The US debt ceiling compromise deal between the Democratic President Joe Biden and Republican House Speaker Kevin McCarthy has cleared the first voting hurdle in the House of Representatives despite a hard-line Republican revolt. The legislation will now pass to the Senate for voting.
An agreement was reached between the two on Tuesday after weeks of negotiations. Both Biden and McCarthy are confident that the deal will get enough votes to pass into law before the Treasury’s default deadline of June 5.
Under the agreed-upon deal, the $31.4 trillion debt ceiling would be suspended until after Biden’s current term. To complement the interest payment on the US national debt, which would take up an increasing share of the government budget, the Republicans had suggested steep spending cuts.
Spending would reduce from its projections by $1.5 trillion over ten years beginning in 2024. Under the deal, limits and restrictions would be placed on non-defence expenditures like housing, education and low-income aid programmes. Unused Covid-19 funds and some Internal Revenue Service (IRS) funds would be clawed back.
The new legislation would also speed up the permitting process for some energy projects and introduce work requirements for food aid programs for some poor Americans. The spending cuts and work requirements are far less than Republicans had sought. The deal leaves Biden’s signature infrastructure and green-energy laws largely intact.