Navigating the 2021 Debt Ceiling Deal: A breakdown of what made it into the bill.

Debt Ceiling Deal: What’s In, What’s Out of the Bill to Avert US Default

Introduction

After a long-drawn-out debate over the debt ceiling, President Joe Biden, and House Speaker Kevin McCarthy have reached a deal on a 99-page bill. The bill would suspend the US debt limit until 2025 to avoid a federal default while limiting government spending. The deal includes several adjustable points that both Democrats and Republicans have agreed upon. However, there are concerns from both sides about certain proposals in the deal, which will need to be addressed before it is voted upon.

Highlights of the Deal

Two-Year Debt Limit Suspension, Spending Limits

The proposed bill aims to keep non-defense spending roughly flat in the 2024 fiscal year and increase it by 1% the following year while suspending the debt limit until January 2025 – past the next presidential election. For the next fiscal year, the bill matches Biden’s proposed defense budget of $886 billion and $704 billion for non-defense spending. The legislation aims to keep federal budget growth at 1% for the next six years, which would be enforceable until 2025. Based on White House estimates, the deal would reduce government spending by at least $1 trillion, but official calculations have not been released.

Veterans’ Care

The agreement would fully fund medical care for veterans at the levels proposed in Biden’s budget blueprint. This includes funding of $20.3 billion for the toxic exposure fund for veterans who have been exposed to toxic substances or environmental hazards.

Unspent COVID Money

The deal would recoup approximately $30 billion in unspent coronavirus relief funds from previous bills. It claws back unobligated money from dozens of federal programs that received aid during the pandemic, including rental assistance, small business loans, and broadband for rural areas. However, the legislation protects pandemic funding for veterans’ medical care, housing assistance, the Indian Health Service, and some $5 billion for a program focused on rapidly developing the next generation of COVID-19 vaccines and treatments.

IRS Funding

Republicans targeted money that the IRS (Internal Revenue Service) was allotted last year to crack down on tax fraud. The bill bites into some IRS funding, rescinding $1.4 billion.

Work Requirements

The agreement would expand work requirements for the Supplemental Nutrition Assistance Program, formerly known as food stamps. It would phase in higher age limits, bringing the maximum age to 54 by 2025, but the provision expires, bringing the maximum age back down to age 49 five years later, in 2030. The agreement would also make it slightly harder for states to waive work requirements for SNAP for certain individuals. Current law allows states to issue some exemptions to the work rules on a discretionary basis, but the agreement would lower the number of exemptions that a state can issue and curb states’ ability to carry over the number of exemptions they can hand out from month to month.

Speeding Up Energy Projects

The bill puts in place changes in the National Environmental Policy Act for the first time in nearly four decades that would designate “a single lead agency” to develop and schedule environmental reviews to streamline the process. It also simplifies some of the requirements for environmental reviews, including placing length limitations on environmental assessments and impact statements. Agencies will have one year to complete environmental reviews, and projects that are deemed to have complex impacts on the environment will need to be reviewed within two years.

Editorial and Advice

As the US prepares for its economic recovery following the pandemic, the debt ceiling issue has become a topic of great debate. The proposed debt ceiling deal aims at avoiding global economic catastrophe while limiting the government’s spending. The deal has provisions that both benefit and hurt the US economy.

Under the deal, the two-year suspension of the debt ceiling until 2025 would allow the government to keep spending up to the new limits in the bill. However, it limits federal spending growth to only 1%, which would be enforceable until 2025. This will ultimately impact the speed of the US’s economic recovery as limited government spending means fewer investments in various key sectors.

The agreement’s expansion of work requirements for the Supplemental Nutrition Assistance Program, formerly known as food stamps, is a subject of concern for Democrats, who believe that it will make it harder for people to afford food and health care without actually increasing the number of people in the workforce. The bill‘s provision to streamline the environmental review process is a welcome development and will boost the adoption of cleaner energy sources in the country.

As the US Congress scrutinizes and debates the legislation, it is crucial to keep in mind that the debt ceiling issue is not just a political problem but has significant economic consequences. Congress should consider the deal’s provisions and ensure that it strikes a balance between economic growth and budget discipline.

Conclusion

The proposed debt ceiling deal has several provisions that will impact the US economy in different ways. The deal will avert global economic catastrophe while limiting government spending growth to 1% until 2025. The agreement’s expansion of work requirements for the Supplemental Nutrition Assistance Program is a concern for Democrats, but the bill‘s provision to streamline the environmental review process is a welcomed development. Congress should consider the deal’s provisions and ensure that it strikes a balance between economic growth and budget discipline.