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Debt Ceiling Deal Includes Work Requirements

Washington Update

Debt Ceiling

On Saturday, May 27, the White House and House Republicans came to an agreement that would impose a two-year suspension of the debt ceiling, which is now set at $31.5 trillion, until January 2025. Under the agreement, the debt limit will be set at whatever level it has reached when the suspension ends. The deal must be passed by the Republican-led House and Democrat-led Senate by the updated deadline of Monday, June 5. The agreement establishes caps on discretionary spending from FY24 through 25 - setting a FY24 defense limit of $868.349 billion and nondefense limit of $703.651 billion. Non-defense discretionary spending would remain flat in FY24, with a 1% increase the following year, and defense spending would increase by 3% in 2024.

A major sticking point in negotiations is the GOP demand for tougher work requirements for federal aid. Republicans are adamant that they will not drop the demand, which many Democrats have fervently opposed. Republicans believe the stricter work requirements for programs like the Supplemental Nutrition Assistance Program (SNAP) will discourage recipients from abusing the payments and becoming reliant on government aid. Democrats argue that the programs already have work requirements in place and making them more stringent would hurt low-income individuals who depend on SNAP and other programs for basic needs. The White House and Republicans came to an agreement that would raise the age for existing work requirements on able-bodied adults without children from 49 to 54, but the White House secured waivers for veterans, homeless and individuals who were children in foster care. The age limit will be phased in over three years, beginning in FY23. There is also a technical change to the TANF funding formula that could cause some states to divert dollars from the program.

In the Inflation Reduction Act, $80 billion was included to help the Internal Revenue Service (IRS) hire thousands more employees and update its antiquated technology. The agreement immediately rescinds $1.38 billion from the IRS and ultimately repurposes another $20 billion of the $80 billion. Also included are new measures to get energy projects approved more quickly by creating a lead agency to oversee reviews and require that they are completed in one to two years. The deal approved permitting requests for the Mount Valley Pipeline - a $6.6 billion natural gas project in West Virginia intended to carry gas about 300 miles. The bill officially ends President Biden’s freeze on student loan repayments by the end of August and restricts his ability to reinstate such a moratorium. The legislation also claws back about $30 billion in unspent money from a previous COVID relief bill with some of the money being repurposed to boost nondefense discretionary spending.

Click here to read the section-by-section summary.

Click here to access the full text of the legislation.

STEM and Space Education

On Wednesday, May 24, NASA and the U.S. Department of Education signed an agreement to bolster collaboration across the agencies to support science, technology, engineering and math (STEM) and space education for students. The partnership aims to promote STEM and space education to students from diverse backgrounds so they have more opportunities to pursue careers in those fields. Both agencies participate on the White House National Science and Technology Council Committee on STEM Education and the White House National Space Council. The two agencies are also working on developing an agreement to provide NASA STEM content and technical assistance for the 21st Century Community Learning Centers Program, which funds afterschool programming across the nation.

Click here to read the full press release.

Initial Jobless Claims

In the week ending May 20, the advance figure for seasonally adjusted initial claims was 229,000, an increase of 4,000 from the previous week's revised level. The previous week's level was revised down by 17,000 from 242,000 to 225,000. The 4-week moving average was 231,750, unchanged from the previous week's revised average. The previous week's average was revised down by 12,500 from 244,250 to 231,750. The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending May 13, unchanged from the previous week's unrevised rate.

Click here to access the report.

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