House Passes Bill to Raise Debt Ceiling and Cut Government Spending in Bipartisan Victory
On Wednesday night, the House passed a bill to raise the nation's debt ceiling and cut government spending over the next two years, in a major victory for both the White House and Republican leaders. The agreement between President Biden and House Speaker Kevin McCarthy (R-Calif.) suspends the debt ceiling and puts limits on some spending for the next two years. The text proposes reducing the funding allocated to the IRS, raising the spending on military and veterans affairs to match inflation, and enhancing the work prerequisites for specific beneficiaries of federal food stamps and welfare.
The debt ceiling will be suspended until January 1, 2025 under the bill. At that point, the Treasury Department will be able to use accounting maneuvers to get around the debt ceiling for several months to ensure the country does not default. This indicates that there will be no requirement to increase the debt limit until the middle of 2025, which is well beyond the 2024 presidential election and a new Congress will be in power. The bill also caps non-defense spending, expands work requirements for some food stamp recipients, and claws back some Covid-19 relief funds, among other policy provisions.
The Congressional Budget Office (CBO) estimated that the bipartisan debt limit deal could reduce projected deficits by about $1.5 trillion over the next decade, which is less than half of what the initial House GOP-backed debt limit package would have achieved. The bill passed with support from 165 Democrats and 149 Republicans, but 71 House Republicans voted against it. Republican Senate Majority Leader Mitch McConnell has come out strongly in favor of the bill, but some irate members of the party may throw up some procedural delays.
The bill's passage marks the House’s biggest bipartisan victory since Republicans took over the chamber this year. So far, McCarthy has only been able to persuade members to support messaging bills that lack Democratic support and are unlikely to be passed as laws. He was bombarded with numerous inquiries about his ability to garner adequate Republican backing for the debt proposal. The high stakes negotiations for the deal and subsequent vote were a critical test for McCarthy as speaker. McCarthy had to perform a delicate balancing act due to his slim majority. He had to devise a deal that would meet the expectations of most of his party members while not estranging the Democratic legislators who were crucial to the legislation's passage.
Breaching the debt ceiling would roil the global financial markets, wipe out jobs, and plunge the U.S. into a recession. The default would break the widely held belief that America would never fail to fulfil its responsibilities after the Second World War. Although there had been two near misses during the Obama administration, the occurrence of default had yet to transpire. On this occasion, there was a valid concern that the United States would fall off the edge.
Chuck Schumer, the Senate Majority Leader from the Democratic Party, referred to the approval of the House as “extremely positive”. He informed the media that he anticipates the bill to advance rapidly in the Senate and reach the President's office at the earliest. If all senators do not come to a unanimous agreement, the Senate might not be able to pass the debt ceiling bill until the following day, which is Tuesday and after the deadline. However, Schumer has pledged to bring the bill to the floor for a vote as soon as possible, saying on Wednesday morning: “It is imperative that we avoid a default.
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