This Is How the Debt Ceiling Deal Exposed America’s Warped Priorities

Legislation brokered by U.S. President Joe Biden and House Speaker Kevin McCarthy to raise the debt ceiling of $31.4 trillion until the beginning of 2025 passed its most difficult obstacles, as the House of Representatives and the Senate approved it and sent it to the president for his signature.

President Biden is expected to sign this legislation into law before June 5, when the Treasury Department will run out of money to be unable to pay its debts for the first time in U.S. history.

In addition to suspending the public debt ceiling, the bill would cap some government spending over the next two years, excluding military spending, eliminate some Internal Revenue Service (I.R.S.) funding, speed up the approval process for some energy projects, and return unused COVID-19 money.

The contents of the bill drew objections from both right-wing Republicans and left-wing Democrats, but there were more than enough political centrists in both parties to get it over the line.

On its part, The Washington Post quoted budget experts as saying that “there are savings to be made in the discretionary budget, but the state will not fix its financial problems without increasing additional revenues and addressing fast-growing budget items such as Social Security.”

The newspaper agreed with the opinion of experts regarding how to stabilize debt over the next decade, considering that addressing entitlement programs is where the bulk of change must occur, with the importance of re-examining the discretionary budget to better prioritize it for the future of America.

The last time the U.S. came this close to overshooting its debt ceiling, in 2011, the credit agency Standard & Poor’s downgraded the country’s rating, a move that has yet to be reversed.

 

Debt Limit Deal

On June 1, 2023, the U.S. Senate voted in favor of passing a bill to raise the debt ceiling through early 2025, in a move that was praised by U.S. President Joe Biden.

Although some lawmakers objected to items in the legislation, they approved it, as 63 members supported it and 36 others rejected it.

The Senate vote came after the House of Representatives voted, on May 31, 2023, to approve a bill to raise the debt ceiling until early 2025, when 314 members voted in favor while 117 voted against.

In turn, U.S. President Joe Biden praised House Speaker Kevin McCarthy for negotiating in good faith.

“Just now, Senators from both parties voted to protect our hard-earned economic progress and prevent a first-ever default,” Biden said in a tweet.

Biden added, “No one gets everything they want in a negotiation, but make no mistake: this bipartisan agreement is a big win for our economy and the American people,” noting that the work is far from finished.

The U.S. President revealed that he is looking forward to signing this bill into force as soon as possible and addressing the American people directly after that.

It is noteworthy that it is a bill to raise the U.S. debt ceiling that was referred to the Senate only 5 days before the deadline to avoid a major default on debt payments.

U.S. President Joe Biden and Parliament Speaker Kevin McCarthy had reached an agreement in principle on suspending the debt ceiling for two years.

On his part, Republican Speaker of the House Kevin McCarthy said that “passing the Fiscal Responsibility Act is a crucial first step to getting America back on the right track,” adding that “this law does what is possible in a divided government,” stressing that “the bill provides for the largest budget cut in American history.”

 

Unprecedented Concessions

In exchange for suspending the limit, the Republicans demanded a set of policy concessions from Biden, chief among them restrictions on the growth of federal discretionary spending over the next two years.

Biden also approved some new work requirements for some recipients of food stamps and the Temporary Assistance Program for Families in Need.

The legislation imposes new work requirements on older Americans, ages 50 to 54, who do not have children living in their homes, and who receive food stamps through the Temporary Assistance for Families in Need program.

Under current law, these work requirements only apply to people between the ages of 18 and 49.

“The Debt Limit Deal puts hundreds of thousands of older adults aged 50-54 at risk of losing food assistance, including a large number of women,” Sharon Parrott, president of the Center on Budget and Policy Priorities (CBPP), said in a statement.

The parties also agreed to modest efforts aimed at speeding up licensing of some energy projects and, in a surprising move, speeding up construction of a new natural gas pipeline to Virginia.

In a related context, activists and environmental groups condemned the deal concluded between Biden and Republicans to raise the debt ceiling by including the acceleration of construction of the highly contested $6.6 billion Mountain Valley gas pipeline, in addition to imposing unusual measures to isolate this project from judicial review.

The New York Times reported that the bill would cut so-called non-defense discretionary programs, which include local law enforcement, forestry management, scientific research, and others, for the 2024 fiscal year.

All discretionary spending will be capped at 1% growth in 2025, which is effectively a budget cut because it is expected to be slower than the rate of inflation.

The newspaper pointed out that the legislative text and White House officials tell different stories about the size of these cuts in reality.

Veterans health care spending will also be funded within Biden’s proposed budget levels, according to the newspaper.

It said the legislative text indicates that non-defense discretionary programs outside of veterans’ programs will shrink in 2024 to roughly last year’s spending levels.

But White House officials say a series of side deals with Republicans, including one related to funding for the Internal Revenue Service, will allow actual funding to be closer to this year’s levels.

The White House estimates that the agreement will generate $1 trillion in savings over a decade of low discretionary spending.

The legislation targets one of President Biden’s biggest priorities, which is to strengthen the I.R.S. to pursue tax fraud and make sure rich companies and individuals pay what they owe, according to the newspaper.

Democrats allocated $80 billion to help the I.R.S. hire thousands more employees and upgrade its aging technology in last year’s budget.

A debt limit deal would return $10 billion in additional I.R.S. money in each of fiscal years 2024 and 2025 in order to maintain funding for some non-defense discretionary programs.

The deal would also raise the proposed military spending budget to $886 billion next year, which is in line with what Biden asked for in his 2024 budget proposal, and rise to $895 billion in 2025.

The bill would formally end Biden’s student loan repayment freeze by the end of August and limit his ability to reinstate that moratorium.

The bill also recovers about $30 billion in unspent money from the COVID-19 relief bill that Biden earlier signed, which was a top priority for Republicans going into negotiations.

 

Warped Priorities

Under the title Debt Ceiling Deal Highlights America’s Warped Priorities, Foreign Policy magazine talked about the failure of the United States to invest in its people, which shows the world the shaking of its power.

The May 30, 2023 article argues that the profligate bipartisan approach to funding the military is ultimately shortsighted because it is based on the belief that equipment is the country’s most important source of strength and the ultimate foundation for its standing in the world.

However, the agreed deal between Democrats and Republicans, in and of itself, is in no way something that should inspire confidence in the leadership role the United States plays in the world.

The article notes that this crisis is of an artificial nature and is a self-made crisis, and despite the exhilarating articles about the country’s great strength, resilience, and continued wealth and strength, the debt ceiling agreement was full of very disturbing signs.

The magazine shows that what is important to highlight in this budget discussion is the complete lack of self-imposed discipline of the United States in terms of military spending.

In many quarters, it is ritually noted that the United States spends more money on its military than the next 10 countries combined.

Yet this says little about the many failures of making choices informed by the need to sacrifice some things in order to do others that are more urgent.

The Department of Defense’s long-standing leniency, under a bipartisan administration, means that spending on failed, outdated, or wasteful weapons systems is nearly impossible to verify, another sign of deep dysfunction, Foreign Policy reported.

“The battle against climate change—one of the existential challenges people everywhere now face—lost out to a new pipeline project in West Virginia and something euphemistically called permitting reform, which means letting other oil and gas projects proceed more rapidly toward development,” the article adds.

“At the same time, the imposition of increased work requirements for things like food stamps and other forms of public support—a reflection of a degree of meanness for which the United States is already something of an outlier among the world’s wealthiest countries. Never mind that measures like these are unlikely to save much money,” the magazine notes.

Foreign Policy stressed that The bigger point is that when a rich and powerful country finds it easier to cut back on the way that it invests in its people, in education, in science, and in making sure that the weakest among them are not completely left behind than to curtail useless and profligate weapons spending, pointing out that there are reasons to worry about the foundations of its power and leading position.