What's Cuts Are in the Biden-McCarthy Debt Limit Deal?
The debt-limit deal would rein in spending on some federal government services but barely dents the roughly $20 trillion in combined budget deficits projected over the next decade.
The agreement between President Joe Biden and House Speaker Kevin McCarthy reached Saturday won’t dramatically shift the nation’s finances because it mostly takes a slice — out of a slice — of the budget known as discretionary spending.
It could be days before the Congressional Budget Office sifts through the ledgers to offer a politically neutral tally of the impact, and then months before the deal’s outline leads to final decisions on funding for individual agencies and programs.
But the deal, on which the House intends to vote Wednesday, provides a glimpse of what is to come. Here’s what is taking shape so far:
Budget Caps
The agreement caps non-defense discretionary spending at just below current levels. Those accounts are a relatively small part of the total budget but include funding for the environment, scientific research, the Department of Justice and more.
At a time of 5% annual inflation that means there’s not enough money next year to sustain the same federal government services outside national security areas.
Even in defense, there would likely have to be some selective trims, since the 3.3% increase that the White House and Republican negotiators settled on, and which Biden put in his annual budget request, is also less than the inflation rate.
Both defense and non-defense would then get a 1% increase in 2025, again well below inflation. Republicans had pushed for a decade of tight 1% increases, but the White House refused.
Entitlement Programs
The deal doesn’t touch most of the fast-growing entitlement programs like Medicare, Social Security or Medicaid, which represent the bulk of the budget.
The deal would also impose new restrictions for the Agriculture Department’s food stamp program — or Supplemental Nutrition Assistance Program — for 50- to 54-year-olds with no job or dependents.
But the Biden administration won agreement for exceptions making it easier to qualify for veterans, homeless people and young adults just emerging from foster care. That is likely to add about the same number of people as leave the food assistance program, a White House official said.
