After a few days of speculation about the debt ceiling agreement between President Joe Biden and House Speaker Kevin McCarthy, we finally have the details. The text of the bill—just 99 pages long—was released on Sunday and is already generating conversation.
Here’s what you need to know.
The bill would suspend the debt limit through 2025. That’s longer than what many assumed—whispers suggested that we might have a bill that would push the limit for a few months while the parties continued to strike a deal. But the current bill would mean serious negotiations wouldn’t have to happen again until after the next presidential election.
The two-year appropriations agreement—the term used by the White House—would keep non-defense spending roughly flat for the 2024 fiscal year and increase it by 1% the following year. Beyond 2025, there are no budget caps, only “non-enforceable appropriations targets.” House Republicans had initially asked for ten years of caps.
Unspent Covid Funds
The bill reclaims about $30 billion in unspent Covid money. The bill holds onto about $5 billion in funding for Covid-19 vaccines and treatments.
Under the bill, the existing pause in student loan repayments would end “sixty days after June 30, 2023” — that’s August 29, 2023. Income-driven repayment plans would remain in place.
The bill did not address Biden’s student loan cancellation plan since that will be decided by the Supreme Court. Oral arguments were heard in that case in February 2023, and an opinion is expected soon.
There are no changes to Medicaid under this bill.
TANF, or Temporary Assistance to Needy Families, is a federal program that assists states and territories with providing cash and services (like childcare) to low-income families with children. The bill makes adjustments to the existing program. Currently, states must demonstrate that 50% of TANF cash assistance recipients are working. But states can reduce that percentage based on how much a state’s caseload has fallen since 2005. The bill amends the base year to 2015 instead of 2005, gives states two years to implement those changes, and imposes additional reporting requirements.
SNAP, or the Supplemental Nutrition Assistance Program, is a federal program that provides nutrition benefits to low-income individuals and families to be used at stores to purchase food—previously referred to as food stamps. The bill would expand work requirements to those aged 50 to 55—the provision already exists for those aged 18 to 49. The deal would expand exemptions for veterans, homeless, and foster youth.
The bill also makes it harder for states to waive SNAP work requirements by lowering the number of exemptions a state can issue and limiting the right to carry over unused exemptions.
When it comes to veterans, the bill largely mirrors Biden’s proposed 2024 budget, including a fund dedicated to veterans who have been exposed to toxic substances or environmental hazards. Otherwise, the bill protects pandemic funding for medical care and housing assistance for veteran care.
Most energy policies under the Inflation Reduction Act, including clean energy tax credits, remain in place. However, the agreement includes changes to the National Environmental Policy Act. Specifically, it would establish “a single lead agency” intended to streamline the development and scheduling of environmental reviews. It also puts in place time restrictions on environmental assessments and impact statements. It also includes provisions to expedite a major natural gas pipeline from West Virginia to Virginia, the Mountain Valley Pipeline, a project favored by Sen. Joe Manchin III (D-W.Va.).
Interestingly, these incredibly detailed provisions take up the most significant chunk of the bill—nearly 27 pages.
Included in the bill was the text, “Of the unobligated balances of amounts appropriated or otherwise made available for activities of the Internal Revenue Service … as of the date of the enactment of this Act, $1,389,525,000 are hereby rescinded.” So, that’s about $1.4 billion of the roughly $80 billion (over a decade) of funding for the agency that was promised in the Inflation Reduction Act.
It is worth noting that according to a White House press call and reports from Republican House leaders, the Biden administration agreed to roughly $20 billion in cuts ($10 billion in FY24, $10 billion from FY25). That agreement is not explicitly reflected in the bill’s text but is expected to be in the final version.
House members have at least three days to review a bill before voting. That means that this bill could go to the House floor as soon as Wednesday. If it passes, it would then move to the Senate.
Treasury Secretary Janet Yellen says the U.S. won’t have enough money to pay all of its bills unless Congress acts to raise the debt ceiling by June 5—that’s next Monday. If that happened, it would trigger the country’s first-ever default.
You can read the text of the bill here.
Our Forbes tax team will provide additional updates as they become available.
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