The US debt ceiling deal is a compromise for both Republicans and Democrats. Now, President Biden and McCarthy need to persuade the more extreme groups within their parties to support the deal and avoid a situation where the government cannot pay its debts.
Image Source : BBC
Biden assured that the agreement is a compromise, which means that not everyone gets exactly what they want. This is a normal part of governing and making decisions. The good news for the American people is that this agreement prevents a very bad situation from happening.
Image source : Federal Reserve
In January, the US government, led by the Democrats, reached the maximum amount of money it is allowed to borrow to cover its expenses. This is called the debt ceiling. Without any new money coming in, the Treasury Department Secretary, Janet Yellen, had warned that by the first week of June, the government would run out of funds. As a result, the government would not be able to fulfill its financial responsibilities, like paying salaries and welfare checks.
Table of Contents
Key Points Of The US Debt Deal
Cap And A Raise
Under the agreement, the limit on the amount of money the government can borrow, which is currently at $31.4 trillion, will be put on hold until January 2025. This means that the government can continue borrowing money to cover its expenses. In exchange for this, the White House has agreed to limit the amount of money it spends on non-defense programs at the levels set in 2024 in 2024, and then increase it by 1% the following year.
Food Stamps
In a change of position by the Democrats, Biden has agreed to make it necessary for people receiving government food assistance to work more in order to qualify. Currently, the government provides food stamps to able-bodied individuals above the age of 50 without dependents if they are not employed or in a work/training program for at least 20 hours a week. This assistance lasts for three months within a 36-month period. However, a new agreement has been made to raise the age limit to 54 for this requirement. Veterans and homeless individuals are not affected by these changes. These new rules will be in place until 2024 unless they are extended.
IRS Money Allocation Reduced
As part of the agreement, the Biden administration has reduced the amount of money allocated to strengthen the Internal Revenue Service (IRS). The White House believed that increasing the number of IRS employees would help ensure that wealthy individuals pay their taxes, leading to higher government income. However, Republicans argued that this would burden middle-class citizens with more us debt related complications.
Process Simplified To Approve Projects
The government has agreed to the Republican request for a simpler process to approve energy projects. This means that a single agency will be responsible for creating one document to review the project, following a set timeline that the public can see. These changes will not reduce the overall evaluation process, limit the time during which legal action can be taken, make it harder to challenge the project, or remove the possibility of obtaining court-ordered remedies.
Image Source : The Jaipur Dialogue
The Republican Party, which has more members in the House of Representatives, wanted to reduce government spending by making big cuts to welfare programs and President Biden’s important laws. At first, the White House said that the US Congress had a responsibility to increase the US debt ceiling without any conditions, but later on, they agreed to discuss reducing spending in the budget in exchange for a temporary suspension of the debt ceiling. As the deadline approached, both sides increased their discussions in the past few weeks.
