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Biden-GOP Debt Ceiling Deal Slashes Assistance Programs and Protects the Wealthy

The deal will impose new work requirements on benefits recipients while protecting the spiraling pentagon budget.

U.S. Speaker of the House Rep. Kevin McCarthy speaks to members of the press as he arrives at the U.S. Capitol on May 25, 2023 in Washington, D.C.

Progressive economists and advocates warned that the tentative debt ceiling agreement reached Saturday by the White House and Republican leaders would needlessly gash nutrition aid, rental assistance, education programs, and more — all while making it easier for the wealthy to avoid taxes.

The deal, which now must win the support of both chambers of Congress, reportedly includes two years of caps on non-military federal spending, sparing a Pentagon budget replete with staggering waste and abuse.

The Associated Press reported that the deal “would hold spending flat for 2024 and increase it by 1% for 2025,” not keeping pace with inflation.

The agreement would also impose new work requirements on some recipients of Supplemental Nutrition Assistance Program (SNAP) benefits and Temporary Assistance for Needy Families (TANF) while scaling back recently approved IRS funding, a gift to rich tax cheats.

In exchange for the spending cuts and work requirements, Republican leaders have agreed to lift the debt ceiling until January 1, 2025 — a tradeoff that House Speaker Kevin McCarthy (R-California) is pitching as a victory to his caucus, which includes far-right members who have demanded more aggressive austerity.

President Joe Biden, for his part, called the deal “a compromise, which means not everyone gets what they want.”

Lindsay Owens, executive director of the Groundwork Collaborative, said in a statement Saturday night that “this is a punishing deal made worse only by the fact that there was no reason for President Biden to negotiate with Speaker McCarthy over whether or not the United States government should pay its bills,” alluding to the president’s executive authority.

“After inflation eats its share, flat funding will result in fewer households accessing rental assistance, fewer kids in Head Start, and fewer services for seniors,” said Owens. “The deal represents the worst of conservative budget ideology; it cuts investments in workers and families, adds onerous and wasteful new hurdles for families in need of support, and protects the wealthiest Americans and biggest corporations from paying their fair share in taxes.”

The agreement comes days before the U.S. is, according to the Treasury Department, set to run out of money to pay its obligations, imperiling Social Security, Medicare, and Medicaid payments and potentially hurling the entire global economy into chaos.

House Republicans have leveraged those alarming possibilities to secure painful federal spending cuts and aid program changes that could leave more people hungry, sick, and unable to afford housing, critics said.

“For no real reason at all, hungry people are set to lose food while tax cheats get a free pass,” wrote Angela Hanks, chief of programs at Demos.

While legislative text has not yet been released, the deal would reportedly impose work requirements on adult SNAP recipients without dependents up to the age of 54, increasing the current age limit of 49. Policy analysts and anti-hunger activists have long decried SNAP time limits and work requirements as cruel and ineffective at boosting employment. (Most adult SNAP recipients already work.)

“The SNAP changes are nominally extending work requirements to ages 50 to 54. In reality, especially as the new rule is implemented, this is just an indiscriminate cull of a bunch of 50- to 54-year-olds from SNAP who won’t realize there are new forms they need to fill out,” said Matt Bruenig, founder of the People’s Policy Project.

Diane Yentel, president and CEO of the National Low Income Housing Coalition, wrote on Twitter that the agreement is “cruel and shortsighted,” pointing to the work requirements and real-term cuts to rental assistance “during an already worsening homelessness crisis.”

“House Rs held our nation’s lowest-income people hostage in exchange for lifting the debt ceiling,” Yentel continued. “The debt ceiling ‘deal’ could lead to tens of thousands of families losing rental assistance… Expanding ineffective work requirements and putting time limits on food assistance adds salt to the wound, further harming some of the lowest-income and most marginalized people in our country.”

The White House and Republican leaders also reportedly agreed to some permitting reforms that climate groups have slammed as a boon for the fossil fuel industry. According to The New York Times, the agreement “includes measures meant to speed environmental reviews of certain energy projects,” though the scope of the changes is not yet clear.

And while the deal doesn’t appear to include a repeal of Biden’s student debt cancellation plan — which is currently before the U.S. Supreme Court — it does contain a provision that would cement the end of the student loan repayment pause, drawing fury from debt relief campaigners.

The deal must now get through Congress, a difficult task given likely opposition from progressive lawmakers who oppose attacks on aid programs and Republicans who want steeper cuts.

As the Times reported, “Lawmakers in the House Freedom Caucus were privately pillorying the deal on Saturday night, and the Congressional Progressive Caucus had already begun to fume about it even before negotiators finalized the agreement.”

Amy Hanauer, executive director of the Institute on Taxation and Economic Policy, said Sunday that “it’s a relief to see that congressional leaders and the president have come to an agreement to raise the debt limit and avert an economic disaster.”

“But by instituting work requirements for critical assistance programs and rescinding important funding to crack down on wealthy tax cheats, this deal will rig the economy even more in favor of the most well-off Americans while failing to fix the real structural problems that led to the current debt crisis in the first place,” said Hanauer. “The deal avoids the elephant in the room: it includes no new revenues even though tax cuts of the past few decades were a primary driver of deficit growth.”

“And next up, many Republican lawmakers want to double down on tax cuts by pushing through many more tax cuts that would most help wealthy families and corporations,” Hanauer added. “They should do the opposite.”

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