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Republican McCarthy on Friday: The deal could still fall through

Photo: J. Scott Applewhite / AP

For many weeks, Democrats and Republicans have wrestled with each other in the US debt dispute. Now both sides have reached a compromise, more precisely Democratic President Joe Biden and Republican majority leader in the House of Representatives, Kevin McCarthy. However, the tough dispute over raising the debt ceiling is far from being completely resolved – the agreement could still fail, with dangerous consequences for the US and the whole world.

What did Biden and McCarthy agree on?

Neither the U.S. President nor the Republican majority leader wanted to give details on Sunday night. One thing is clear: the debt ceiling of currently 31.4 trillion dollars is to be suspended until January 2025 – i.e. until after the next presidential elections in November 2024.

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In return, savings are planned for the next two budgets, and unused Corona funds are to be used elsewhere. According to the New York Times, the agreement will include the following:

  • Expenditure for 2024 is expected to be at the level of 2023, and in 2025 it may be one percent higher. However, there are exceptions to this spending limit: military, social security and the national health insurance Medicare are not included. According to calculations by the New York Times, the agreed spending cuts would add up to a total of $650 billion within ten years.

  • This means that some of the Biden administration's social programs, such as the support programs for education in low-income groups or the $400 billion waiver on student loans, can be retained.

  • The IRS's budget to combat tax evasion by the rich is to be cut from $80 billion to $70 billion.

  • For some recipients of state aid, there should be an obligation to work – specifically for people under 54 years of age without children. The Republicans had vehemently demanded this point, but the Democrats rejected it just as decisively. On the other hand, access to food aid for the homeless and veterans will be expanded.

What else can go wrong?

So far, there is only one agreement agreed by telephone between the president and the Republican. Now it has to be brought into law in detail and passed by both chambers of the US Congress.

Kevin McCarthy in particular will have to do a lot of convincing behind the scenes in the coming days. In the House of Representatives, the Republicans have a narrow majority of 222 to 213 votes, and McCarthy had to make concessions to the hardliners for his election as majority leader, giving this group immense influence. Each and every single member of parliament can call for a vote to remove the Speaker at any time.

Some Republican hardliners have already expressed their displeasure with a possible compromise. They are demanding far-reaching spending cuts, and a compromise may not go far enough for them. The Democrats could also overturn the compromise, they also have a narrow majority of 51 to 49 votes in the Senate.

Where do we go from here?

Speed is now crucial. According to the U.S. Treasury, the money will only last until June 5, before the threat of insolvency. The new law still has to be formulated, according to McCarthy, by Sunday. He promised members of the House of Representatives that he would have 72 hours to consider the brief before it was put to a vote. That and the previous debate are likely to take a day or two. A simple majority is sufficient to pass the law.

Then it goes to the Senate. Here, 60 of the 100 senators must vote in favor of the agreement. This means that at least nine Republicans must be in favor. Due to various rules, senators could drag out the procedure. Changes to the bill in the Senate would also mean delay, because then the House of Representatives would have to give its blessing again. Only when both chambers of the US Congress have passed the identical text of the law can it be submitted to President Biden for signature and thus enter into force.

fdi/Reuters