A deal has been reached at the 11th hour to avoid the country defaulting on its debt, which could have had very dire consequences for the economy and the American people.
“The Speaker and I made clear from the start that the only way forward is with a bipartisan agreement. This agreement is an important step forward, and now it will go to the United States House and Senate,” President Joe Biden tweeted on May 28.
After months of stalemate and negotiations, the deal was reached. However, compromises were made on both sides.
“The agreement represents a compromise, which means not everyone gets what they want. That’s the responsibility of governing,” President Biden said in a statement posted on the White House website.
Student loan payments
The deal would lift the student loan payment pause. “Sixty days after June 30, 2023, the waivers and modifications described in subsection (c) shall cease to be effective,” according to the text of the bill.
This would see payments resume at the end of August and would save taxpayers “an estimated $5 billion per month,” according to a Republican fact sheet on the deal.
However, Republicans were unable to include a measure that would stop President Biden’s student loan relief program, which is currently under review by the Supreme Court.
Food Stamps: New Work Requirements
The deal includes new work requirements for government benefits such as the Supplemental Nutrition Assistance Program (SNAP) and the Temporary Assistance for Needy Families Program (TANF).
The final agreement included the Republican proposal to phase in SNAP work requirements to people up to age 54, while currently they go from 18 to 49, according to a White House press call transcript.
The White House said that there will also be changes that will reduce the number of vulnerable people who are subject to SNAP work requirements — exemptions that will apply to certain individuals aged 18 to 54 as well as the homeless and veterans. Foster youth may also see special consideration.
In addition, the SNAP changes are temporary, sunsetting in 2030. This will give Congress an opportunity to reevaluate them at that time, White House officials added.
The New York Times also reported that the age limit will be phased in over three years and include a “technical change to the TANF funding formula that could cause some states to divert dollars from the program.”
As AARP explained, the pay-as-you-go rule (PAYGO) “is designed to encourage Congress to offset the cost of any legislation that increases spending on entitlement programs or reduces revenues so it doesn’t expand the deficit. Under PAYGO, Congress must pay for such legislation by reducing other entitlement spending or increasing other revenues.”
Under the deal, the PAYGO rule would also apply to to executive actions, which, as Politico noted, would mean presidential actions like student loan forgiveness could require a huge offset.
The provision would expire at the end of 2024, Politico added.
As The New York Times reported, the deal would protect the military and programs such as Social Security and Medicare from spending cuts.
Internal Revenue Service Funds
The deal would immediately rescind $1.3 billion from IRS funding, according to the text of the bill. In addition, it would “ultimately repurpose another $20 billion from the $80 billion it received through the Inflation Reduction Act,” according to The New York Times.
Two Biden Concerns Absent From the Deal
President Biden wanted to raise taxes on corporations and high earners as part of his budget released in March 2023, but as The New York Times reported, this was not included in the deal.
As GOBankingRates reported at the time, the budget would have implemented a Billionaire Minimum Tax of 25% on the wealthiest taxpayers — those with wealth greater than $100 million.
Also, as The New York Times reported, President Biden wanted to take new steps to reduce Medicare’s spending on prescription drugs, but that did not make it into the bill.
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