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U.S. President Joe Biden and Republican House Speaker Kevin McCarthy on Saturday reached an agreement in principle to lift the debt ceiling that would trim some U.S. federal spending.
While the bill is still being written, the general contours of the deal have been described by sources. Sometimes, Democrats and Republicans appear not to be on the same page.
Here’s what we know so far:
The deal would suspend the $31.4-trillion debt ceiling until January of 2025, allowing the U.S. government to pay its bills. In exchange, non-defense discretionary spending would be “roughly flat” at current year levels in 2024, “when factoring in agreed upon appropriations adjustments,” a source familiar with negotiations said. It would increase by only 1 percent in 2025.
Republicans have told their members that non-defense discretionary spending would be cut to 2022 levels, apart from veterans’ healthcare, which would remain fully funded.
The U.S. government will spend $936 billion on non-defense discretionary spending in 2023.
The debt limit extension lasts past 2024, meaning Congress would not need to address the deeply polarizing issue again until after the November 2024 presidential election.
This would prevent another political showdown that rattles global investors and markets until either a Republican is elected president or Biden wins a second term.
The deal is expected to boost defense spending to around $885 billion, in line with Biden’s 2024 budget spending proposal, an 11-percent increase from the $800 billion allocated in the current budget.
