The issue of raising the debt limit has been resolved, at least until January 2025, and we can all breathe easier now that the United States can continue to pay its debts. Hopefully, in the future, Congress will find a way to eliminate this boondoggle or at least work around it, as was done under 1979’s Gephardt Rule.
For now, though, we need to understand what provisions are contained in the act.
What is in the act
- The debt limit is suspended until January 2025.
- With two exceptions, the act sets caps on government spending for the next two years:
(1) Military spending is increased by about 3% in 2024. In addition, the act includes funding to improve medical care for military veterans, including a $20.3 billion fund for veterans who have been exposed to toxic substances or environmental hazards.
(2) Nondefense spending levels (i.e., those related to most domestic spending) remain flat next year and can be raised by 1% in 2025. This increase is projected to be lower than the rate of inflation.
- The act contains new work requirements for able-bodied, low-income Americans ages 50-54 who receive food assistance under the Supplemental Nutrition Assistance Program. This provision contains certain exceptions for homeless people and veterans.
- The formula used by states to calculate cash assistance for low-income households under the Temporary Assistance for Needy Families program was modified.
- With certain exceptions for veterans’ medical care, housing assistance, and the Indian Health Service, approximately $30 billion in unspent COVID-19 relief funds was taken back, including $400 million from the Centers for Disease Control and Prevention’s Global Health Fund.
- The COVID-19 freeze on student loan payments is ended but does not affect President Joseph Biden’s efforts to forgive between $10,000 and $20,000 in student loan debt for most borrowers. Student loan payments are to resume no later than Aug. 29, 2023.
- New measures to get energy projects approved more quickly were included in the act. These measures include the creation of a lead agency to oversee reviews and require that the reviews are completed in one to two years.
- $10 billion of the $80 billion allocated to the IRS in the Inflation Reduction Act has been reprogrammed in the 2024 and 2025 fiscal years in order to maintain funding for some nondefense discretionary programs.
What is NOT in the act
- Changes to Social Security or Medicare.
- New taxes on corporations or wealthy individuals.
- Steps to reduce Medicare spending on prescription drugs.
- Changes to the Inflation Reduction Act’s clean energy and climate provisions.
Further details on H.R.3746 - Fiscal Responsibility Act of 2023, including the complete text, are available on the official Congress website.
This is just an overview of a complex series of provisions, some of which may continue to evolve. To learn about how the provisions may affect you, work with a financial professional.
For more information about the above article or other business advisory services, contact Nick Wheeler, CPA at (334) 887-7022 or by leaving us a message below.
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