The Congressional Budget Office (CBO) has estimated that the debt-ceiling deal agreed by House Republicans and President Joe Biden will reduce budget deficits by about $1.5 trillion between 2023 and 2033.
The projection by the nonpartisan office Tuesday follows frustration from the House Freedom Caucus that the deal does not go far enough. The agreement suspends the debt limit through Jan. 1, 2025 and caps spending in the 2024 and 2025 budgets. A vote on the bill is expected Wednesday and it is expected to be passed with bipartisan support.
In a letter to Speaker Kevin McCarthy (R., Calif.), director of the CBO Phillip Swagel also projected that there would be reductions in discretionary outlays in the amount of $1.3 trillion over the 2024–2033 period. Mandatory spending would decrease by $10 billion, revenues would decrease by $2 billion over the same period, and the interest on the public debt would decline by $188 billion.
McCarthy celebrated the CBO’s report, calling it the largest spending cut that Congress has ever voted for.
One revelation that caught attention was that there would be an increase of $2.1 billion in spending between 2023 and 2033 for the Supplemental Nutrition Assistance Program.
While work requirements were tightened by the recent bill, eligibility was expanded for some groups, including veterans.
On the other hand, there would be a reduction of $5 million in spending for Temporary Assistance for Needy Families.
The bill will also claw back unused Covid funds and rescind certain funds provided to the Internal Revenue Service. On the latter measure, Swagel wrote that “rescinding those funds would result in fewer enforcement actions over the next decade and in a reduction in revenue collections.”
Other provisions of the bill, including the mandate for pay-as-you-go procedures before finalizing certain administrative actions and the termination of federal student-loan payments would have a minimal effect on direct spending or revenues.
The CBO also assessed the permitting provisions would have a minimal effect on direct spending or revenues, but has not yet evaluated the potential economic effects.