After a month of frantic on-again, off-again negotiations between Speaker McCarthy and the White House over the debt ceiling, a bipartisan agreement was reached and eventually signed into law on June 3. Both sides immediately claimed victory and put out two very different narratives about the deal. Here’s the score as we see it:

Republican Wins	Democratic Wins
3% increase in defense spending without new non-defense spending	2-year debt ceiling increase
Ends student loan payment pause	Spending caps limited to 2 years
Moderately streamlines energy project permitting	IRS cuts will be used to backfill spending caps, negating the cuts
Narrowly expanded work requirements for SNAP and TANF	New SNAP/TANF work requirements will actually increase eligibility by exempting veterans & homeless
Cuts to IRS funding and rescinds some unspent COVID aid	No cuts to key Biden victories (Inflation Reduction Act, Bipartisan Infrastructure Law)

 

On its face, Republicans appear to have secured some major policy and spending victories, but a closer look tells a different story. First, there were rumors that the current student loan repayment moratorium was likely to end sometime this summer, so the agreement may have only expedited that process by a few months. Additionally, the new work requirements for SNAP, commonly known as food stamps, only apply to individuals aged 49-55, and because it also expanded exemptions for veterans, individuals experiencing homelessness and former foster youth, the end result will actually increase the number of individuals eligible for SNAP. Lastly, the spending caps, which cap nondefense funding at current levels for Fiscal Year 2024 and provide a 1% increase in Fiscal Year 2025, are expected to largely be backfilled by transferring the $20b in IRS cuts included in the deal.

In short, Democrats conceded very little to get a longer-than-average two-year suspension of the debt limit. That said, many progressive Democrats voted against the bill because they argue that neither party should ever use the full faith and credit of the United States as leverage to extract spending cuts and policy goals. To them, any deal that is not a clean increase in the debt ceiling is a loss.

Regardless of the ‘score’ and which party really won out in the deal, Speaker McCarthy successfully overcame the first major hurdle in his Speakership by negotiating a deal that got the support of more than half of the Republican Members of Congress. While many conservatives were disappointed, it does not appear that they will mount a formal effort to vote him out as Speaker of the House any time soon.

That won’t stop conservatives from making Speaker McCarthy’s life difficult, though, as they demonstrated by voting down a procedural measure on Tuesday, June 6. By voting down the rule, conservative Members effectively halted legislative activity in the House for an entire day, and delivered McCarthy a black eye that no party leader has experienced since 2002. They also secured a promise from Majority Leader Scalise to bring up Congressman Clyde’s legislation, which would overturn a new Biden regulation on pistol braces, for a vote next week.

What’s Next In Congress

One of the most interesting provisions in the debt ceiling deal is a requirement for Congress to pass all 12 appropriations bills, which fund different aspects of the federal government, instead of relying on a continuing resolution to fund the government at level-funding. If Congress fails to pass all 12 bills by January 1, 2024, an automatic reduction in funding would go into effect, funding all programs at 99% of the current Fiscal Year level.

With less than 35 legislative days left before the end of the Fiscal Year on September 30, getting all 12 bills passed will be a tall order and Congress will need to get moving quickly or keep lawmakers in Washington over parts of August to get it done. Speaker McCarthy will need to navigate a number of difficult votes as hardline conservatives press him to hold firm and cut spending. Meanwhile in the Senate, Majority Leader Schumer will have to use valuable floor time that could be used to approve judicial nominees to pass individual spending bills that can get more than 60 votes.

In other words, Congress is going to have to take the hard votes and work together to find common ground to avoid stagnating federal funding and a mini ‘fiscal-cliff’ at the beginning of the New Year.

 

Ash Arnett, PACE Government Affairs, NACM’s Washington Representative