[The slings and arrows in this agreement result from the failure
to solve the debt ceiling in 2022 when Democrats controlled the
government. It generally makes things a little bit worse. That this is
seen as progress is a sad commentary on Washington.]
[[link removed]]

AS DEALS GO, THIS IS ONE OF THEM  
[[link removed]]


 

David Dayen
May 28, 2023
The American Prospect
[[link removed]]


*
[[link removed]]
*
[[link removed]]
*
*
[[link removed]]

_ The slings and arrows in this agreement result from the failure to
solve the debt ceiling in 2022 when Democrats controlled the
government. It generally makes things a little bit worse. That this is
seen as progress is a sad commentary on Washington. _

,

 

The second that Joe Biden agreed to negotiate with House Republicans
on the debt ceiling, the results were going to be bad. The people who
benefit most from government action—the poor and the
vulnerable—were going to be hurt, and those who benefit most from a
weakened government—the rich and the powerful—were going to be
aided. The only question was the degree.

With one potentially major exception, the relative harm and help was
kept to a minimum in the final agreement. It will only be a little bit
easier to commit wage theft, or to sell defective or poisoned
products. It’ll only be a little harder to get rental assistance or
tuition support. Only a few people will be freer to pollute the
environment; only a few will find it more difficult to get food. The
Internal Revenue Service will only be a little worse. A lot of things
will stay the same. Almost nothing will get any better.

That’s the broad strokes of a deal that the White House and House
Republicans are selling to their respective bases right now. (House
Republicans held a meeting immediately after the agreement was made
last night; the White House isn’t holding anything for Democrats
until this afternoon, after the bill text is supposed to be posted.)
It will dictate federal spending on domestic discretionary programs
for two years, and it will raise the debt ceiling for two years. After
that, depending on the composition of Congress, we’ll all be here
again. The stakes for the 2024 election just got even higher.

Imagine a world where we were a normal country with no debt ceiling,
but everything else was exactly the same. Thanks to gerrymandering and
the malpractice of the New York Democratic Party, Republicans still
have the House, and the budget for the current fiscal year still
expires on September 30. Republicans and Democrats would still have to
negotiate that budget, and one likely outcome of that would be that
negotiations fall apart, that there’s just no way to reconcile what
both sides want. In that case, either the government shuts down or a
continuing resolution is struck, which means that the government would
operate at the current funding levels for a period of time. Maybe
we’d live under a CR for the entire two years of this Congress.

That’s approximately what happened in this agreement. The funding
levels for fiscal year 2024 on the non-defense discretionary side are
at FY2023 levels. House Republicans are saying they clawed things back
to FY2022, but a number of funding shifts—most prominently the
return of tens of billions of dollars in unspent COVID aid—backfill
the non-defense discretionary budget to get it to around FY2023. (The
IRS money from last year’s Inflation Reduction Act also adds to this
backfill, but while some reports
[[link removed]] still
list that as a $10 billion fund shift, others put it as low as $1.9
billion [[link removed]], which
is a little more than 2 percent of the total $80 billion outlay). This
cap then rises by one percent in FY2025.

The goal here was to allow both sides to say contradictory things to
their members. Republicans can say they achieved the target of the
Limit, Save, Grow Act to limit discretionary spending to FY2022;
Democrats can say they only froze spending at current levels. And both
are sort of right.

Meanwhile, military spending, which is magic and has no impact on the
federal budget, actually rises in FY2024 to the level in the Biden
budget. (House Republicans wanted it even higher.) Veterans spending
has similar privilege, and rises as well. Mandatory spending, like
Social Security and Medicare, isn’t touched as well.

You’ll hear a lot about a spending “freeze,” but if you don’t
increase spending at the rate of inflation, in real terms you’re
cutting. Given that inflation will run around 4-5 percent this year
and maybe 3 percent the next, if you do the math you’re talking
about approximately a 5 percent cut
[[link removed]] to
domestic discretionary programs over the next two years, maybe more
depending on inflation’s persistence. (Republicans are claiming
it’s a six-year deal, but after the first two years there are only
non-binding appropriations targets. This is another way each side can
say different things at once.)

_The New York Times_ estimates
[[link removed]] that
this will cut $650 billion in spending over ten years, but only if
spending rises at the rate of inflation after the caps lift. That’s
highly uncertain: a Democratic government could restore all the cuts,
while a Republican government could cut further.

In macroeconomic terms, the near-term cuts will be offset by the
increases to defense and veteran programs, plus the fact that the
IRA’s energy tax credits, none of which were touched by this deal,
are being used at about three times the rate of what was previously
expected. Macro estimates so far are relatively negligible
[[link removed]]. What
this deal really does is hurt the government’s _capacity_. Clean
air and water, consumer product safety, labor laws, public lands,
agricultural conservation—most of the stuff we think of as “the
government” will be hit by this. “’Flat spending’ implies a
further reduction in real government funding per person after a decade
of Obama-Boehner austerity, followed by Trump’s assaults on the
administrative state,” wrote Jeff Hauser
[[link removed]] of
the Revolving Door Project.

These are just topline numbers in the deal. They have to be translated
into appropriations bills. As I wrote on Friday
[[link removed]],
there is a mechanism if those appropriations don’t pass in time to
snap in an automatic continuing resolution. That auto-CR would be at
FY2023 levels, meaning _lower_ levels for defense and veterans.
That’s supposed to be the hammer that gets the appropriations bills
done. But there’s still going to be tons of strife to enact these
cuts, and a kind of opportunity for anyone who doesn’t think America
needs to spend $886 billion on its military.

The hopes of a grand bargain on permitting large energy and
infrastructure projects mostly dissolved into nothing.

Here are the other aspects of this deal:

_TANF/SNAP work requirements: _This became a Republican red line.
Both of these programs already have work requirements; they’re being
made stricter. For TANF (Temporary Assistance for Needy Families, or
welfare), they appear to be somewhat optional for the states, which
means red states will tighten their eligibility.

SNAP (the Supplemental Nutrition Assistance Program, sometimes called
food stamps) was one of the last things decided
[[link removed]].
There are two SNAP work requirements
[[link removed]]: one limits
able-bodied adults without dependents (ABAWD) from getting benefits
for more than three months over a three-year period. That previously
cut off at age 49; it will now increase to age 54. That could
affect close to 1 million Americans
[[link removed]];
the Congressional Budget Office has said this would cut the SNAP rolls
by about 275,000 people per month. That change sunsets in 2030. On the
flip side, all work requirements for homeless individuals and
veterans will be lifted
[[link removed]]. If
you’re a 52-year-old woman without children with stable housing who
didn’t happen to serve in the military, you deserve food assistance
less, is the implication here.

The bigger issue is that all of these things require forms that people
must know how to fill out. All the evidence shows
[[link removed]] that
making SNAP harder to navigate won’t increase work; it’s just a
way to take some people’s food away
[[link removed]], at some
level based on whether they know about the new form. Maybe it will
give food to others (particularly homeless individuals and vets), but
that depends on whether they apply; it would be nice to sign up all
eligible unhoused people for SNAP, but the newly constrained federal
government certainly doesn’t have the resources to do so. Maybe our
philanthropists can pitch in.

_Permitting_: The hopes of a grand bargain on permitting large energy
and infrastructure projects mostly dissolved into nothing
[[link removed]].
There are minor changes to the National Environmental Policy Act
(NEPA) that mostly just write down what the Biden administration was
implementing anyway. These include things like designating a single
lead agency for federal environmental reviews, and faster timelines
for writing those reviews. (Environmental impact statements will need
to take two years; environmental impact assessments, one year.) Large
projects are supposed to be expedited by codifying the “Fast-41”
approach that’s already an executive order. The scope of the law,
and the timelines for public challenges, remain the same. There’s
supposed to also be an agreement in some way speeding up approvals for
transmission lines, to connect them to renewable energy, but
apparently it’s only a study of some techniques to do so. Kyrsten
Sinema came in at the last minute
[[link removed]] to
try to make transmission reform friendlier to monopoly utilities,
huzzah.

Republicans are calling this “the first significant reform to NEPA
since 1982,” which shows you the level of honesty in their talking
points.

Keep in mind that the agencies who conduct these reviews are having
their funding cut in real terms, while simultaneously being told they
have to complete the reviews faster. That’s a solid approach:
tighter deadlines with less money. There was $700 million in the IRA,
under the mandatory spending budget so not affected by the caps, for
“environmental reviews.” But that bucket won’t last forever.

Essentially this fight got deferred. We could still see permitting
reform later in the year.

Keep in mind that this only extends federal borrowing for _two
years_, after which we have to do this all over again.

_Student debt_: While we await a Supreme Court decision on the Biden
administration’s student debt cancellation plan, the Education
Department announced that they would restart payments 60 days after
that decision
[[link removed]].
The deal puts that promise in writing, while retaining flexibility to
reimpose loan forbearance if there’s some emergency down the road.

This will probably create the biggest macro effect, as millions of
people will have to start repaying their student loans again,
potentially many more if the Supreme Court denies debt relief. The
White House has been readying a newly generous Income-Driven Repayment
program, which is at the Office of Management and Budget and should be
finalized before the payment pause is lifted. This program would
effectively have everyone pay a percentage
[[link removed]] of
their income, and those making $30,000 a year or less would pay
nothing. If done right, it would transform the student loan system.

But it will have to be finalized, which leads us to…

_Administrative paygo_: This was a surprise, not mentioned in the
leaks of the agreement, and not mentioned by the White House in their
talking points. House Republicans proudly touted it, but their version
of events is unreliable. So it’s unclear what the scope of this is
right now.

However, administrative paygo is the nickname for a 2005 executive
order [[link removed]] from
George W. Bush, which was strengthened in 2019
[[link removed]] by
Donald Trump. To summarize, any time a federal agency proposes an
action that would increase mandatory spending, it must also propose
reducing mandatory spending by the same amount. In the above example,
if a new income-driven repayment system would increase Education
Department spending (really reducing loan revenue), it would have to
somehow take action to offset it by an equivalent amount.

Right now this is an executive order. The deal would make it
statutory. That means that failing to offset mandatory spending at the
agency level would violate the law, not just an administrative
directive. Republican administrations aren’t likely to create costly
regulations; Democratic administrations are. This could be a tool that
poses enough threat to Democratic-led agencies that they shrink from
taking action.

Former and current regulators have expressed alarm to me that this
would be included. “This would be VERY VERY VERY bad for anyone that
wants new regulations to protect the public,” tweeted
[[link removed]] Public
Citizen’s Amit Narang, “and VERY VERY VERY good for corporations
that want another talking point against regulations that hold them
accountable for not endangering the public.” A lot more reporting
has to be done to see what’s actually in the bargain.

That’s basically the agreement. Freedom Caucus Republicans are
already mad about it; to them, it looks too much like a normal
agreement and nothing like their ambitions. Democrats really got
nothing out of it—the worst was just mitigated somewhat—so
progressives have no real motivation to endorse this. But the White
House can sell it. They avoided the worst, protected most of the core
programs, and can say that, if Democrats win full control of the
government again in 2024, they’ll reverse the bad parts. The House
vote will be Tuesday; I imagine it will get done, albeit with some
agita. This is the kind of deal that passes the Senate with 80 votes.

Keep in mind that this only extends federal borrowing for _two
years_, after which we have to do this all over again. The 2024
election, if it wasn’t already consequential, becomes much more so
from a fiscal perspective. Depending on the makeup of Congress and the
White House—and remember the upcoming Senate map is terrible for
Democrats—the future of domestic discretionary spending as the cap
lifts, the ability to hijack the debt limit, and the fate of the Trump
tax cuts, which expire in 2025, are all up in the air.

Janet Yellen pleaded
[[link removed]] to
get the debt ceiling solved in 2022, when Democrats controlled the
government. The slings and arrows in this agreement are the result of
that failure. It generally makes things a little bit worse. That this
is seen as progress is a sad commentary on Washington.

_David Dayen is the Prospect’s executive editor. His work has
appeared in The Intercept, The New Republic, HuffPost, The Washington
Post, the Los Angeles Times, and more. His most recent book is
‘Monopolized: Life in the Age of Corporate Power.’_

_The American Prospect is devoted to promoting informed discussion on
public policy from a progressive perspective. In print and online,
the Prospect brings a narrative, journalistic approach to complex
issues, addressing the policy alternatives and the politics necessary
to create good legislation. We help to dispel myths, challenge
conventional wisdom, and expand the dialogue._

_Founded by Robert Kuttner, Paul Starr, and Robert Reich, read the
original 1989 prospectus for the magazine.
[[link removed]] _

_You can support our mission with a subscription or a tax-deductible
donation.  DONATE TODAY [[link removed]]_

* Debt Ceiling
[[link removed]]
* budget cuts
[[link removed]]

*
[[link removed]]
*
[[link removed]]
*
*
[[link removed]]

 

 

 

INTERPRET THE WORLD AND CHANGE IT

 

 

Submit via web
[[link removed]]

Submit via email
Frequently asked questions
[[link removed]]

Manage subscription
[[link removed]]

Visit xxxxxx.org
[[link removed]]

Twitter [[link removed]]

Facebook [[link removed]]

 




[link removed]

To unsubscribe, click the following link:
[link removed]