An agreement between Speaker Kevin McCarthy and President Biden was reached to suspend the nation’s borrowing limit. This suspension, lasting two years, will prevent the government from hitting its current debt ceiling of $31.4 trillion, allowing continued borrowing and timely repayment. This remains to be ratified by Congress before the United States’ cash reserves are depleted on June 5.

The deal involves concessions from President Biden to the Republicans include restraining federal discretionary spending growth for the next two years and introducing new work prerequisites for recipients of food stamps and the Temporary Aid for Needy Families program. The deal also includes a plan to expedite some energy projects, including a new natural gas pipeline from West Virginia to Virginia.

The legislation suspends the $31.4 trillion borrowing limit until January 2025 providing the Treasury Department with flexibility to borrow as much money as required to meet the nation’s bills, plus a few additional months once the limit is reached. At the end of the suspension, the debt limit will be set at the level it has attained.

The bill also limits spending growth, proposes the military budget be increased in line with President Biden’s budget agenda and maintains that veterans’ health care be funded as requested.

It includes significant cuts to the funding of the Internal Revenue Service (IRS), rescinding $1.38 billion and repurposing another $20 billion from the $80 billion it received through the Inflation Reduction Act. However, due to IRS spending plans, these cuts may not affect the agency’s operations in the short term.

The agreement imposes new work requirements for recipients of food stamps and aid from the Temporary Assistance for Needy Families Program. These requirements will apply to adults aged 50 to 54 without dependents in the home, raising concerns among safety net assistance advocates.

A major point in the agreement is the accelerated approval of the Mountain Valley Pipeline, a natural gas project championed by Senator Joe Manchin III. The project has faced opposition from environmentalists, civil rights activists, and many Democratic state lawmakers.

The legislation restricts President Biden’s ability to reinstate a moratorium on student loan repayments and does not forward the proposal to forgive between $10,000 and $20,000 in student loan debt for most borrowers. It also retracts around $30 billion in unspent money from a previous Covid relief bill, with some funds being reallocated to boost nondefense discretionary spending.

The deal also threatens to reduce spending if all 12 regular funding bills are not approved by the end of the year. The threat of potential military cuts acts as a strong incentive for Republicans to pass appropriations bills in the near term.