House Passes Bipartisan Bill to Raise Debt Ceiling and Cut Spending for Next Two Years
The House of Representatives has passed a bill that would raise the nation's debt ceiling while cutting some government spending for the next two years. The bipartisan agreement between President Biden and House Speaker Kevin McCarthy suspends the debt ceiling and puts limits on some spending, including paring back money designated for the IRS, increasing spending for the military and veterans affairs in line with inflation, and increasing work requirements for certain recipients of federal food stamps and welfare. The Congressional Budget Office estimated that the deal could reduce projected deficits by about $1.5 trillion over the next decade.
Breaching the debt ceiling would have dire consequences for the global financial markets, wiping out jobs and plunging the US into a recession. The idea of default would break the widely held belief post World War II that America would never fail to fulfill its commitments. This time, there was good reason to worry that the US would tumble over the cliff.
Until January 1, 2025, the debt ceiling is suspended by the bill. Once reached, the debt ceiling can be circumvented by the Treasury Department through accounting strategies known as “extraordinary measures” allowing the country to avoid default for a few months. This implies that there will be no need to increase the debt ceiling until the middle of 2025, which is considerably after the 2024 presidential election and with a fresh Congress taking over.
The deal was a major victory for both the White House and Republican leaders as the country tiptoed closer to a historic default on its bills. The House’s passage of the bill comes after months of uncertainty and marked a rare instance in the Biden presidency where the House essentially forced the Senate to take up its deal with the White House.
Democratic Senate Majority Leader Chuck Schumer called the House vote “very good,” telling reporters that “we hope we can move the bill quickly here in the Senate and bring it to the president's desk as soon as possible.” The Senate must pass the bill before Monday's US default deadline.
The bipartisan debt agreement negotiated by Speaker Kevin McCarthy sparked opposition from both conservative and progressive lawmakers while garnering support from a broad section of Republicans and Democrats. Some of the conservative lawmakers even made an attempt to remove McCarthy from his position as Speaker.
Passing the bill marks the House’s biggest bipartisan victory since Republicans took over the chamber this year. So far, McCarthy has primarily engaged in contentious negotiations with members over a series of messaging bills that lack Democratic backing and have no potential to be enacted into law. He was confronted with numerous inquiries about his ability to garner sufficient Republican backing for the debt proposal.
The agreement is a critical test for McCarthy as speaker. McCarthy faced a delicate task due to his slim majority. He had to create a deal that met the expectations of most of his conference members while also not estranging the Democratic legislators whose backing was necessary for the bill's approval. In January, McCarthy had made commitments and concessions on House rules and spending to obtain the Speakership. For the most part, the different groups of the conference had managed to coexist peacefully in the preceding months. However, the dissatisfaction of the right-wing faction regarding the agreement on the debt ceiling caused this harmony to crumble.
The bill easily passed with support from 165 Democrats, who were torn between voting for a bill that includes some policies they oppose or risking a default. Many were surprised by the fact that McCarthy's bill received 165 votes from Democrats, while only 149 were cast by Republicans.
If both houses of Congress pass the agreement, it will remove the threat of a catastrophic debt default for another two years. The agreement secured by the Biden Administration has some occasional callous and misguided aspects, but it is more similar to the debt-ceiling deals of 2015, 2018, and 2019 rather than the severely harmful agreement passed in 2011.
However, the deal would increase the debt limit only until January 1st, 2025, at which point it would all start again. The cycle of brinkmanship and threats of economic self-destruction would continue.
0. “Debt ceiling deal passes the House as US moves closer to preventing historic default” ABC News, 1 Jun. 2023, https://abcnews.go.com/Politics/debt-ceiling-deal-passes-house-us-moves-closer/story?id=99739272
1. “Senate leaders stress time crunch as they prepare for debt ceiling bill” The Washington Post, 1 Jun. 2023, https://www.washingtonpost.com/politics/2023/05/31/senate-leaders-stress-time-crunch-they-prepare-debt-ceiling-bill/
2. “Debt limit rule adopted after Democrats ride to rescue” Roll Call , 31 May. 2023, https://www.rollcall.com/2023/05/31/debt-limit-rule-vote-emerges-as-key-question-mark/
3. “What Happens When the U.S. Hits Its Debt Ceiling?” Council on Foreign Relations, 25 May. 2023, https://www.cfr.org/backgrounder/what-happens-when-us-hits-its-debt-ceiling
4. “A break-glass option, gumbo and a bike ride: How the debt ceiling deal got done” NBC News, 1 Jun. 2023, https://www.nbcnews.com/politics/congress/break-glass-option-gumbo-bike-ride-debt-ceiling-deal-got-done-rcna87179
5. “Congress Races to Pass Debt Ceiling Deal” Charles Schwab, 31 May. 2023, https://www.schwab.com/learn/story/congress-races-to-pass-debt-ceiling-deal
6. “House passes debt limit deal as lawmakers race to avert default” CNN, 1 Jun. 2023, https://www.cnn.com/2023/05/31/politics/house-vote-debt-limit-bill/index.html
7. “House passes bill to raise debt ceiling into 2025” Axios, 1 Jun. 2023, https://www.axios.com/2023/06/01/house-passes-bill-to-raise-debt-ceiling-into-2025
8. “House Passes US Debt-Ceiling Deal, Heads to Senate as Default Deadline Nears” Bloomberg, 1 Jun. 2023, https://www.bloomberg.com/news/articles/2023-06-01/debt-ceiling-deal-goes-to-senate-after-mccarthy-wins-votes-for-pact-with-biden
9. “House passes bipartisan debt deal, sending it to Senate” POLITICO, 1 Jun. 2023, https://www.politico.com/news/2023/05/31/house-debt-ceiling-vote-00099573
10. “House approves Biden-McCarthy debt ceiling, spending cap bill” NPR, 31 May. 2023, https://www.npr.org/2023/05/31/1179246766/house-debates-the-biden-mccarthy-debt-ceiling-bill-as-default-deadline-looms
11. “House passes bill to raise debt ceiling” The Hill, 1 Jun. 2023, https://thehill.com/homenews/house/4029385-house-passes-bill-to-raise-debt-ceiling-days-ahead-of-default-deadline/
12. “Debt ceiling bill passes in the House, advances to the Senate days ahead of default deadline” CNBC, 31 May. 2023, https://www.cnbc.com/2023/05/31/debt-ceiling-bill-house-vote.html
13. “The Debt-Ceiling Deal Could Be a Lot Worse” The New Yorker, 30 May. 2023, https://www.newyorker.com/news/our-columnists/the-debt-ceiling-deal-could-be-a-lot-worse
14. “Can the debt-ceiling deal hold?” The Economist, 31 May. 2023, https://www.economist.com/united-states/2023/05/31/can-the-debt-ceiling-deal-hold