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The Debt Ceiling Bill Faces Its First Test: Live Updates

President Joe Biden speaks to members of the press upon returning to the White House on Sunday. Photo: Anna Rose Layden/Getty Images

After weeks of unnecessary brinksmanship by Republican leadership in Congress, the White House negotiators and House Speaker Kevin McCarthy reached an agreement to raise the debt ceiling on Saturday. If the bill makes it through Congress, the U.S. will avoid a June 5 default (and self-inflicted economic crisis.) On Tuesday, the bill faces its first test in the Republican-controlled House Rules Committee takes a look at it in a meeting scheduled for 3 p.m.

To recap, the debt ceiling is the max amount of outstanding debt the federal government is authorized to borrow to keep the country running, from Defense spending to Social Security and beyond. It is not the cap for what the government spends — in fact, it’s paying back money that’s already been spent. The ceiling was last raised two years ago to a limit of $31.4 trillion, which the government hit in January. Since then, it’s been able to avoid catastrophe by taking “extraordinary measures,” which amount to delaying investments for pensions and other payments. President Joe Biden achieved his goal to reach a two-year agreement for the ceiling, though Republicans — who rarely care about the national debt when they hold the Oval Office — had been playing hardball ahead of the deadline. Below are updates on what we know about the deal, the reaction to it, and what hurdles remain.

The bill faces its first test for approval in the House

The Republican-controlled House Rules Committee will meet at 3 p.m. on Tuesday before sending the bill to the House floor for a vote that GOP leadership intends to hold on Wednesday. Normally, Rules Committee votes fall along party lines, but far-right Republican committee members Chip Roy and Ralph Norman have criticized the deal for not taking further cuts. Speaker McCarthy has said he is not worried about the Rules Committee vote, but if Roy and Norman were able to peel off another Republican for a no vote — like far-right ally Thomas Massie — the delay could put the U.S. closer to default.

Final text of the bill released

The finished bill, dubbed the “‘Fiscal Responsibility Act of 2023’’ was made public on Sunday night. Read it here.

So what’s in the agreement?

Negotiators are still finalizing the text of the bill as of Sunday afternoon, but the broad outline of the agreement seems to have become clear. Here’s what we know about what the bill will do, based on the reporting so far:

• Increases the debt ceiling for two years (until after the 2024 presidential election).

• Keeps non-defense federal spending flat for the 2024 fiscal year, then allows a 1 percent increase for the 2025 fiscal year, followed by non-enforceable funding targets in future years. The Washington Post characterizes this as a spending “near-freeze” which is “far closer to a typical federal spending deal during divided government, even if it’s not what Democrats would prefer.”

• Tightens restrictions for SNAP food assistance and Temporary Assistance for Needy Families (a family welfare benefits program) per Politico:

New time limits would be phased in for people without children up to age 54 to receive food assistance through SNAP if they do not complete certain work requirements. Under current law, those time limits only apply to people up to 49 years old. Those expanded limits will sunset in 2030.

SNAP eligibility for the homeless and veterans will reportedly be increased as part of the deal, however.

• Claws back some of the $80 billion in IRS funding that Democrats passed in last year’s Inflation Reduction Act, which was intended to help the agency modernize itself and target wealthy tax cheats.

• Claws back unspent federal COVID relief funds, which will most likely impact a range of public health efforts, including preparations for future pandemics.

• Cements the planned end, later this year, of the pandemic-length freeze in student loan payments and interest. (The deal does not impact the Biden administration’s attempt to cancel up to $20,000 of individual borrowers’ student debt — the fate of which will still be left to the conservative-majority Supreme Court.)

• Makes minor efficiency-improving changes to the energy permitting process, but falls far short of a grand bargain on energy permitting which both Democrats and Republicans had hoped to work out.

• Increases funding, slightly, for the military and V.A., meeting the Biden administration’s budget request.

Democratic leaders seem set to back the bill

Both Speaker McCarthy’s team and the White House have reportedly been working the phones to secure votes for the bill, with both sides claiming victory. And Senate Majority Leader Chuck Schumer sounded like he was on board in a letter to his colleagues on Sunday:

House Freedom Caucus isn’t happy, as expected

A representative example of how the conservative caucus is reacting to the deal:

They have a deal

President Biden and Speaker McCarthy finally reached an agreement in principle on Saturday to raise the debt ceiling for two years, reportedly in exchange for cutting and capping government spending — though it’s not yet clear how much. McCarthy said Saturday night that the bill was still being written, but that the text would made available to members Sunday, at which point they would have 72 hours to review it before the House will vote on the bill on Wednesday.

The New York Times reports that the deal will “effectively freeze federal spending that had been on track to grow” over the two years. McCarthy maintained that “we still have a lot of work to do,” but nonetheless framed the agreement as a win:

It has historic reductions in spending, consequential reforms that will lift people out of poverty into the workforce, reign in government overreach. There are no new taxes, no new government programs. There’s a lot more within the bill.

“I expect to finish the writing of the bill, checking with the White House and speaking to the president again, tomorrow afternoon, and then posting the text of it tomorrow,” McCarthy said at a press conference. His team also put out a fact sheet late Saturday:

The White House has scheduled a briefing for Democratic lawmakers about the agreement at 5 p.m. on Sunday.

Biden said in a tweet that the agreement “represents a compromise, which means not everyone gets what they want”:

Republican hardliners are already scheming against the bill

GOP hardliners and their allies “are plotting ways to gum up passage of the bill or add amendments to make it more appealing,” NBC News reports. It’s not clear that any of them even know what’s in the bill yet, but it comes as no surprise that the hardliners are opposed to a compromise. Even if the bill has enough votes in the House and Senate, there will undoubtedly be efforts to slow it down.

Whipping into shape?

NBC News spotted House Majority whip Tom Emmer and members of his whip team heading into Speaker McCarthy’s office on Saturday afternoon, noting that it “suggests movement in negotiations” — since Emmer will have to push House Republicans to support any plan and vote counting is expected to begin immediately after any deal is reached. About a half hour later, there was a different kind of movement: Emmer left and returned to his own office.

No deal as of midday Saturday, but they’re still trying

Lawmakers continued to express cautious optimism to reporters as negotiations continued Saturday. Speaker Kevin McCarthy, for one, said in the morning that “I feel closer to an agreement now than I did a long time before” — which is the latest variation of what most of everyone’s comments have been for a few days. A Democratic source told NBC News that an agreement was “very close but not done yet” and that it was “still possible” the deal could be finalized Saturday. Meanwhile, Congress has ground to a halt and congressional reporters continue to take in the same collective view at the Capitol:

Negotiations enter the wee hours

President Biden told reporters on Friday evening that he hoped there would be “evidence” of an agreement by midnight. There wasn’t:

But at least both sides have remained “hopeful” about the ongoing congressional conclave:

Yellen says Treasury will run out of cash by June 5

Treasury secretary Janet Yellen told U.S. lawmakers in a letter on Friday that the U.S. will have run out of funds to pay its bills by June 5, following the more than $130 billion in payments scheduled for June 1 and 2. Previously, Yellen had estimated the deadline would be “as early as” June 1, but now lawmakers will have until Monday, June 5, to avoid a default.

Where does the deal stand now?

Per the current state of negotiations, Republicans want to create steep requirements for people who receive SNAP food benefits, cash assistance, and Medicaid. With the Congressional Budget Office estimating that as many as 600,000 Medicaid recipients could lose coverage, Biden has refused to accept compromises on this front. A source familiar with the negotiations told the Associated Press that both sides are currently “dug in” on this matter. But House Speaker Kevin McCarthy said on Friday morning that “we made progress last night … we know it’s a crunch.”

Both parties want to raise the ceiling until after the 2024 election. While Biden wants to keep spending levels steady — neither growing nor receding — McCarthy hopes to cut spending for next year and levy a one percent cap on spending growth for 2025.

When does a deal have to be reached?

Treasury Secretary Janet Yellen has warned that the U.S. could run out of money to pay its debts by June 5, resulting in a default that would have severe effects throughout the global economy — with the impact increasing the risk of an immediate recession if the default goes on for weeks. With lawmakers going into recess until Tuesday for Memorial Day, that leaves less than a week to get it done after they return.

This post has been updated.

The Debt Ceiling Bill Faces Its First Test: Live Updates