The House finally passed the debt ceiling bill Wednesday night. It comes just days before America is projected to run out of money to pay its bills. In a 314-117 vote, lawmakers pushed through the tax package to suspend the deferral debt days before the nation was in danger of exhausting its borrowing power.
The Wednesday vote was overwhelmingly bipartisan. The negotiations were finally done by President Biden and Speaker Kevin McCarthy to suspend the debt ceiling and set limits on federal spending. Finally, after months of hectic negotiation, a broad coalition of bipartisan politicians lined up and cast their crucial vote and passed the tax package. This managed to pull America from the edge of economic disaster.
The tax package will defer the federal debt ceiling for 2 years. This allows the government the right to borrow unlimited sums whenever necessary to meet its financial obligations. In agreeing to the two years of cap on spending and a host of policy changes, the Republicans got their pound of flesh.
Hectic Negotiations Finally Broke The Tax Package Deadlock
The tax package finally came days after the marathon session of talks between top House Republicans and negotiators for President Biden finally led to a breakthrough agreement.
Both the hard-left lawmakers and the far-right were opposed to the deal and revolted against their party’s stance. It finally was decided by a bipartisan coalition that was powered by the Democrats and also received overwhelming support from the Republicans. This finally helped them overcome the fiscal stalemate that gripped Washington for months.
In the final vote for the tax package, 165 Democrats backed the bill while for the Republicans, it was 149 votes. 46 Democrats opposed the bill while 71 Republicans were against the tax package.
It is being seen as a setback for Kevin McCarthy as it was being hailed as his hard-fought victory. The fact that more Democrats supported the tax package than the Republicans is being seen as a personal setback for the leader.
There was a minor hiccup as the tax package made its way to the House floor as hard-right GOP members fought hard to block the consideration of the bill. But breaking the suspense, democrats moved in and voted in enough numbers to push through a procedural measure finally allowing the bill to become law.
The tax package will finally suspend the borrowing limit till January 2025/ the steps mooted include cuts in federal spending in several sectors. The tax package will also cut by $1.5 trillion the federal spending spread over a decade. This was revealed by the Congressional Budget Office. This will freeze some of the funding proposed by the Biden administration. These expenses were projected to increase in 2024 while limiting spending to 1% growth the following year in 2025.
This is considered a cut as it would be at a level lower than the projected increase due to inflation. The legislation would also lead to stricter work standards for getting food stamps. This was forced by the Republicans. Another Republican victory was in cutting back funding for IRS enforcement against the corporates and the super-rich. The Republicans also managed to claw back the unspent COVID-19 relief budget, hasten the permitting of fresh energy projects, and also officially ended President Biden’s freeze on repayment of student loans.
The Tax Package Led To Hectic Negotiations With Both Sides Refusing To Relent Easily
The deal would allow Republicans that they have managed to rescue federal spending under this tax package. But military and veterans’ programs continue to grow. The Democrats can also claim that they had managed to spare most domestic programs from any significant cuts.
Negotiators from both parties talked for days to draft the legislative text, but details remained uncertain till the last moment.
Republican Speaker Kevin McCarthy said that it had not been easy, and they continued to go back and forth. He refused to divulge what were the main points of contention in the tax package. But he had been confident and said that though it was taking some time to happen, the GOP was hard at work to ensure that it did.
The compromise made by both sides was finally incorporated and enacted. It has raised the government’s borrowing limit for two years and would go past the 2024 election. This was disclosed by legislators familiar with the process though they refused to divulge details.
It has been almost five months since the US hit the legal ceiling which at present is $31.4 trillion in January this year. Since then, it has indulged in accounting jugglery to avoid defaulting on its financial commitments.
The Treasury Dept had warned for months that it would exhaust all its options and would default by June if no fresh legislation goes through by that period.
For its commitment to remove the debt limit, the GOP had demanded and managed to secure cuts in federal spending across sectors. But both sides have agreed on an accounting jugglery that will allow both sides to claim victory and give them the necessary political cover for the agreement. Both sides do not expect the tax package to be readily accepted. There has been stiff opposition among voters to agree upon a deal that each side believes will not harm them politically.
The deal will also roll back $10 billion of the total $80 billion that was approved by CCongress last year. The funds were for a crackdown by the IRS on corporations and the rich who continue to evade taxes. But the provision remained under consideration until the last moment. A spokesperson at the White House said that President Biden and his team were at work to retain this provision. They argued that the money spent on the IRS would pay back in multiples as the money would more than be repaid as the added scrutiny would force these corporates and the rich to pay additional taxes.