It’s All Political
The Debt Ceiling
Over the weekend, Speaker of the House Kevin McCarthy and President Biden came to what’s being described as a negotiated agreement on the looming debt ceiling.
Who wins and who loses? Here are some of the details, you decide.
The current National debt sits at nearly $32T, and the expected new debt limit was to be increased by $1.7T over the next year, with spending to be rolled back to the 2022 levels. However, some major “concessions” were tentatively agreed to, and all is not as it seems.
The National Debt will be suspended for the next 2 years until January of 2025. Which means unlimited spending could occur.
Non-defense spending is flat for the 2024 fiscal year with a 1% increase for 2025.
Defense spending is roughly $890B.
Non-defense spending $700B.
Congress must pass a bill that sets 12 annual spending bills instead of a single Omnibus type bill or a snapback provision comes into play which would lead to a 1% budget cut.
Fully funds veterans’ programs. Debunking any claims, the Democrats have claimed.
On unspent COVID funds, rescinds only $30B, but those funds are to be held in reserve, not re-purposed.
The promise to pull back the $80B on IRS funding, only rescinds $1.4B. So, the IRS still basically gets $78B to hire additional agents to increase enforcement.
Work for benefits requirement, currently calls for able-bodied individuals ages 18-49 to work in order to receive benefits, is raised to 54 by 2025. However, it expires in 2030 and then reverts back to the previous age range. Additionally, new exemptions to the work requirements could add cost to the program.
It approves Senator Joe Manchin’s, West Virginia Mountain Valley pipeline that had pushed aside by Biden and Schumer.
Addressing student loans, the GOP proposal to rescind the White House’s plan to waive $10,000 to $20,000 in debt for nearly all student borrowers is not in the debt ceiling package.
Also absent is the GOP proposal to repeal many of the clean energy tax credits Democrats passed in party-line votes last year.
Currently, the Federal Government is spending $2T more than it takes in annually as revenue from the taxpayers.
This bill does little to reduce or control spending.
The Initial CBO indexing initially indicated a $4T savings over a 10-year period, it’s now been reduced to around $2.5T over that same period.
Several members of the Freedom Caucus have come out against the negotiated debt bill and see the concessions as unacceptable.
The Democrats have been quiet on the matter, which should provide some hints and pressure from Biden will force some to vote in favor, as it can be expected that numerous Republican Representatives will vote against the bill.
Having the support in the Senate from the minority leader Senator McConnell one could expect that there will be enough Republican votes would be garnered to pass the debt bill in the Senate.
This is a watershed moment for Speaker McCarthy and could lead to a vote of no-confidence by the members of the Republican caucus, especially if many Democrats vote in favor of the bill.