Debt ceiling deal: What's in it and why some lawmakers are unhappy

Conservative members of the Republican caucus vowed to stop a debt ceiling deal to avoid financial calamity for the United States brokered by the White House and House Speaker Kevin McCarthy.

After weeks of negotiating, the two sides agreed to a deal over the weekend. The bill made it out of the House Rules Committee on Tuesday evening despite objections from right-wing members, meaning it now moves on to a vote by the entire House and then the Senate. Projections by the Treasury Department and other analysts have said that the government could run out of money to fulfill its debt obligations within the next two weeks.

Right-wing resistance

At a press conference Tuesday afternoon outside the Capitol, members of the hard-right House Freedom Caucus expressed their displeasure with the agreement and urged all Republicans to vote against it.

“This deal fails completely,” said Rep. Scott Perry, R-Pa., the caucus chairman. “And that’s why these members and others will be absolutely opposed to the deal and we will do everything in our power to stop it and end it now.”

Perry cited the bill’s failure to do anything to roll back President Biden’s student loan forgiveness proposal or the Inflation Reduction Act, which passed last year and includes provisions for clean energy production. Perry and his colleagues were also critical about the size of cuts to last year’s funding increase for the Internal Revenue Service.

The Congressional Budget Office projected that increasing the IRS budget would pay for itself, and early returns of the funding boost resulted in what the agency said was a dramatic reduction in call-wait times earlier this year during tax season.

Rep. Ralph Norman, R-S.C., a Freedom Caucus member who also serves on the Rules Committee, said the only two factions supporting the bill were the Chinese government (because it would be able to purchase more U.S. debt) and the Biden administration.

“This bill is un-American,” Norman said. “It defies conservatism. No Republican in good conscience should support this. Go back to the drawing table. Let’s go back, and if we’re going to negotiate — negotiate does not mean completely evaporate, completely dismiss the things that we passed.”

The representatives praised a bill passed last month by House Republicans that would raise the debt ceiling while also cutting a number of social spending programs. Members of the Freedom Caucus said that bill should be the model from which a new agreement is reached.

Both Norman and Rep. Chip Roy, R-Texas, voted against the deal in the Rules Committee on Tuesday, the only two of the nine Republican members on the committee to do so. Earlier in the day, Roy said the agreement had “torn asunder” the House GOP and threatened a “reckoning” for Republican leaders like McCarthy.

What’s in the Biden-McCarthy deal

Included in the tentative agreement announced Saturday is a two-year boost of the debt ceiling through early 2025, meaning that it will not be an issue until the next presidential term.

The deal keeps nondefense spending near current levels into 2024, before a small increase the following year, while clawing back unspent COVID-19 relief funds. The deal would not cut spending for the military budget and instead increase Pentagon spending.

There are no new taxes in the bill (Republicans rejected a proposal by Biden to increase rates on wealthier Americans) nor any work requirements tied to Medicaid, which was in the original GOP proposal. The bill would, however, add work requirements for some SNAP recipients in their early 50s without children.

McCarthy and his allies, however, were able to show that Republican legislators can still extract policy demands from a Democratic president in debt ceiling fights. So-called clean debt-limit raises, in which the ceiling was raised without a dramatic standoff or threat of default, were once a matter of course in Washington.

A failure to raise the debt ceiling would have resulted in a default by the government on its debts. In March testimony to Congress, Moody’s Analytics chief economist Mark Zandi estimated that a default would cost 7 million jobs, raise the unemployment rate to 8% and wipe out a fifth of the stock market’s value — eliminating about $10 trillion in household wealth.

Progressive response

In a call with reporters Tuesday afternoon, the Congressional Progressive Caucus chair, Pramila Jayapal, D-Wash., said she “very much [appreciated] what the president and his team did to minimize the most extreme demands and impulses of these MAGA Republicans.” However, Jayapal also said she had “deep concerns,” and that it was on McCarthy to find votes for the deal.

When asked if she would be upset if a majority of Democrats supported the bill, Jayapal said no, saying it was a “tough decision” and that “none of us want the country to go into default.” However, she repeatedly expressed her concerns about the precedent this was potentially setting for future negotiations.

“We can’t afford to have constitutional obligations taken hostage,” Jayapal said. “We need to get rid of the debt ceiling when we next take the majorities back, because it’s clear that Republicans don’t take these constitutional obligations seriously and instead use them as a pawn in the negotiating process.”

Jayapal cited the additional “red tape requirements” for food assistance and the approval of the 300-mile Mountain Valley Pipeline from West Virginia to Virginia. The pipeline also has opponents in the Senate, with Sen. Tim Kaine, D-Va., saying Tuesday that he would introduce an amendment to strip that provision from the final agreement.

Jayapal also argued that the cap on spending will result in “very, very difficult choices to make” with regard to spending programs but noted Republicans did not win any “concessions on spending.”

“I don’t want to minimize the challenges with the bill,” she said. “There will be real, harmful impacts for poor people and working people being barred from income support that they not just desperately need, but frankly, that they deserve. There will be impacts for environmental justice and the fight against the climate crisis.”