The full legislative text of Speaker Kevin McCarthy’s debt limit agreement in principle with President Biden includes a two-year suspension of the debt ceiling, allowing the government to borrow as much money as it needs to pay its bills during that time period — as long as Congress passes the agreement before June 5, when the U.S. is forecast to run out of cash.
In exchange for suspending the limit, Republicans demanded a range of policy concessions, including limits on the growth of federal discretionary spending over the next two years and some new work requirements for certain welfare recipients. Both sides agreed to modest efforts meant to accelerate the permitting of some energy projects.
Under the new legislation, the debt limit will be set at whatever level it has reached when the suspension ends in 2025. For political reasons, Republicans tend to prefer suspending the debt limit rather than raising it, because it allows them to say they did not technically green-light a higher debt limit.
Details: The bill cuts spending on so-called nondefense discretionary, which includes domestic law enforcement, forest management, scientific research and more, for the 2024 fiscal year. It would limit all discretionary spending to 1 percent growth in 2025, which is effectively a budget cut, because that is projected to be slower than the rate of inflation.
– The New York Times