From Breakingviews - Breakingviews: Biden gives little, gets less in debt ceiling deal
A person sits outside the U.S. Capitol after U.S. House Speaker Kevin McCarthy reached a tentative deal with President Joe Biden to raise the United States' debt ceiling and avoid a catastrophic default, in Washington, U.S. May 27, 2023.
After months of negotiation, Biden and McCarthy reached an agreement just nine days before U.S. Treasury Secretary Janet Yellen said the country was expected to run out of cash. The deal lifts the debt ceiling about $4 trillion from its current level of $31.4 trillion, extending the government’s borrowing power for. It conveniently allows Biden to avoid a similar standoff before the 2024 presidential election.
The actual changes made to the budget swing in conservatives’ favor. It redirects $10 billion of funding away from the Internal Revenue Service that was meant to modernize the system. In effect that might have helped the government collect more in taxes – the revenue side of the budget equation that was woefully missing from the current deal. The White House also caved to Republicans’ push for work requirements for federal aid programs.
The budget for fiscal 2025 will be capped at a 1% increase from today’s level. The agreement also sets more stringent work requirements for food aid and claws back unspent Covid-19 funds.
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