President Joe Biden has urged Congress to pass a deal to raise the government’s borrowing limit and prevent a potential default on US debt repayments. Negotiators from both the Democratic and Republican parties have reached an agreement, which, if approved, would allow the federal government to borrow money until after the next presidential election in November 2024. The deal suspends the borrowing limit until 2025, ensuring that the next fight over raising the ceiling does not interfere with the election. Failure to raise the borrowing limit could have had a global impact.
In terms of spending, Republicans wanted a freeze on overall spending for ten years with increased defense spending and cuts to other budgets. The agreement maintains non-defense spending at the current level next year, with a 1% rise in 2025. Defense spending would increase to $886 billion, a 3% rise compared to this year. There are no budget caps beyond 2025, and the White House estimates that government spending would be reduced by at least $1 trillion, although official calculations have not been released.
The deal also includes increased funding for the medical care of military veterans as sought by President Biden. Additionally, with the public health emergency officially ended, Republicans wanted unspent relief funds to be returned. The Congressional Budget Office estimates that this will amount to around $30 billion. Republicans aimed to tighten the distribution of welfare benefits by attaching work requirements for able-bodied recipients, but Democrats opposed this. Medicaid remains untouched in the deal, but the age at which work requirements are included for recipients of the Supplemental Nutrition Assistance Program (SNAP) was raised from 50 to 54.
Furthermore, new rules will make it easier for both fossil fuel and renewable energy projects to obtain licenses, a measure advocated by Democratic Senator Joe Manchin of West Virginia. These rules aim to streamline the environmental review process and potentially expedite project implementation.
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