Debt Limit Bill
House could vote Wednesday, May 31 on bill to raise the debt ceiling, Senate expected to vote this coming weekend
This update gives you a quick summary of the compromise announced by President Joe Biden and House Speaker Kevin McCarthy over the Memorial Day weekend, its implications for safety net programs and environmental concerns, and a quick link to find and contact your Congressmember and Senators. You’ll also find a list of some of the many Americans who would be harmed if the federal government defaults and has to stop paying its bills.
As of the evening of Memorial Day, I could not find a written press release from either the White House or Speaker McCarthy’s office giving their respective talking points on the agreement, so I am basing this update on articles from the Washington Post and National Public Radio. Contact your Congressmember and both Senators with your views on the bill. You can reach their websites by clicking on their pictures at this link.
The debt ceiling bill negotiated by President Biden and House Speaker Kevin McCarthy was released to Congress over the weekend. Members are now studying it as party whips are counting votes. It has to be cleared by the House Rules Committee to reach the House floor. Rules Committee members include Rep. Thomas Massey of Northern Kentucky, who represents some members of Episcopal congregations in Cincinnati.
Overview: Here is a summary of key elements of the debt ceiling bill from National Public Radio and the Washington Post.
The debt reduction bill passed by the House earlier this spring would have made significant cuts – estimated from 8-12% – in domestic programs from rental assistance (think of Episcopal Retirement Services’ growing number of affordable senior housing communities) to scientific research. The compromise holds domestic funding largely stable, partly by redirecting pandemic funding that has not yet been spent. It also repurposes $20 billion of the $80 billion of new IRS funding over the next ten years to recover the money owed by wealthy tax evaders.
Work requirements will not be imposed on Medicaid recipients. This had been a top goal of Republican leadership. To be eligible for SNAP (food stamps), single adults without children will have to meet work requirements up to the age of 54 rather than the current 50, but veterans and homeless people will be exempt.
The vast majority of Medicaid recipients aged 18-55 are already working. Some are exempt due to illness or caregiving responsibilities. Prior experience in the 13 states granted waivers to impose Medicaid work requirements showed that thousands of households lost coverage, including people who were employed, because of the administrative hurdles of proving eligibility. This same paper in Health Affairs also links to research showing a counterproductive impact on health and employment when work requirements were imposed on recipients of SNAP (food stamps) and TANF (cash assistance for families). Read more in this Robert Wood Johnson Foundation paper on the harm to families, health care providers, and state budgets when thousands of people lose Medicaid, which covers 26% of Americans with serious mental illness.
On environmental policy: the compromise protects the clean energy tax credits that are a key climate solution in the Inflation Reduction Act. The debt ceiling deal does, however, accelerate environmental impact reviews for projects under the National Environmental Policy Act, which concerns environmentalists but could also speed approval of new transmission lines for renewable energy. The compromise also requires approval of permits for the Mountain Valley gas pipeline demanded by Senator Joe Manchin (D-West Virginia).
The President wanted to reduce the deficit by closing tax loopholes. The Republican leadership succeeded in eliminating that plan from the compromise. It’s relevant to note that the Congressional Budget Office estimates that better enforcement of tax laws through the new funding partially clawed back by the default deal will increase federal revenue by $240 billion, helping to reduce the deficit. The White House says that the $20 billion cut in the ten-year IRS enforcement funding will not impair its success in the initial years.
If passed, the debt ceiling bill would also:
- suspend the debt limit till Jan. 1, 2025 so this crisis won’t recur until then.
- cut nondefense spending slightly in 2024 and raise it by 1% in 2025.
- Set spending caps for the federal budget in the first two years in 2024 and 2025, and then set appropriations targets for the following four years
- slightly increase funding for military and veterans affairs
- The House won its goal on student debt: the Administration must end the pandemic loan forbearance 60 days after June 20 (a plan already announced) though the President’s policy for canceling up to $20,000 in student debt. which is being litigated in federal courts, is still on the table.
This bill now faces opposition both from the right and the left, though centrist leaders in both parties are endorsing it. So did Senate Majority Leader Mitch McConnell over the weekend, saying, “Today’s agreement makes urgent progress toward preserving our nation’s full faith and credit and a much-needed step toward getting its financial house in order.”
Who would be impacted by a default? National Public Radio economics reporter Scott Horsley compiled a list on May 22 of key groups waiting for federal payments in the first ten days of June.
Treasury Secretary Janet Yellin subsequently briefed Congress that the government will default June 5 if Congress doesn’t raise the debt limit, but the June schedule above illustrates the monthly obligations of our government which are vital to Americans being able to meet living expenses.
- Veterans: $12 billion in benefits payable June 1
- Retirees: $12 billion in military and civilian retirement benefits June 1
- Social Security beneficiaries: $25 billion payable June 2, first of several monthly payments
- Homebuyers: Zillow estimates a prolonged default could raise mortgage rates as high as 8.4%
- Others: $47 billion for Medicare providers
- 1 billion in tax refunds payable June 7
- $4 billion in federal salaries, payable June 9
Advocacy briefings are compiled by Ariel Miller, a longtime community advocate and member of Ascension & Holy Trinity, Wyoming. Connect with her at arielmillerwriter@gmail.com
