Debt ceiling agreement better than the alternative

Over the Holiday weekend negotiators in Washington struck a deal relating to the federal debt ceiling that would suspend the debt ceiling until January 1, 2025. The challenge for House Republicans is that they BARELY have a majority in one house in order to gain leverage on spending and their party has not exhibited fiscal restraint in general (as recently as the Trump Administration).  

While we believe the deal is better than the alternative, the interesting question is whether it ultimately is embraced by enough on the right and left to pass. If not, which side kills it and who is blamed if it is killed. New Mexico’s delegation has (so far) been quiet with the exception of Rep. Gabe Vasquez who represents the most competitive seat and has stated his support for the deal.

Here are some of the key provisions:

Via CNN: Under the deal, non-defense spending would remain relatively flat in fiscal 2024 and increase by 1% in fiscal 2025,

Under the deal, $11 billion in rescinded unobligated Covid-19 relief funds and $10 billion in money shifted from the Internal Revenue Service would be used to beef up non-defense discretionary spending. Also, $10 billion in funds repurposed from mandatory programs and $23 billion that’s designated as emergency funding would be shifted.

The agreement calls for temporarily broadening of work requirements for certain adults receiving food stamps.

Currently, childless, able-bodied adults ages 18 to 49 are only able to get food stamps for three months out of every three years unless they are employed at least 20 hours a week or meet other criteria. The agreement would increase the upper limit of the mandate to age 55 in phases, according to the bill text.

The deal would rescind roughly $28 billion in unobligated funds from the Covid-19 relief packages that Congress passed to respond to the pandemic, according to the House GOP,

Under the deal, borrowers would have to begin paying back their student loans at the end of the summer.