With days to spare until a government default, President Biden and House Speaker Kevin McCarthy, R-Calif., on Saturday evening announced a deal to raise the federal debt ceiling and fund the government for the next two years.

The deal now faces an uncertain path to passage through the House and Senate. Conservatives have already objected to a deal they say does not do enough to cut federal spending, while some liberals have worried it sacrifices funding for key priorities. The bill was released on Sunday evening.

The deal accomplishes much for both Biden and McCarthy, enabling them to claim a victory that appeared elusive just days ago. Biden can point to a deal that, at least temporarily, frees him from the headache of the debt ceiling, while staving off Republican demands for steep cuts to domestic spending. McCarthy gets a deal that curtails federal spending and increases some work requirements on federal aid programs, such as food stamps.

Here’s what’s in – and out – of the deal.


For Biden, one upside of the deal – assuming it passes – is that he will not have to deal with the debt ceiling again until after the next presidential campaign because the agreement raises the debt ceiling until 2025. This was a top priority of the administration, which will be grateful to move past the messy fight over the debt limit that has provoked substantial criticism even among fellow Democrats.

The administration has been furious with the brinkmanship over the debt limit for months, believing McCarthy recklessly took the nation’s economy hostage to push through conservative changes to the federal government. If it passes, the deal will ensure the GOP will not be able to do so again until the next House term. Democrats will try to win back control of the House in 2024, although if they don’t – and Biden wins – the nation could face a similar standoff two years from now.


The biggest sticking point in negotiations has been funding levels for part of the federal budget – separate from Social Security and Medicare – that funds hundreds of domestic programs, such as scientific research, rental aid and nutritional assistance for mothers.

McCarthy pushed for substantial cuts to these programs because he wanted to bring down federal spending while increasing funding for the military and veterans affairs. Ultimately, the White House agreed to an inflation-adjusted reduction in direct spending on these kinds of programs – but one that will be mitigated by redirecting funds from other areas, such as the money clawed back from IRS expansion. Spending on these domestic programs will fall by $1 billion from this year to next and rise by 1 percent in 2025, said a White House official who briefed reporters Sunday night on the condition of anonymity to candidly discuss the budget agreement.

The administration had appeared to be facing cuts to these programs of about 8 or 12 percent, which would have undermined key aspects and made the deal very difficult for the White House to sell to Democratic members of Congress. The near-freeze is far closer to a typical federal spending deal during divided government, even if it’s not what Democrats would prefer.


Despite sparing domestic programs from cuts, the Biden administration agreed to do so in part by paring back roughly $20 billion of the $80 billion it approved last year for an expansion of the IRS. That agreement does not appear in the text of the bill released Sunday night, but lawmakers from both parties suggested they had agreed for it to be implemented as part of the appropriations process.

The original $80 billion was included in the Inflation Reduction Act, Biden’s signature economic bill, to help pay for the climate and health-care spending in the measure. While the nonpartisan Congressional Budget Office said the expansion would increase revenue by $240 billion by allowing the IRS to step up enforcement, conservatives furious with the measure have argued it would unleash tens of thousands of new auditors on Americans. The IRS has said it plans to raise audit rates back to 2011 levels for only wealthy taxpayers.

Paring back the expansion is aimed at giving McCarthy a victory he can use to sell the deal to House conservatives. It is likely to upset liberals, who say the IRS needs all the new money to improve tax collection and customer service.

Still, the White House official briefing reporters Sunday night said the measure would have little effect on the IRS’s expansion plans in the short term. The additional funding approved for the IRS in 2022 was meant to last 10 years, after which the tax collector would have to come back to Congress if it wants more money to upgrade systems and services. The debt ceiling deal may force that request to happen in eight years instead of at the end of a decade, the White House official said.


The deal also meets the requests in Biden’s budget to increase spending for the military and veterans affairs in line with inflation.

The White House initially proposed to freeze spending on these programs, to accommodate the GOP’s request to restrict spending overall. But House Republicans rejected that proposal.

Negotiators ultimately agreed to slight boosts in funding for both, exempting them from the inflation-adjusted cuts for the domestic programs. They will grow in the deal in line with what Biden requested in his budget.


Meeting a GOP priority, the deal increases work requirements on federal food stamps and on family welfare benefits.

Republicans had pushed for sweeping changes to those programs and to Medicaid, the health insurance program. The deal does not include additional work requirements for Medicaid.

While the precise details were not clear, the deal raises the age at which adults will be required to work to receive food stamps from 50 to 54. For example, a 52-year-old woman currently receiving food stamps without having to work 20 hours per week may have to do so under the agreement. While the deal will also make it easier for the homeless and veterans to get food stamps, the administration projects that the debt ceiling agreement overall will lead to fewer people on food stamps facing work requirements, the White House official who briefed reporters said. These changes are set to expire in 2030.

The changes to the family welfare benefits program, Temporary Assistance for Needy Families, will require states to ensure that a higher percentage of their welfare beneficiaries are working, but not as dramatically as Republicans had sought.


In a surprise revealed Sunday night, the debt ceiling deal includes provisions to expedite a major natural gas pipeline from West Virginia to Virginia that has long been championed by Sen. Joe Manchin III, D-W.Va.

The Mountain Valley Pipeline, which has been strongly opposed by environmental groups, would transport Appalachian shale gas about 300 miles from West Virginia to Virginia if built. The company has said it would carry 2 billion cubic feet of gas a day to help support domestic energy and liquefied natural gas, but environmental advocates say the project would impact hundreds of streams, wetlands and several miles of national forest land.

The proposal backed by Biden and McCarthy says federal agencies “shall issue all permits and verifications necessary” within 21 days of the legislation’s enactment to complete the pipeline’s construction.


Negotiators on both sides agreed to drop key demands.

The White House had proposed closing a number of tax loopholes, arguing that any deal to lower the deficit should include increases in federal revenue as well as spending cuts. The GOP ruled those ideas out.

Similarly, House Republicans had fought for repealing some of the clean energy tax credits approved by Democrats last year. The Biden administration objected strongly to that proposal, and they fell out of the final deal.

House Republicans also fought to block the White House’s plan to cancel student loan debt. The agreement codifies into law the White House’s prior announcement that it would no longer extend forbearance on student loan payments. But the deal does not change Biden’s proposal to cancel up to $20,000 in student debt per borrower, which is now being reviewed by the Supreme Court.

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