What’s in the Debt Deal

America is getting a little closer to averting a self-imposed economic crisis.

President Biden and Speaker of the House Kevin McCarthy, yesterday announced that they an agreement has been reached to increase the amount of money the government can borrow. The deal includes federal spending limits, additional work requirements for food stamps and benefits, and reforms to build energy projects faster. Overall, this is the kind of spending deal that Democrats and Republicans have agreed to many times over the past few decades.

But the deal was remarkable given how close the country was to a disaster this time around. The Treasury Department has warned that the US will run out of money as early as June 5 – in just a few days. At that point, the federal government could be forced into default, potentially triggering a global financial crisis (like This newsletter explains).

The passage of the bill in Parliament is not guaranteed. Today’s newsletter will explain the agreement reached by Biden and McCarthy — and the main thing that can still go wrong.

The final agreement is a compromise. Many Republicans want more cuts, and many Democrats don’t want cuts. The deal landed in the middle. “I don’t think people are going to be happy at the end of the day,” McCarthy said Thursday. “That’s not how the system works.”

First, the deal will raise the debt limit for two years. This shifts any future debt-restriction battles to after the 2024 election.

The spending cap at the heart of the deal targets federal programs alongside Social Security, Medicare, Medicaid and the military — such as education, scientific research and border security. The cap won’t actually reduce spending, but is intended to make it grow more slowly relative to inflation and the economy. This arrangement allows for a win-win for both parties: Republicans might call it a spending cut, since spending will grow more slowly than it might otherwise. And Democrats can say they have prevented the actual cuts.

The deal will also reclaim some of the money previously allocated to the Internal Revenue Service to crack down on tax fraud by the rich. Under the agreement, some of the IRS funds could be used to mitigate other spending cuts. That reflects the bipartisan nature of the negotiations, with both sides winning: Republicans claim they have successfully cut IRS funding, and Democrats use the money to reduce the costs. another cut they never wanted.

Likewise, the reforms allowed in the deal could facilitate more clean energy projects, a priority for Democrats, but also more oil and gas projects that Republicans support. .

The big question now: Will the deal get through? The right wing of House Republicans has a big say. Those lawmakers have a history of doing everything they can to stop spending transactions they disapprove of. They can do so again and they have enough power to rescind the deal because McCarthy only had a nine-vote majority.

McCarthy tried to avoid a mutiny by involving some of the most conservative members in debt limit negotiations and putting them in leadership positions. But there’s no guarantee they’ll stick with him – especially if they believe he’s gone too far in giving in to the White House.

There are two top scenarios. In one case, far-right Republicans voted against the deal but let it pass and McCarthy won the necessary votes from Democratic lawmakers willing to support his compromise legislation with Biden. That outcome would be a testament to McCarthy’s approach to the speaker role: By rallying his most conservative members, he would prevent them from taking more drastic action.

In another scenario, far-right Republicans essentially broke the deal. They could convene a vote on whether to remove McCarthy as speaker, and because House Republicans have such a narrow majority, McCarthy could lose. (Remember: McCarthy lost 15 votes to win the speaker spot in the first place.)

My colleague Carl Hulse, chief correspondent for The Times in Washington, said conservative Republicans could stop at such a step to avoid being blamed for the consequences. If the federal government defaulted on its debt and economic disaster ensued, it is clear that the far right allowed this to happen by blocking a deal that a majority of lawmakers were willing to pass. .

With that in mind, conservative Republicans could let a deal pass even if they voted against it.

Unforgettable memories: Chronicles “Women We Buried, Women We Burned” a woman’s duty to create a fulfilling life in its own way.

Our editor’s pick: The novel “Ascension” is about the sudden appearance of a mountain much larger than Everest, and eight other books.

According to the book: In 2018, Tina Turner wants to invite Dante goes to her dinner party.

Best selling times: Samantha Irby’s new collection of essays “Quietly Hostile” is published on paperback nonfiction book.

Vermeer: Look beyond beauty to see violence.

Read the full issue.

  • Tomorrow is Memorial Day in the United States.

  • DeSantis will host its first in-person presidential campaigning event on Tuesday in Des Moines, Iowa.

  • The Scripps National Spelling Bee Finals will be held on Thursday.

  • The monthly US employment numbers will be released on Friday.

The recipes in this version of Five dishes of the week, Emily Weinstein’s newsletter, all work well for Memorial Day weekend get-togethers and the days that follow. This grilled chicken on the stove make a favorite dish without baking; orecchiette lettuce use halloumi, a cheese with a wonderful aroma, for toast; and Kenji López-Alt’s dried salmon Ask for pre-salting the fish – a trick that makes the skin crisper and the meat tastier.


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