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Deal Suspending Debt Ceiling—and Cutting Some IRS Funding—Signed into Law

S.J. Steinhardt
Published Date:
Jun 5, 2023

GettyImages-884618936 White House Washington DC President Federal

President Joe Biden signed the Fiscal Responsibility Act of 2023 into law on Saturday, allowing for a two-year suspension of the debt ceiling in exchange for certain spending cuts, The New York Times and other news organizations reported.

The law came just days before the so-called X-date, on which Treasury Secretary Janet Yellen warned that the government would run out of money to meet its fiscal obligations.

“Nothing—nothing would have been more irresponsible. Nothing would have been more catastrophic,” the president said of a default on Friday evening in a televised address from the Oval Office. A default would have meant that “America’s standing as the most trusted, reliable financial partner in the world would have been shattered,” he said.

House of Representatives Speaker Kevin McCarthy (R-Calif.) characterized the spending cuts achieved from his negotiations with the president as “a major victory.” The Congressional Budget Office (CBO) estimated that, as a result of the deal, government spending would be reduced by about $1.5 trillion over the next decade.

"We’re finally bending the curve on discretionary spending because of this bill, and we’re doing it while at the same time raising our national defense and our veterans fully funded, with Social Security and Medicare preserved,” he said on the House floor after the bill passed.

The White House also considered the deal a success, the Times reported, because it avoided many of the draconian spending cuts that Republicans in Congress had proposed. Aides noted that most of Biden's agenda remained untouched.

As part of the deal, there was an unwritten but agreed-upon compromise that allows appropriators to repurpose $10 billion a year in 2024 and 2025 from the IRS’s $80 billion in increased funding allocated under the Inflation Reduction Act, the Times also reported. That funding was meant for a number of purposes, such as hiring more agents, increasing enforcement, improving customer service and upgrading systems. Republicans had opposed the additional enforcement funding.

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