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The Debt Ceiling Deal Is Here — Now, Will It Pass?


With a debt ceiling deal reached, it’s now onto the hard part: getting it through Congress.

In addition to the usual Memorial Day weekend parties and revelry, two things happened this weekend: U.S. Treasury Secretary Janet Yellen gave a precise date for when the federal government would hit its statutory debt limit (June 5) and President Joe Biden and House Speaker Kevin McCarthy (R-Calif.) announced they had reached a deal to raise the limit.

Speaker McCarthy released text of draft legislation, called the Fiscal Responsibility Act (FRA), on Sunday evening.

Yesterday, the powerful House Rules Committee voted to allow the legislation to move toward a floor vote. (While House Rules Committee votes are normally somewhat pro forma, that was not the case with the FRA since the panel is stacked with fiscal conservatives who wanted deep spending cuts. In fact, the bill just squeaked by the panel. The vote was 7-6.)

The full U.S. House could vote on the bill as soon as this evening, which would send the FRA to the Senate for consideration. If that vote is successful, the Senate will have four days, a mere 96 hours, to consider the bill before Secretary Yellen’s June 5 deadline.

What is in the FRA — and, as importantly, how are the rank-and-file lawmakers who will vote on the bill in the coming hours feeling about it?

Let’s take a look.

What Provisions Are Included In The Fiscal Responsibility Act?

The FRA, of course, centers around an increase to the federal government’s statutory borrowing limit. The key question for negotiators was how far to raise that cap. Republicans preferred a more conservative approach that likely would have forced Congress to vote on another debt ceiling increase before the November 2024 election.

Democrats wanted something longer-term.

The two parties solved this problem not with a dollar amount, but by deeming the debt limit raised through January 2025. It does not matter how much the government spends between now and then — all outlays through January 2025 are allowed under the legislation since the limit is suspended until after the 2024 election.

In exchange for suspending the debt limit for nearly two years, Democrats agreed to Republican-supported limits on future spending and clawbacks of past spending. Specifically, the FRA:

  • Imposes limits on how much Congress can spend for defense and nondefense discretionary programs for fiscal years (FY) 2024 and 2025. Essentially, funding for nondefense spending — education, housing, labor programs, and other discretionary spending priorities (which do not include Medicare, Medicaid, and Social Security) — can grow at no more than one percent for each of these fiscal years. Defense spending would get a slightly bigger boost. According to the American Action Forum, relative to current spending, these caps would save about $110 billion in FY 2024 and $136 billion in FY 2025.

  • Sets spending limits for FYs 2026, 2027, 2028, and 2029, but while there are enforcement mechanisms for the FY 2024 and 2025 spending caps, there are no such rules that apply to the later four fiscal years. In other words, without another deal — say, an agreement in early 2025 to once again raise the debt limit — Congress could ignore these limits without consequence.

  • Rescinds $28 billion in spending from prior years. Much of that savings would come from unspent funds related to the COVID-19 pandemic, but, at Republican lawmakers’ insistence, the bill also will claw back $1.8 billion from the Internal Revenue Service.

In all, the Congressional Budget Office estimates the FRA would reduce spending by $1.5 trillion over 10 years.

The FRA also would impose stiffer employment requirements for some recipients of the Supplemental Nutrition Assistance Program, or SNAP. As CNN explained, currently, childless, able-bodied adults between the ages 18 to 49 may only get food stamps for three months out of every three years unless they are employed at least 20 hours a week or meet other criteria. The FRA increases the age to which these rules apply to 54. Republicans wanted to these new rules to apply to other programs too, including Medicaid, and to more people, but gave up on those hopes during negotiations.

Republicans did win a major energy policy victory. According to Utility Dive, the FRA requires that a single federal agency lead environmental reviews for infrastructure projects, sets a one-year deadline for agencies to issue environmental assessments, and imposes a two-year deadline for environmental impact statements. In a huge win for moderate Sen. Joe Manchin (D-W.Va.), a key swing vote, the FRA also authorizes and bars legal challenges to the partially built $6.6 billion Mountain Valley natural gas pipeline, which has been delayed by litigation and which runs through Sen. Manchin’s home state.

Republicans also prevailed – partially – on the question of student loans. As The New York Times explained, the FRA “officially puts an end to Mr. Biden’s freeze on student loan repayments by the end of August and restricts his ability to reinstate such a moratorium.” Repayments would restart just as the new school year got underway. The White House, however, fought back Republicans’ interests in including language in a deal that would have also invalidated the President’s student loan debt forgiveness plan.

Finally, the bill includes a provision that both Republicans and Democrats say will prevent government shutdowns.

While the FRA allows the federal government to borrow more money, and sets caps for spending, it does not actually appropriate any money to federal agencies. That job, of course, is up to House and Senate appropriators who each year must write 12 spending bills to be considered and approved by their colleagues. Normally, if both houses of Congress do not complete this task, lawmakers either need to pass a continuing resolution or the government will shut down.

The FRA attempts to control this process by stating that, if Congress does not approve all 12 spending bills by September 30 of the new fiscal year, a continuing resolution would automatically go into effect with spending levels that are one percent lower than the current spending levels. The cuts would last until Congress approves and the president signs a full-year spending bill. The Wall Street Journal acknowledged it is still unclear exactly how this provision would work, or when the automatic cuts would come in, and there is not much analysis on the provision to date. You can bet more information bill come as Congress moves further into appropriations season, particularly since it’s unlikely both the House and Senate will be able to pass all 12 bills in the next three four months.

As noted above, the FRA late yesterday won approval of the House Rules Committee. While that victory was a significant one, it by no means guarantees passage of the bill, so now let’s look at who is lining up behind the FRA — and who is not.

Does Speaker McCarthy Have The Votes?

House Speaker McCarthy released text of the FRA on Sunday evening. He pledged to give his colleagues 72 hours to read the bill. That allowance elapses tonight, and it does not appear Speaker McCarthy will give lawmakers one minute more.

The House is expected to vote this evening, probably around 8:30 ET.

Speaker McCarthy lost the support of two Republicans in the Rules Committee, and he is likely to lose more GOP lawmakers during the House floor vote. As Roll Call reported, the conservative Freedom Caucus held a press conference yesterday in which members criticized the FRA – and sharply. To wit: Rep. Andy Biggs (R-Ariz.) said, “I had no idea that we would see a plan as ephemeral and as malodorous as this plan.”

Several Freedom Caucus members have already said they will vote against the FRA, but Caucus Chair Rep. Scott Perry (R-Penn.) declined “to say whether members of his group as a whole would vote against the rule when it reaches the floor.”

Some House Democrats also appear poised to vote against the FRA, including House Natural Resources Committee Ranking Member Rep. Raúl Grijalva (D-Ariz.) who has criticized the permitting reform provisions in the debt limit bill.

Still, according to Bloomberg, House Democratic Leader Rep. Hakeem Jeffries (D-N.Y.) has said he will deliver the votes Speaker McCarthy needs to get the FRA past the House finish line.

If he and Speaker McCarthy can generate majority support for the FRA, the bill then moves to the Senate, which will have to approve the legislation by Sunday night if lawmakers want to adhere to Secretary Yellen’s June 5 deadline.

Will Senators Filibuster The FRA?

The FRA needs 60 votes to avoid a Senate filibuster. According to The Hill, “The bill is expected to get more than 40 Senate Democratic votes, which means it would likely need at least 10-20 ‘yes’ votes from Senate Republicans …”

Four conservative Senate Republicans, Mike Braun (R-Ind.), Mike Lee (R-Utah), Rand Paul (R-Ky.), and Rick Scott (R-Fla.), already have suggested they will oppose the bill. The Hill also reported Sens. John Cornyn (R-Texas), John Kennedy (R-La.), and Mike Rounds (R-S.D.). are still “on the fence.”

It is not just conservative Republicans who have questions about the FRA, however. According to Punchbowl, Sen. Tim Kaine (D-Va.) wants Sen. Manchin’s Mountain Valley Pipeline out of the deal while Senate Armed Services Committee Chair Jack Reed (D-R.I.) and Sen. Susan Collins (R-Maine) think the bill’s limits on defense spending are too severe.

One bright spot for the White House, which is working hard to generate Democratic lawmaker support, is this nugget, also from Punchbowl: while progressives “were fuming over the legislation on Tuesday,” stalwarts like Sen. Elizabeth Warren (D-Mass.) have not indicated they will vote against the bill, or that they will try to slow the process.

The finish line is in sight, but there are still some important hurdles for congressional leaders to clear.

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