President Joe Biden and House Speaker Kevin McCarthy, R-Calif., reached a tentative compromise to raise the debt ceiling over the weekend, but the plan still faces a rocky path forward.
Lawmakers on both sides have expressed frustration with the concessions made to reach that deal with several suggesting they will not vote to support the debt limit increase. If a deal is not passed by June 5, U.S. Treasury officials say the nation risks defaulting on its debt obligations, hurting the national credit rating, and sending shockwaves through the U.S. economy and the global markets.
The “Fiscal Responsibility Act” extends the debt limit until January 1 of 2025, notably through the next election. Democrats have touted that the agreement does not significantly cut nondefense spending. McCarthy says the plan would freeze for fiscal year 2024 and then increase by 1% in 2025 and touted that the bill takes back $20 billion that was previously appropriated to the IRS as well as another $30 billion of unspent COVID relief funds.