What the Debt Limit Deal Included
In the heat of the throwdown on Capitol Hill concerning the debt limit, we wrote about what a default would mean for small businesses. But as expected, the debit ceiling was lifted with several concessions. Today we’ll dive into the bi-partisan agreement that eased a lot of fears across the globe—including those of many small businesses.
The debt limit deal is a 99-page agreement that President Biden and speaker Kevin McCarthy came to just days before the United States defaulted on its financial obligations. To recap, the debt ceiling (or debt limit) “is a restriction on how much the federal government can borrow to pay its bills and allocate funds for future investments. When Congress appropriates or directs government money to be spent, the government is obligated to pay those funds, creating a bill it must pay” as explained by usafacts.org. When the bill for the federal budget Congress passes each year comes due—which could be years after its original passage—the United States has an obligation to pay it. If it can’t, the U.S. risks default. This means that social security recipients, veterans, and more stop getting the funds they rely on to live. It spells doom for the country and our allies across the globe.
The debt-limit showdown happens on a regular basis, and the debit limit is usually lifted without argument. When we’re operating with a highly partisan congress, however, a debate can ensue—one that aims to curb spending (despite the fact that the bills we’re expected to pay are part of an agreement that was already reached by both houses of congress). This past debate brought about several concessions in order to raise the debt ceiling (which is currently set to $31.4 trillion) until January 1, 2025.
Included in the bill that lifted the debt limit were restrictions to spending over the next 2 years and policy updates that weren’t necessarily favored by the Democratic arm of congress: work requirements for those 55 and younger who receive benefits through the Supplemental Nutrition Assistance Program (SNAP) plus Temporary Assistance for Needy Families, with exceptions for veterans and homeless people,” and approval of the Mountain Valley Pipeline that “crosses 9 counties to bring natural gas to eastern markets” and is considered by Democrats to be harmful to the environment. There were also caps for the next 2 years on non-defense discretionary spending.
In the final hours of negotiations, the “Congressional Budget Office said the spending restrictions in the package would reduce deficits by $1.5 trillion over the decade, a top goal for the Republicans trying to curb the debt load” according to the Associated Press. With the passage of this deal, the Treasury is able to keep borrowing money to pay the bills our country has already incurred.
Overall neither political party was particularly thrilled with the outcome of the deal. But one thing we can be sure of is that it’s highly likely we’ll be back in this same spot come January 2025.
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