On 31st May 2023, the House of Representatives decided to suspend the $3.14 Debt Ceiling with a bipartisan vote. The House reached a majority agreement, with a landslide win of 314:117.
For further bifurcation– 149 Republicans voted for the bill, and 71 voted against it. While 165 Democrats voted for the bill and 46 voted against it.
It was majorly opposed by hard-line conservatives, although both Republicans and Democrats find this Fiscal Responsibility Act of 2023 to be the immediate solution for the default. This bill will now be passed on to the U.S. Senate to enact it and forward it to President Biden, with Monday as the final deadline.
President Biden has urged the Senate to take up the legislation pronto, calling the bill “good news for the American people and the American economy.”
Mr. Biden further elaborated on the decision stating–
“Tonight, the House took a critical step forward to prevent a first-ever default and protect our country’s hard-earned and historic economic recovery.
This budget agreement is a bipartisan compromise. Neither side got everything it wanted. That’s the responsibility of governing. I want to thank Speaker McCarthy and his team for negotiating in good faith, as well as Leader Jeffries for his leadership.”
President Biden and House Speaker Kevin McCarthy formulated the Debt Ceiling deal for the coalition House. McCarthy told the reporters:
“I’ve been thinking about this day before my vote for speaker because I knew the debt ceiling was coming,”
“I wanted to make history. I wanted to do something no other Congress has done, that we would literally turn the ship and for the first time in quite some time, we’d spend less than we spent the year before. Tonight, we all made history.”
Basically, the legislation has shifted the timeline to 1st January 2025, restricting Federal Government’s borrowing limit.
This will postpone the politically risky issues after the November 2024 elections.
What Is Included in the Debt Ceiling Bill?
- Suspending Debt Limit
Using time factor to suspend the debt limit rather than raising the debt ceiling by a specific dollar amount. This will also restrict the use of the debt for any political advantage/campaign.
- Spending Caps
White House proposed maintaining the spending cap at fiscal year 2023 levels for two years. After 2025, there are no budget caps, only spending targets. The agreement states a slight increase of 1% in non-defense spending.
- Energy Permitting Reform
All remaining permits for the Mountain Valley Pipeline, a project championed by Sen. Joe Manchin, will be approved, and a single lead agency tasked with the environmental review for clear, public timelines.
- Student Loans
End to student loan payment suspensions– borrowers will have to start repaying their loans after August. This is after more than 3-year suspension of student loans.
- Unspent COVID Funds
Congressional Budget Office estimated a $30 billion surplus in COVID funds. This relief fund will be back in the deal.
- IRS Cuts
About $71 billion in IRS funding over the next decade is to be cut
- Work Requirements
Toughen work requirements for able-bodied people:
- Temporary Assistance for Needy Families (TANF)
- The Supplemental Nutrition Assistance Program (SNAP)
- Medicaid
- Veteran’s Medical Care
Full funding for veterans’ medical care under the agreement.
What Was Rejected in the Debt Ceiling Bill?
- Rescinding climate-related provisions from Inflation Reduction Act
- No New taxes increase in the deal
- Republicans demanded the cancellation of Biden’s Student debt relief
When Will Senate Vote on Debt Ceiling?
After the overwhelming win of the bill in the House of Representatives, the Senate will have to act on it as soon as possible. They are given 5th June 2023 as the deadline to avoid an “Economically Catastrophic Default.”
They have been warned that the U.S. will run out of money to pay its bills on time if they create any delays in the final bill proposal.
What are your thoughts on the Debt Ceiling Bill? Do you think this urgency is necessary?
Let us know your opinions in the comment section below.
