News

Bill To Increase Debt Limit Passed By US House

Bill To Increase Debt Limit Passed By US House

In a narrow victory, the US House of Representatives passed a bill to increase the debt limit. This bill got Republicans uniting to push the legislation forward. The bill includes nearly $4.8 trillion in deficit reduction measures. Moreover, it aims to force Democrats to negotiate conditions for raising the nation’s borrowing limit. The legislation passed with a 217-215 vote, largely along party lines, after weeks of negotiations.

The bill proposes raising the debt limit by $1.5 trillion or extending it through March 2024. What the house decides on depends on which comes first. Other key factors include:

  • Cutting and capping discretionary spending for the next decade,
  • Repealing most energy tax credit provisions from the Democrats’ 2022 climate, tax, and health law,
  • Rescinding unobligated IRS tax enforcement and climate-related grant funds from the 2022 law,
  • Canceling President Joe Biden’s student loan forgiveness plan,
  • Expanding work requirements for the Supplemental Nutrition Assistance Program and Temporary Assistance for Needy Families.

House Republicans argue that the bill reflects shared priorities among various ideological factions within their party. Additionally, they argue that it serves as an opening offer to President Joe Biden and Senate Democrats who have called for a clean debt limit increase. Democrats, however, have criticized the spending cuts in the bill. They stated that they would have a significant impact on crucial government programs. Some of the most affected programs would be healthcare, nutrition services, education, and infrastructure.

The Senate is expected to ignore the House bill. Therefore, we might see increasing pressure to negotiate or act on an alternative plan. Senate Majority Leader Charles E. Schumer has not indicated that the House vote would change his negotiating position.

We think what Speaker McCarthy and the House have done is going to bring us closer to default, not further away from it…

Charles E. Schumer, Senate Majority Leader

President Biden “Will Do Anything Necessary” For Debt Limit Increase

Democrats are pushing for a clean debt limit bill, but it is unclear whether Schumer plans to bring one to the floor.

Our plan has always been the same: to avoid default, pass a clean debt ceiling β€” no brinksmanship, no hostage-taking…

Charles E. Schumer, Senate Majority Leader

Meanwhile, Senate Minority Leader Mitch McConnell and his conference support McCarthy’s insistence on spending cuts for raising the debt limit.

President Biden has threatened to veto the GOP bill and maintains that a clean debt limit increase is necessary. He has said he would meet with McCarthy again if House Republicans produce a budget with a non-negotiable debt limit increase. While it remains uncertain whether the White House will open the door to negotiations, some congressional Democrats believe that Biden will eventually do so.

As the deadline for the Treasury Department to run out of cash and wiggle room under the borrowing cap approaches, both sides must compromise to avoid a crisis. The exact timing of the deadline will depend on tax receipts still being analyzed by the Treasury, but an updated forecast is expected to be released soon.