Debt Ceiling Deal Emerges; Uncertain Future Remains
Updated as of 10:07pm, Saturday, May 27, 2023
Chief negotiators have worked over the weekend to put together a debt ceiling agreement to take to Congress for consideration by legislators. Leaders worked throughout the day and the deal was announced around 9pm EST.
“Not everyone will like what’s in the agreement,” House Speaker McCarthy told reporters at the Capitol on Saturday morning. The Speaker intends to ensure members have a full 72 hours to review legislative text before voting. At 9:30pm, Speaker McCarthy announced his intent to vote on the bill on Wednesday, May 31. Legislative text is expected to be published Sunday, May 28, and the House Democratic Caucus has been invited to a members-only White House briefing Sunday at 5pm. House Republicans kicked off an internal call at around 9:45pm on Saturday night.
The Speaker acknowledged that he had to give in to some Democratic demands, but the White House certainly is not getting the 'clean' debt ceiling deal it was insistent on in February/March.
In principle, negotiators have agreed to a two-year deal, with no budget caps after 2025. The agreement phases in (and sunsets in 2030) time limits for individuals up to age 54 to participate in the Supplemental Nutrition Assistance Program (SNAP) and keeps non-defense spending at roughly FY 2023 spending levels. At this time, there are no changes or work requirements added to Medicaid, a key Republican priority. For SNAP, however, work requirements are increased from age 49 to 54; work requirements are reduced for veterans, individuals experiencing homelessness, and others. The deal also 'claws back' $1.9 billion of the $80 billion appropriated to the IRS last year. On student loans, the deal codifies into law the Biden Administration's current plan to end the current halt of student loan payments - though it leaves the door open for future emergencies. Lastly, it would appear that there is some form of permitting reform included in the agreement, but that these provisions are minimal.
President Biden put out this statement after the agreement was announced.
Congressional Reaction
Reactions across Capitol Hill varied have varied or not yet been reported. Legislators have been waiting for a deal for quite some time - and the delay has eaten up precious time on the legislative calendar for critical congressional priorities, such as the 2023 Farm Bill, PHMSA Reauthorization, and - of course - the FY 2024 appropriations process.
“It’s very frustrating,” said Rep. Frank Lucas (R-OK-03), about some of the House’s delayed priorities. “But until you know how much money you have to work with,” he added, referring to potential spending cuts in a debt deal, “you can’t do these things.”
The slim 4-vote majority Republicans enjoy in the House necessitates near unanimous partisan support or a bipartisan agreement to ensure passage in the lower chamber. Many Democrats, particularly in the House, urged the President to invoke Section Four of the 14th Amendment to avoid a default without agreeing to substantial domestic spending cuts demanded by McCarthy and Republican negotiations. This provision within the 14th Amendment was a post-Civil War amendment the Union required Southern states agree to prior to readmittance; its purpose was to ensure the war debts would not be disregarded by former Confederates rejoining Congress.
Congressman Bob Good (R-VA-05) was one of the first Republican members to issue a brief public statement in response to the loose agreement. The Freedom Caucus member asserted that if what he was hearing is true, no conservative can justify a YES vote. This agreement is likely to stir discontent in the Speaker's caucus. Conservative Congressman Chip Roy (R-TX-21) expressed opposition throughout the day to the details emerging, though he had not commented publicly on the announced deal at the time of the publication of this alert.
More details and additional reactions will emerge as legislators begin to comment publicly on the compromise. Everything is still on the table: the agreement can pass, amendments can be considered, the President can still invoke the 14th Amendment unilaterally or until a deal is agreed upon, or the nation can default on its debts.
Constitution Partners will continue providing updates as they materialize, but please do not hesitate to reach out with any questions.
