A major focal point during recent weeks in the nation’s capital has been to avoid an impending crisis expected to occur unless constructive action is taken to prevent the federal debt ceiling limit from being reached in early June. The current borrowing limit is $31.4 trillion. President Biden and his Democrat colleagues in Congress for several months advocated that a clean bill should be developed, which entails no restrictions on current federal government expenditures. That view clashed with the perspective of Republicans in both legislative chambers who share a core belief that it is necessary to rein in spending that regularly contributes to unsustainable growth in the overall federal deficit. Achieving a final result following rounds of strenuous negotiations is perceived as producing either elation or sorrow, depending on where each policymaker stands along the political divide of liberal v. conservative.
Passage of the Fiscal Responsibility Act of 2023 (H.R. 3746) made it possible to suspend the debt ceiling until the first quarter of 2025. The bill was passed in the House of Representatives on a vote of 314-117, which included 165 Democrats. The Senate gave its approval the following day on a vote of 63-36. President Biden signed the legislation into law (P.L. 118-5) on June 3. Otherwise, only two days later, the government would have been compelled to reneg on its debt obligations in the absence of a borrowing cap extension. Some features of the bill are as follows:
The Congressional Budget Office (CBO) estimates that the deficit could be reduced by $1.5 trillion through fiscal year (FY) 2033, including a $1.3 trillion reduction in discretionary spending that starts in FY 2024.
A 1% sequester on discretionary spending will be triggered if Congress fails to pass all FY 2024 appropriations bills. That fiscal year begins on October 1, 2023.
Military spending would increase about 3% in FY 2024.
Other provisions will reduce some funding for the Internal Revenue Service, tighten some work requirements for the Supplemental Nutrition Assistance Program (SNAP), and attempt to speed permitting for energy projects.
Student-loan payments have been suspended since 2020 because of the COVID-19 pandemic. Interest accrual and repayments would restart by the end of August 2023.
Major programs, such as Medicare and Social Security are left untouched by spending cuts in P.L. 118-5.