After several weeks of tense negotiations, President Joe Biden and House Republicans have reached an agreement in principle to address the debt limit and cap spending.
The drama is by no means over. Congressional leaders in both parties have to convince enough of their members to vote for the agreement, which contains provisions that lawmakers on each side of the aisle don’t support.
The bill text was released on Sunday evening, and both parties are trying to cast the provisions as favorable for their side.
Here’s what we know about the deal, based on the bill text, White House sources andinformation circulated by House Republicans.
The agreement would suspend the nation’s $31.4 trillion debt limit through January 1, 2025. This removes it as a potential issue in the 2024 presidential election.
Under the deal, non-defense spending would remain relatively flat in fiscal 2024 and increase by 1% in fiscal 2025, after certain adjustments to appropriations were made, according to a White House official. After fiscal 2025, there would be no budget caps.
The House GOP fact sheet says that non-defense discretionary spending would be rolled back to fiscal 2022 levels and topline federal spending would be limited to 1% annual growth for the next six years.
The breakdown of non-defense discretionary spending for fiscal 2024, according to a source familiar with the deal, is that the cap would be about $704 billion, of which $121 billion would be for veterans’ medical care and $583 billion would be for other areas.
But the adjustments would bring the resources available for spending outside of veterans’ medical care to $637 billion for the coming fiscal year, compared to $638 billion for the current one.
Under the deal, $11 billion in rescinded unobligated Covid-19 relief funds and $10 billion in money shifted from the Internal Revenue Service would be used to beef up non-defense discretionary spending. Also, $10 billion in funds repurposed from mandatory programs and $23 billion that’s designated as emergency funding would be shifted.
Some $886 billion would be spent on defense, according to the bill text.
The debt ceiling bill that House Republicans passed last month would return discretionary spending to fiscal 2022 levels and then limit the growth in spending to 1% for a decade. Defense spending would be protected.
The deal would maintain full funding for veterans’ health care and would increase support for the PACT Act’s toxic exposure fund by nearly $15 billion for fiscal year 2024, according to a White House source.
The House GOP fact sheet says veterans’ medical care would be fully funded.
The agreement calls for temporarily broadening of work requirements for certain adults receiving food stamps.
Currently, childless, able-bodied adults ages 18 to 49 are only able to 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 agreement would increase the upper limit of the mandate to age 55 in phases, according to the bill text.
However, the deal would also expand exemptions for veterans, people who are homeless and former foster youth in the Supplemental Nutrition Assistance Program, or SNAP, as food stamps are formally known.
And all the changes would end in 2030.
The administration believes that about the same number of food stamp recipients would be subject to work requirements because of the exemptions, though it is waiting for a formal estimate, the White House official said.
The agreement would also tighten the current work requirements in the Temporary Assistance for Needy Families program, primarily by adjusting the work participation rate credits that states can receive for reducing their caseloads.
Work requirements would not be introduced in Medicaid, which House Republicans had called for in their debt ceiling bill.
The deal would rescind roughly $28 billion in unobligated funds from the Covid-19 relief packages that Congress passed to respond to the pandemic, according to the House GOP.
It would retain $5 billion in funding to accelerate the development of Covid-19 vaccines and treatments, and funding for vaccines and treatments for the uninsured, according to a White House source. It would also keep money for housing assistance, the Indian Health Service and other measures.
Congress approved roughly $4.6 trillion in Covid-19 relief funds since the pandemic began in early 2020.
House Republicans have been determined to jettison the roughly $80 billion in IRS funding over 10 years contained in the Inflation Reduction Act that Democrats passed last year. The GOP lawmakers argue that the money will be used to hire an army of new agents to audit Americans, but the agency says it will also be used to support operations, modernize customer service technology and assist taxpayers.
The deal would repurpose $10 billion from fiscal 2024 and another $10 billion from fiscal 2025 appropriations to be used in non-defense areas, according to the White House source.
This provision does not appear in the text of the bill, but another source familiar with the deal said both sides have agreed to it.
Separately, the agreement would also rescind $1.4 billion in IRS funding from the act, which the GOP describes as the full amount of funds included in the agency’s fiscal 2023 spending plan for non-taxpayer services.
The moves mean that the IRS will use up the boost in funding and need to request additional money from Congress sooner than a decade, according to the White House official.
Under the deal, borrowers would have to begin paying back their student loans at the end of the summer, as the Biden administration has already announced, according to a third source familiar with the debt ceiling talks. The pause has been in effect since the Covid-19 pandemic began.
Also, the agreement would maintain Biden’s plan to provide up to $20,000 in debt relief for qualifying borrowers, the source said. The measure is currently before the Supreme Court, which is expected to rule on it in coming weeks.
The deal would also continue Biden’s income-driven repayment plan, according to the White House source.
The House GOP last week passed a resolution seeking to block the forgiveness program, as well as end the pandemic-related pause on federal student loan payments.
The agreement would not make any changes to the Inflation Reduction Act’s climate and clean energy provisions, according to the White House talking points.
House Republicans had sought to repeal the law’s clean energy tax credits and subsidies.
The agreement also includes measures in the National Environmental Policy Act aimed at boosting the coordination, predictability and certainty associated with federal agency decision making, according to the White House source.
It would designate a single lead agency, charged with developing a single environmental review document, and also would require agencies to complete environmental reviews in one year, or two years for the most environmentally complex projects.
The agreement would also speed the creation of the Mountain Valley Pipeline, a natural gas pipeline in West Virginia.