little something for everyone… and a little something for everyone to hate. Republicans like the slowdown in the growth of spending, the cuts to the IRS budget, and the stiffer work requirements for federal aid. Democrats like the fact that Joe Biden won’t preside over a default and the elimination of work requirements for some groups.
Last week, I wrote that this year there seemed to be a real possibility of default. The fact that there is an agreement is a good sign, but it still has to get to President Biden’s desk. It must pass a Republican-controlled House where Speaker McCarthy has a tenuous hold on his caucus and a narrowly-divided Senate where a filibuster is a possibility. Ultimately, passage is likely, but the wingnuts at both ends of the spectrum may try to ensure that passage does not come easily.
Rep. Chip Roy (R-Texas), a Freedom Caucus member, has already announced that he will oppose the deal. Other members of the “usual suspects” crowd such as Marjorie Taylor Greene (R-Ga.), Thomas Massie (R-Ky.), Lauren Boebert (R-Col.), and even Ron DeSantis have indicated that they are opposed to the deal. I have not seen a statement from The Former Guy, but he presumably opposes the deal since he previously said Republicans should “not make a deal on the debt ceiling unless they get everything they want (Including [sic] the ‘kitchen sink’).”
Some have indicated an intent to make every one of the appropriations bills an individual battle. The provision for automatic cuts if the appropriations bills don’t pass could easily become a temptation to scuttle the whole process.
The deal may be even more costly for McCarthy than he now realizes. Thinking back a few months to January when McCarthy eked out enough support to become Speaker after 15 ballots, he agreed to several conditions in order to win over the necessary holdouts. One of those was a change to House rules that would allow a single Republican congressman to call a vote to fire the Speaker. With a lot of unhappy Republicans in his caucus, McCarthy may find that the bill for his speakership has come due.
Open opposition from sitting Democrats has been harder to find, but the White House has been on the defensive against progressives angry at the work requirements and who believe that there should have been no concessions at all.
I do think that there is a segment of the Republican Party that would be willing to default to either force spending cuts or simply to own President Biden. Similarly, some progressive Democrats would prefer to force a confrontation over the 14th Amendment. Thankfully, cooler heads seem to have prevailed.