McCarthy's New Debt Ceiling Deal: What's In It?

$80 billion Funding To The IRS And Increases In Defense Funding

Late Saturday night Speaker Kevin McCarthy announced that, “in principle”, the deal to raise the debt ceiling has been reached.

Further negotiations are expected on Sunday and early next week; with the vote being scheduled for Wednesday, May 31st.

McCarthy spoke to the press on Saturday night. Here are the key highlights:

• Timing: the debt limit extension would last past 2024. This is proposed so that Congress would not need to address the issue prior to the November 2024 presidential election. No budget caps after 2025;

• IRS funding: both parties agreed to secure $80 billion in new funding for the Internal Revenue Service to enforce the tax code (i.e. conduct more audits, hire new agents, update its software, etc.);

• Defense spending: the agreement is expected to boost defense spending to around $885 billion

• COVID funding: parties agreed to clawback unused COVID funds estimated to be between $50 billion and $70 billion;

• Green initiatives: parties agreed to new rules to make it easier for energy projects - including fossil-fuel based ones - to gain permit approva

• Government spending: the agreement cuts spending by $50 billion with non-defense discretionary spending capped at current year levels in 2024; will increase 1% in 2025;

• Social programs: new stricter work requirements on low-income people who receive food assistance.

On social media, the majority of comments have been that of a disappointment. McCarthy says that there is “a lot work to do” and further details will be announced soon.