CBO finds Biden-McCarthy debt limit deal could reduce spending by $1.5T over decade
The Congressional Budget Office (CBO) on Tuesday said the debt ceiling deal negotiated by the White House and House GOP leaders could reduce projected deficits by about $1.5 trillion over the next decade.
The nonpartisan budget scorekeeper estimated in a letter to congressional leaders Tuesday that proposed spending limits for 2024 and 2025 would trim nearly $1.5 trillion from projected federal budget deficits from 2023 to 2033.
GOP leaders in the House had demanded spending restrictions in exchange for raising the debt ceiling. The legislation is headed for votes in the House and Senate ahead of a June 5 deadline set by Treasury Secretary Janet Yellen to prevent a possible default.
The CBO estimates are important in the coming debate as Democratic and GOP congressional leaders seek to secure votes for the package in Congress. Some conservatives have argued the bill does not cut spending enough, while some Democrats argue it goes too far.
“Reductions in projected discretionary outlays would amount to $1.3 trillion over the 2024–2033 period,” Congressional Budget Office Director Phillip Swagel said in the letter. “Mandatory spending would, on net, decrease by $10 billion, and revenues would, on net, decrease by $2 billion over the 2023–2033 period.”
“As a consequence, interest on the public debt would decline by $188 billion,” he added.
As part of the legislation, dubbed the Fiscal Responsibility Act of 2023, the White House and House GOP leaders agreed to suspend the debt ceiling through next year, while also laying out budget caps for fiscal 2024 and 2025.
The bill also includes changes to work requirements for Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF), and it would claw back some unused coronavirus funds.
The bill would also pull some funding Democrats approved last year to help bolster enforcement and operations at the Internal Revenue Service. However, Democrats and budget experts said the investment greenlit as part of the Democrats’ Inflation Reduction Act would help boost revenue.
In the letter Tuesday, Swagel said the CBO “anticipates that rescinding those funds would result in fewer enforcement actions over the next decade and in a reduction in revenue collections.”
A closer look at proposed changes to work requirements for SNAP and TANF estimated the modifications would increase federal spending by about $2.1 billion over the next 10 years — largely driven by changes to the former program.
The letter said language in the bill upping the age at which able-bodied adults who don’t live with dependents would be subject to work requirements for SNAP would cut spending for the program by $6.5 billion during the 10-year stretch. But it added that a portion of the bill that included exemptions for several groups “would lead to a spending increase of $6.8 billion over the same period.”
The exemptions apply to people experiencing homelessness, veterans, and those 24 years old or younger who were in foster care when they turned 18.
The letter also included estimates of additional increases in direct spending due the provisions being enacted simultaneously.
“The new exclusions would not only apply to some beneficiaries under age 50 who otherwise would be subject to the work requirement under current law, but also would apply to some beneficiaries ages 50 to 54 who otherwise would be subject to work requirements under the bill. As a result, CBO estimates, direct spending would increase by an additional $1.8 billion,” it added.
By contrast, the letter also estimated that changes to TANF could lead to a reduction in block grants and reduce federal spending by $5 million over the next decade.
Updated at 8:24 p.m.
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