|Update on the Debt Ceiling and Government Funding Levels 5-30-2023|
SUMMARY: The President and House Speaker Kevin McCarthy announced an agreement over the weekend to raise the debt limit and determine agency funding levels, leaving Congress just six days until the new estimated default date of June 5.
On Saturday, President Biden and House Speaker Kevin McCarthy (R-CA) announced a deal to address the debt limit and government funding. This came after Treasury Secretary Janet Yellen notified Congress on Friday that the U.S. government would be able to pay its bills on June 1 and 2, including payments to veterans, Medicare providers and Social Security recipients, leaving the government with very little cash on hand. She then projected that the government would not have enough money to pay all of its bills due the following week, beginning June 5.
The agreement, called the Fiscal Responsibility Act (H.R.3746), would suspend the debt ceiling until January 1, 2025, but the Treasury Department’s “extraordinary measures” will be replenished during that time, pushing the next anticipated default date at least several months later. The agreement also places limits on overall discretionary spending for the next two fiscal years. Defense spending would rise about 3 percent next year, while non-defense spending would remain essentially flat, averting enormous cuts to key programs and investments that would have occurred if forced to return to FY 2022 levels as proposed in the House Republican debt limit bill that was passed by House Republicans last month. That bill also would have imposed 10 years of spending caps, where this agreement would increase non-defense spending by 1 percent in FY 2025, with no budget caps after FY 2025, only non-enforceable appropriations targets. The bill gives Congress some encouragement to actually pass its annual appropriations bills rather than simply sidestep the new budget caps with a full-year Continuing Resolution. If the 12 spending bills are not passed by year’s end, a 1 percent spending cut would be enforced and applied evenly to defense and non-defense accounts to keep the pressure bipartisan.
The House Republicans’ debt limit bill would have also rescinded more than $71 billion of the $80 billion provided to the IRS in the Inflation Reduction Act of 2022 (IRA). Instead, the Fiscal Responsibility Act would rescind $1.4 billion of IRA funding for IRS enforcement efforts. However, the deal includes an agreement, which is not in the legislative text, to repurpose
NTEU is very disappointed this agreement strips away critical funding from the IRS given the adverse impact that insufficient funding for the IRS has had on its’ ability to meet its’ mission. Rest assured that we will work with our supporters in Congress to fight any additional attempts to target funding at the IRS and to ensure the agency is provided with the resources necessary to provide taxpayers with quality service while generating critical revenue that can be used to reduce the deficit or pay for important services. We will also fight to restore the IRA funding proposed to be repurposed under this deal to ensure the IRS can finish executing the changes needed to modernize the agency so it can meet its mission.
The House is expected to vote on the bill as soon as Wednesday evening and then the Senate will begin consideration of the bill. The legislative path remains uncertain, but NTEU continues to encourage Congress to increase or suspend the debt limit and avoid a catastrophic default. We will keep you updated on additional developments. For more information click here.
Anthony M. Reardon