5 takeaways: Biden, McCarthy strike deal to raise debt limit

President Biden and Speaker Kevin McCarthy (R-Calif.) reached an agreement in principle to raise the debt limit Saturday night, capping off days of high-stakes negotiations between emissaries for the White House and GOP conference.

The deal raises the debt limit for two years, beefs up work requirements on federal public assistance programs and claws back unused COVID spending, among other provisions.

But key steps remain before Biden can sign the agreement and avert a default ahead of next week’s deadline — hurdles that are becoming more and more steep, as conservatives and liberals voice concerns with the nascent deal.

Here are five takeaways.

Deal will raise debt ceiling past election

The deal struck between Biden and McCarthy raises the debt limit for two years — not by a monetary amount — punting any future battle over increasing the borrowing limit to after the 2024 presidential election, according to a source familiar with the negotiations.

It will protect spending levels for defense and fully fund veterans’ health care while increasing support for the PACT Act’s toxic exposure fund by nearly $15 billion for fiscal 2024, according to the source. 

The Biden-McCarthy agreement is structured as a two-year budget deal and a separate two-year debt ceiling increase, the source said, an arrangement that is consistent with budget deals struck in 2015, 2018 and 2019 that addressed the borrowing limit.

Compromises on both sides

Both Biden and McCarthy acknowledged that neither side got everything they wanted in the debt limit deal.

The length of the hike marks a win for Democrats, who sought to avoid having another debt limit showdown ahead of next year’s election. And they protected many programs that Republicans sought to slash, such as tax credits for green energy projects.

But Republicans succeeded not only in getting Biden to back away from his demand for a “clean” debt ceiling, but in securing an agreement that claws back spending and implements new work requirements on public assistance programs without having to agree to any tax increases.

“It doesn’t get everything everybody wanted, but … in divided government that’s what we end up with,” McCarthy said Sunday. 

Biden similarly acknowledged Saturday that “not everyone” will get what they want as part of the compromise but that the deal protects Democrats’ “key priorities and legislative accomplishments.”

Conservatives, liberals already pushing back

With neither side getting a perfect deal, members of both parties are pushing back.

Rep. Pramila Jayapal (D-Wash.), chairwoman of the House Progressive Caucus, signaled on CNN’s “State of the Union” on Sunday that there will be resistance from Democrats over provisions in the bill to beef up work requirements for public assistance programs.

“We are one of the only countries in the world — if not the only country in the world — that is an industrialized country that puts any requirements on people who just want food,” Jayapal said. She called it “very bad policy” and expressed doubts on its impact on curbing spending.

Rep. Ken Buck (R-Colo.) said shortly after the deal was announced Saturday that he was “appalled by the debt ceiling surrender.” 

“The bottom line is that the U.S. will have $35 trillion of debt in January, 2025,” Buck tweeted.

Several steps remain before debt ceiling actually raised

A bill will have to pass out of the House Rules Committee before an expected House floor vote on Wednesday — keeping with the House GOP rule to have 72 hours between release of text and a vote.

But Rep. Chip Roy (R-Texas) said in a tweet that he will try to stop the bill from passing the House. And Russ Vought, the president of Citizens for Renewing America who was instrumental in the strategy of those resisting McCarthy for Speaker in January and extracting concessions from him, suggested that three of the 20 members who resisted McCarthy for Speaker could block the bill from coming to the House floor.

Along with Roy, two other McCarthy detractors from the Speaker fight — Rep. Ralph Norman (R-S.C.) and Rep. Thomas Massie (R-Ky.) — sit on the House Rules Committee.

But three Republicans could only block the legislation if all four Democrats on the panel voted against the rule.

Senate may work through weekend to meet deadline

Senate Majority Leader Chuck Schumer (D-N.Y.) warned Democrats on Sunday that the chamber could work Friday and through the weekend to pass the debt limit bill once it clears the House. The Senate is slated to reconvene Tuesday from Memorial Day recess.

“When the bill passes the House, I will move to immediately begin consideration of the agreement in the Senate,” Schumer wrote in a letter to Democratic colleagues. “Due to the time it may take to process the legislation in the Senate without cooperation, Senators should prepare for potential Friday and weekend votes.”

That process, however, could be elongated if senators use procedural tools to drag out the legislative process as a way to protest the agreement. Last week, for example, Sen. Mike Lee (R-Utah) threatened to use “every procedural tool” possible to slow down Senate consideration of the debt limit bill, should it not have “substantial spending and budgetary reforms.”

“I will use every procedural tool at my disposal to impede a debt-ceiling deal that doesn’t contain substantial spending and budgetary reforms. I fear things are moving in that direction. If they do, that proposal will not face smooth sailing in the Senate,” Lee wrote on Twitter.

The threat comes as lawmakers stare down the June 5 deadline Treasury Department Secretary Janet Yellen said is the date the U.S. will no longer be able to pay its bills.