Congress solved the problem with the public debt: there will be no default, but benefits will be cut and requirements for their recipients will be tightened
The US Congress passed the debt ceiling package just a few days before the Treasury Department would run out of funds sufficient to pay all obligations on time and in full. More details about the agreement, thanks to which it was possible to avoid default, told the publication CNN.
After months of deadlock and weeks of tense negotiations, the deal was finalized over the Memorial Day holiday weekend. But passage of the agreement in Congress was not guaranteed because it contained provisions that were not supported by lawmakers on both sides.
The text of the bill was made public on May 28 in the evening. With Congressional approval, it now goes to President Joe Biden for signature.
Now more about what is known about the package.
Removing the debt ceiling
The law suspends the $31,4 trillion government debt limit until January 1, 2025. This eliminates him as a potential problem in the 2024 presidential election.
This means that debt can exceed the ceiling without triggering a default. The bill caps non-defense spending that funds areas like public education and transportation in fiscal year 2024 and then increases it by 1% in 2025.
Limits non-defense spending
Non-defense spending will remain relatively flat in FY 2024 and increase by 1% in FY 2025 after certain adjustments, a White House spokesman said.
According to a GOP House fact sheet, non-defense discretionary spending will be rolled back to FY 2022 levels and total federal spending will be capped at 1% annual growth for the next six years.
Discretionary non-defense spending in fiscal 2024 will be capped at about $704 billion, with $121 billion for veterans' health care and $583 billion for other areas, a source familiar with the legislation said.
But the adjustments will increase the resources available for non-veterans health care spending to $637 billion in the coming fiscal year, up from $638 billion this year.
Under the law, $11 billion of canceled Covid-19 relief funds and $10 billion transferred from the Internal Revenue Service will be used to increase discretionary non-defense spending. In addition, $10 billion redirected from mandatory programs and $23 billion earmarked for emergency funding will be reallocated.
According to the text of the bill, about $886 billion will be spent on defense.
Veterans Health Care
The law will retain full funding for veterans' health care and increase support for the PACT Act fund by nearly $15 billion in fiscal 2024, a White House source said.
The PACT Act is a law that expands veterans' health care and benefits for veterans exposed to toxic substances.
The fact sheet of the Republican House of Representatives says that veterans' medical care will be fully funded.
Expands job requirements
The package provides a temporary increase in work requirements for some adults receiving Food Stamp Benefits.
Currently, childless working adults aged 18 to 49 can only receive food stamps for three months out of every three years unless they work at least 20 hours a week or meet other eligibility criteria. According to the text of the bill, the law will gradually increase the upper limit to 55 years.
The package will expand the exemptions for veterans, the homeless, and former foster children in the Supplemental Food Assistance Program, or SNAP, as food stamps are officially known.
All changes will end in 2030. The Congressional Budget Office forecasts that these provisions will increase the number of Food Stamp recipients by an average of 78 per month.
The package will, among other things, tighten the current requirements for working in the temporary assistance program for needy families, mainly by adjusting the labor participation rate that states can receive for reduced workload.
Job requirements will not be introduced into Medicaid, as House Republicans have called for.
COVID-19 Relief Funds
According to the Republican Party, the law will eliminate approximately $28 billion of free funds from COVID-19 relief packages that Congress passed in response to the pandemic.
He will keep $5 billion in funding to accelerate the development of vaccines and treatments for COVID-19, as well as vaccines and treatments for the uninsured, according to a White House source. In addition, he will save money for aid, the Indian Health Service and other measures.
Congress has approved roughly $4,6 trillion in COVID-19 relief since the pandemic began in early 2020.
Cuts funding to the Internal Revenue Service
Republicans in the House of Representatives were determined to forego the roughly $80 billion in 10-year IRS funding contained in the Inflation Reduction Act that Democrats passed last year. GOP lawmakers say the money will be used to hire an army of new agents to test Americans. True, the agency says they will also be used to support operations, modernize customer service technologies and help taxpayers.
The package will reallocate $10 billion of FY2024 appropriations and another $10 billion of FY2025 appropriations for use in non-defense areas, according to a White House source.
This provision does not appear in the text of the bill, but another source familiar with the agreement said that both parties agreed to it.
Separately, the law will eliminate $1,4 billion in IRS funding included in the agency's fiscal year 2023 spending plan for non-taxpayer services.
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The move means the IRS will run out of funding and be forced to ask Congress for more money in less than ten years, a White House spokesman said.
Student loan repayment
Under the package, borrowers will have to start paying off their student loans at the end of the summer, as the administration of US President Joe Biden has already announced. The pause has been in effect since the start of the COVID-19 pandemic.
The agreement prohibits the administration from renewing it again.
In addition, the package will support Biden's plan of up to $20 in debt relief for eligible borrowers. The measure is currently under review by the Supreme Court, which is expected to rule in the coming weeks.
According to a White House source, the law will, among other things, continue to implement Biden's income-based debt repayment plan.
Supports climate protection and clean energy measures
According to White House talking points, the agreement will not make any changes to the climate and clean energy provisions of the Inflation Reduction Act.
House Republicans sought to eliminate statutory tax credits and subsidies for clean energy.
The package also includes new measures in the National Environmental Policy Act to increase the coordination, predictability and certainty associated with federal agency decision-making, the White House source said.
It will appoint one lead agency tasked with developing a single environmental review document, and will also require agencies to complete the environmental review within one or two years for the most environmentally challenging projects.
Accelerates gas pipeline construction in West Virginia
The package will also speed up the construction of the Mountain Valley Pipeline in West Virginia.
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