Debt limit deal would save feds’ paychecks, but freeze agency spending – By Eric Katz (Nextgov) / May 30, 2023
The agreement also reduces shutdown threats, plus other takeaways for federal employees.
An agreement between the White House and congressional Republicans would bring a spending freeze to federal agencies next fiscal year in exchange for punting debt ceiling decisions into 2025, averting a crisis for government operations and ensuring federal employees continue to receive their paychecks on time.
With Treasury Department Secretary Janet Yellen warning lawmakers a catastrophic debt default would likely occur June 5 absent congressional action, President Biden and House Speaker Kevin McCarthy, R-Calif., struck the deal to suspend the borrowing limit through Jan. 1, 2025. The agreement would require some belt-tightening that may remind federal employees of the spending caps-era that followed the 2011 Budget Control Act, but the bill avoided the more drastic cuts Republicans had sought. The agreement, dubbed the 2023 Fiscal Responsibility Act, came together after weeks of tense negotiations that followed the White House initially suggesting it would not discuss any outcome other than a “clean” debt ceiling hike.
The measure nominally reduces top-line discretionary spending at non-defense agencies for fiscal 2024, but includes offsets elsewhere that can be applied to those accounts and will ultimately keep funding essentially frozen at fiscal 2023 levels. The bill carves out the departments of Defense and Veterans Affairs, where funding would meet President Biden’s request. It would cap spending at 1% growth for fiscal 2025 for both defense and non-defense agencies. The agreement includes spending caps for the subsequent four fiscal years, but they are advisory in nature and Congress could easily ignore them.
