McCarthy-Biden debt deal eliminates unspent COVID funds, blocks IRS expansion and reforms permitting

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Just The News

Nicholas Ballasy

May 28, 2023

The debt limit deal struck late Saturday between House Speaker Kevin McCarthy and President Joe Biden rolls back some of Washington’s massive spending while delivering other conservative priorities like blocking new taxes and requiring some welfare recipients to work, according to a summary obtained by Just the News.

McCarthy described the deal as an "agreement in principle," and it rolls back domestic spending to fiscal year 2022 levels while limiting "top line federal spending to 1% growth for the next 6 years."

The debt limit would be raised by about $1.5 trillion until after the next presidential election as part of the agreement.

The outline of the deal includes clawing back tens of billions of dollars in unspent COVID-19 stimulus funds and streamlining the regulatory permitting process for energy projects with the first major reform to the National Environmental Policy Act (NEPA) since 1982, according to the House GOP document.

Most Republicans and some Democrats have complained NEPA’s red tape has been slowing energy production in America, from oil and gas drilling to new clean energy projects.

The agreement also reduces funding for the hiring of additional Internal Revenue Service agents by eliminating the fiscal year 2023 staff funding request for new agents.

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Debt ceiling deal: Read the full legislative text aimed at averting a default
Ryan King, Breaking Politics Reporter
May 28, 2023

Speaker Kevin McCarthy's (R-CA) office released the full text of the compromise debt ceiling bill late Sunday, teeing up a likely Wednesday vote on its passage.

The bill, dubbed the Fiscal Responsibility Act of 2023, will suspend the debt ceiling for roughly two years in exchange for a slew of spending clawbacks and other reforms. Treasury Secretary Janet Yellen most recently projected that the government has until June 5 before it could start running dry on cash to meet its obligations if no debt limit hike occurs.

BIDEN AND MCCARTHY'S TENTATIVE DEAL RAISES DEBT CEILING UNTIL 2025

“The American people elected House Republicans to stop the out-of-control inflationary spending that has broken family budgets. Today, we secured a historic series of wins worthy of the American people," McCarthy, Majority Leader Steve Scalise (R-LA), Majority Whip Tom Emmer (R-MN), and Chairwoman Elise Stefanik (R-NY) said in a joint statement.

Both sides announced they achieved a tentative breakthrough on the monthslong impasse Saturday and staff quickly begin working to draft up the text of the bill shortly thereafter. McCarthy has vowed to give his members at least 72 hours to parse through it.

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About the Debt Ceiling Deal

Steven Hayward

May 29 2023

We don’t have many of the fine details of the debt ceiling deal Kevin McCarthy has struck with (P)resident Joe Biden yet, but my first proposition is that the exact details don’t matter, and my conclusion is that the outcome is a modest but potentially significant win for Republicans. I think McCarthy played a weak hand—the political equivalent of a pair of deuces—extremely well. The political outcome of this deal is more important than the near-term fiscal policy outcome.

This is not the consensus of many conservatives right now, but The Squad and other “progressives” don’t like it either. It appears that the compromise will be passed with a typically swampy center-out bipartisan vote that most Power Line readers will hate. But before you take to the comment thread to demand that “Lucretia” kick my rear end, hang with the analysis for a moment.

There is a lot of criticism that McCarthy got a bad deal because the spending restraints are modest to non-existent (likely true), and moreover that he only got a $10 billion cut from the $80 billion passed last year for stepped-up IRS harassment of American taxpayers, after promising to rescind the entire amount as part of a deal. I suspect the IRS can’t actually absorb the $80 billion in new funding, or the surge of agents it funds, so a $10 billion cut is no real sacrifice at all by Democrats. It will require a Republican House, Senate, and President to roll back this predation fully, and that will have to wait another 18 months.

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But keep in mind that as recently as two weeks ago Democrats in Congress said any work requirements for welfare benefits would be a deal breaker. As I have argued on the podcast and elsewhere, this is because for Democrats, welfare programs are not relief for people in temporary distress, but means of redistribution by way of entitlement, and as such any suggestion of reciprocal obligation by recipients is a direct blow to their ideology.

These kind of political concessions are more important going forward than whether the budget for the next year is capped at 1 percent growth or 2 percent growth. McCarthy has won an important concession from Biden on this point, and even if the media ignores it, “progressive” Democrats are fuming about it, and Republicans, if they have the wit for it (always doubtful) can run with it.

Caveat: This assessment subject to change as we get further details of what’s in the bill the House will vote on.