There Are 99 Pages Of Details In The Debt-Ceiling Deal, And A Big Trap On Republicans

Tyler Durden's Photo
by Tyler Durden
Tuesday, May 30, 2023 - 12:40 AM

By Mish Shedlock of Mish Talk

Semifinal Details 

If you wish to wade through 99 pages of details, here's the full text of the Allegedly Final Debt-Ceiling Deal.

The Wall Street Journal has a synopsis in Biden, McCarthy Agree to Final Details of Debt-Ceiling Deal

With some conservative Republicans in both chambers signaling initial opposition to the deal, Biden urged both chambers of Congress to approve the agreement and said McCarthy would have sufficient votes in the Republican-led House to secure passage.

He also sought to quell concerns among Democrats over some of the deal’s provisions, such as additional work requirements for certain government safety-net programs, and rejected criticism from some progressive lawmakers that the agreement would let vulnerable people go hungry. “That’s a ridiculous assertion,” Biden said.

Republican Dissent

Essentially What the Democrats Wanted

Trojan Horse View

Democrats Got Everything They Wanted

Deal is Insanity

"A $4T debt ceiling increase with virtually no cuts is not what we agreed to."

Democrats Oddly Calm

"Notice how oddly calm Democrats are for a change? This is why…"

Framework for a Deal

Despite the WSJ headline, this will not be the final deal. First, the bill has to clear the House. I suspect some House revisions. 

Even if not, the Senate is also highly likely to make changes which will then have to be approved by the House.

Complete Surrender

What's Currently Inside?

  1. A small cut in nonmilitary spending for the 2024 fiscal year, which begins Oct. 1, and a 1% cap on spending increases for the 2025 fiscal year. Veterans’ health programs would be exempt.
  2. Military spending in fiscal 2024 would be roughly at the level of Biden’s fiscal 2024 budget request, according to two people familiar with the matter, which would amount to about a 3% increase.
  3. A $21.4 billion reduction in funds that Congress approved last year for the IRS to boost tax enforcement and modernize its technology. [The original funding was $80 billion].
  4. A provision aimed at pushing Congress to give up its practice of funding the government through a single, omnibus bill, as it has done in recent years, and to return to the tradition of passing 12 appropriations bills that cover the various parts of the federal budget. The measure has potential to win conservative support for the deal and was pushed by an influential Republican, Rep. Thomas Massie (R., Ky.), who believes that Congress should follow regular order when conducting its business.
  5. The provision would call for the U.S. government to operate under a so-called continuing resolution at 99% of the prior year’s spending levels until the spending bills were enacted. Lawmakers were awaiting text to see the date at which the cuts would be triggered.
  6. An expansion through 2030 of the requirement that some able-bodied people without dependents hold a job or be enrolled in a job training program to receive food stamps, which is a Republican priority. [This unfortunately excludes Medicaid. And it only applies to low-income adults without dependents between the ages of 49 and 54. It will be phased in over three years. All of these are far less than the original deal passed by McCarthy] 
  7. Imposition of a one- or two-year time limit to complete environmental reviews for energy and infrastructure projects. The bill allows a project’s developer to sue if the review isn’t completed in time. [I suspect this is a huge trap, more comments below]
  8. Currently, reviews required under the National Environmental Policy Act of 1970 take an average 4.5 years to complete and can involve multiple agencies. The deal calls for a single agency to assume responsibility for the study. Speeding up the reviews has been a priority for Republicans. [This too is a huge trap]
  9. Expediting the remaining permits necessary to complete the Mountain Valley Pipeline, a 303-mile natural-gas pipeline between West Virginia and Virginia. 

Understanding the Trap

The above points are quotes from the WSJ plus my comments in brackets[].

Points seven, eight, and nine are part of the trap. Point nine will be debated in the Senate. Expect fireworks. 

Both sides seem to be in favor of points seven and eight. But one side is sure to be wrong.

With Biden as President, it's easy to see who fell into the trap. Democrats will speed up and approve every clean energy boondoggle imaginable at great speed. 

Republicans will have every project rejected at great speed.

This situation will reverse if Republicans win the White House in 2024. But a lot of boondoggles will be approved in the interim.

Best Part of the Deal and Overall Analysis

The best part of the deal are points four and five. A no earmark provision needs to be added to those points.

But Democrats get far more out of this than Republicans.

Hold the Line

35 GOP House Representatives will likely vote against this deal.  Republicans only have four votes to spare. 

Expect More Boondoggles Like These

Question and Answer of the Day

Q: Will This Pass?
A: Yes, easily.

Don't be surprised if more Democrats vote for this version than Republicans. Look no further than trap points seven and eight above to understand why.

In return for minor cutbacks in spending, and a token roll-in work requirement for food stamps, Democrats will get to rubber stamp every pet clean energy boondoggle they seek. 

I mentioned this in a previous post and still have not seen it mentioned elsewhere. Don't be surprised if this deal costs McCarthy his job as Speaker of the House.