Important Update: What You Need to Know About the Recent Debt Ceiling Agreement

I wanted to take a moment to share an update on the news you are probably hearing regarding the debt ceiling agreement.

For weeks, President Joe Biden has been urging Congress to pass a deal to raise the government's borrowing limit, avoiding a potential default on US debt repayments. The negotiators from both the Democratic and Republican parties have finally reached an agreement.

If approved, this deal would allow the federal government to borrow money until well after the next presidential election in November 2024. This means that the government can pay its bills and meet its obligations without any immediate interruptions – and that's great news for all of us.

Now, let's talk about spending. Republicans wanted to freeze overall spending for ten years, with an increase in defense spending and cuts to other budgets. The agreement, however, keeps non-defense spending flat next year, with a slight 1% rise in 2025. While the implications of this belt-tightening are yet to be fully understood, defense spending would increase by 3% this year, amounting to $886 billion.

Additionally, there are no budget caps after 2025, giving some flexibility in the years to come. It's worth noting that the White House estimates government spending would be reduced by at least $1 trillion, but we're still waiting for the official calculations to be released.

Now, let's touch on a few other aspects. Unspent Covid funds will be returned, estimated to be around $30 billion now that the public health emergency has officially ended. Welfare benefits, including Medicaid, remain untouched in the deal, but work requirements for SNAP recipients have been raised to age 54. Moreover, Democrats have secured $80 billion over a decade to help the IRS enforce the tax code on wealthy Americans.

Lastly, the agreement introduces new rules to streamline the environmental review process, making it easier for both fossil fuel and renewable energy projects to obtain licenses. This move aligns with the push for faster implementation of energy initiatives, benefiting our environment and our energy sector.

It's important to note that certain topics didn't make it into the deal. Student loan relief remains untouched, while tax hikes on wealthy Americans have been replaced with increased resources for tax enforcement. Additionally, the clean energy provisions of the Inflation Reduction Act will not be repealed, as Republicans had initially sought.

We hope this overview gives you a clear understanding of the recent debt ceiling agreement and its potential implications. As always, we are here to address any questions you might have.

Source: Docs.House.Gov, May 28, 2023