A last-minute debt agreement between President Joe Biden and House Speaker Kevin McCarthy has left the nation optimistic that the lawmakers will finally pass a deal in time to avoid an imminent catastrophic US default. But the deal might deliver less budget savings than Republicans have hoped for.
Bipartisan Agreement Ensures No Debt-Ceiling Showdown Until After 2024 Election
The bipartisan agreement ensures that President Biden will not have to grapple with another debt-ceiling showdown until after the November 2024 election. On the other hand, Speaker McCarthy secured $1.3 trillion–which is less than the $4.8 trillion Republicans had initially sought–in spending cuts as part of his party’s effort to scale back government and rein in the growth of US debt. The proposed deal would raise the debt ceiling, allowing the Biden government to borrow more to pay its obligations, and it would also fund the government for the next two years.
Debt Ceiling Agreement Likely to Do Little to Bring Down National Deficit
The debt ceiling agreement is likely to do little to bring down the national deficit, which is the gap between the government’s income and its spending on a given year. The agreement would cut spending by $1.5 trillion over the next 10 years. But those savings wouldn’t balance out the country’s largest expenses, which include Social Security, Medicare and the military, which weren’t touched. In fact, the deal increases spending on defense and veterans‘ care. The proposed spending caps are limited to „nondefense discretionary spending,“ that includes funding for education, national parks and scientific research, and makes up less than 15% of the $6.3 trillion the US spent in the last fiscal year.
Student Loan Repayments Likely to Resume in September
Student loan repayments have been on hold since March 2020, which is likely to resume in September costing the government roughly $5 billion a month in lost revenue. Some experts feel that if the debt agreement is passed, it would require some 43 million Americans to resume payments in September, slightly earlier than expected.
Changes to Nutrition Programs and Work Requirements
The deal includes changes to nutrition programs, including new work requirements for adults who receive help through Temporary Assistance for Needy Families (TANF) and Supplemental Nutrition Assistance Program (SNAP) that would lead to spending increases as well. The bill would require childless adults under 54 to look for work, up from 50 years old now. The deal also creates a spending cap on the Special Supplemental Nutrition Program for Women, Infants and Children.
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