The biggest policy changes in the legislation, explained.
House Republicans took the debt ceiling hostage — but now Speaker Kevin McCarthy has agreed to set the hostage free for a relatively small ransom payment.
The deal struck by negotiators for President Biden and McCarthy on Saturday night is no major overhaul of American public policy. The White House managed to avert sweeping cuts to domestic spending, which will instead effectively be held at something close to the status quo (though a cut when accounting for inflation). And on a set of other policy issues where Republicans made big demands, Democrats granted only some limited concessions.
The deal certainly includes some policy changes progressives do not like — they’d prefer domestic spending not be cut at all, and they dislike new work requirements for food stamp beneficiaries ages 50 to 54, among other things.
But if you keep in mind that Democrats and Republicans were always going to have to negotiate over spending levels at some point this year (to avert a government shutdown this fall), it’s not clear that Republicans’ use of the debt ceiling as a bargaining chip even got them anything they wouldn’t have won later anyway.
Rather than an extremist GOP’s attempt to force Democrats into unthinkable concessions or else trigger an economic crisis, the outcome here looks a whole lot like an ordinary congressional deal reached with the help of an imminent deadline.
Can such a deal pass the GOP-controlled House? There has been some grumbling from the right, though few are talking about an outright revolt against McCarthy. The bill could face a challenge in getting to the House floor because of the House Rules Committee, where McCarthy granted some seats to the far right. But there are ways around that, and if the bill does make it to the House floor, it will likely pass with a combination of Democratic and Republican votes, and Senate passage is a sure thing.
If House Republicans can get to yes, it will signify a shift in the party compared to the last major debt ceiling showdown in 2011. Back then, the GOP majority brought to power in the Tea Party wave sought extreme spending cuts, including big changes to Medicare and Social Security. That GOP conference also proved chaotic and nearly ungovernable by its leaders.
Yet true-believing anti-spending ideologues have seen their influence dwindle in the Trump and post-Trump eras. GOP leaders decided early on not to demand any Medicare and Social Security cuts in these talks, and the eventual deal leaves Medicaid untouched, too.
Most in the party would still like to be seen as spending cutters, but in practice the energy is around culture war fights. That made the current deal — which uses various gimmicks and accounting tricks that will let Republicans claim they made substantial cuts to domestic spending, while letting Democrats avert many of the actual consequences of those cuts — possible.
The Biden White House, meanwhile, deflated liberal commentators’ and activists’ pleas that the president use executive authority in some way to effectively raise the debt ceiling on his own. Officials saw various practical, legal, and political drawbacks that made them very reluctant to go down that road. Instead — after climbing down from an initial stance that they wouldn’t negotiate at all — Biden’s team engaged with Republicans in hopes they could get a reasonable deal. And they think they’ve succeeded.
Here’s what’s in the deal. —Andrew ProkopHow big are the budget cuts?
The deal negotiated by the Biden White House and House Republicans cuts some domestic programs in 2024 and limits spending growth to 1 percent in fiscal year 2025. That will still amount to a cut, after accounting for inflation.
Almost two-thirds of the $6 trillion federal budget is mandatory spending on programs like Social Security, Medicare, and Medicaid that will happen without any action by Congress. The rest is determined by Congress, and that is the bucket that will be affected by the debt limit deal.
The cuts are going to land disproportionately on programs that help the poor and on administration, which also affects the people who rely on government programs. Some discretionary spending — on the military and for veterans — is actually going to increase.
