Debt ceiling deal contents and beneficiaries.

Republican and Democratic leaders in Congress both portray the long-awaited deal to raise the nation’s debt ceiling as a win for their side.

The Fiscal Responsibility Act of 2023, unveiled on May 29, ends a months-long disagreement between President Joe Biden and House Speaker Kevin McCarthy (R-Calif.) over the terms for increasing the borrowing limit. The deal would suspend the country’s $31.4 trillion debt limit through Jan. 1, 2025.

After racing to complete a compromise agreement over Memorial Day weekend, each side emerged claiming victory.

“The deal that the president is announcing today, we think, is a good one,” White House officials told reporters on May 29. “It protects the historic economic gains we’ve made, really allowing one of the strongest recoveries on record to continue by taking the threat of default off the table into 2025.”

“I believe this is an agreement in principle that’s worthy of the American people,” McCarthy told reporters on May 29. “It has historic reductions in spending, consequential reforms that will lift people out of poverty and into the workforce, and reign in government overreach. There are no new taxes, no new government programs.”

Here’s a look at major provisions of the Fiscal Responsibility Act of 2023 and who stands to gain—or lose—from it.

Debt Ceiling Suspension

The United States nearly reached its statutory borrowing limit of $31.4 trillion in January. A political standoff ensued, centered on how much, for how long, and under what terms, Republicans would agree to raise the debt ceiling.

The GOP’s starting offer was a debt limit increase of $1.5 trillion, or until the end of March 2024, whichever came first.

That was included in the Limit, Save, Grow Act, which the Republican-controlled House passed in April. The bill also included spending cuts and other provisions aimed at reducing federal spending and stimulating the economy.

Democrats claim the Fiscal Responsibility Act of 2023 is a win for their own party in that it suspends the debt limit through Jan. 1, 2025. That delays any further wrangling over the issue until after the 2024 election.

A suspension of the debt ceiling is different from an increase as the agreement is limited by time, not the dollar amount of the U.S. debt. Under this provision, the Treasury Secretary can borrow as much as necessary to pay interest on the national debt and carry out the spending initiatives approved by Congress.

Caps and Cuts

The bill reduces non-defense discretionary spending in 2024 by about $1 billion, or about 0.2 percent. The amount will increase by only 1 percent in 2025. After that, the bill stipulates spending targets, though they are not enforceable spending caps.

McCarthy claims this is the largest spending cut in the nation’s history. Democrats say they’ve basically held the line on spending and refused cuts to social services demanded by the GOP.

Any reduction in spending is magnified by inflation, which remains at 4.9 percent, according to the U.S. Bureau of Labor Statistics, so this doesn’t appear to be a win for Democrats. And the modest cuts achieved here could be the prelude to more significant spending reductions, some analysts say.

IRS

The IRS loses $20 billion in funding in the Fiscal Responsibility Act, which is a partial win for Republicans.

The GOP had hoped to rescind all $80 billion allocated to the agency through the Inflation Reduction Act. The president said the funding is necessary to modernize the agency to go after wealthy tax cheats. Republicans feared the money would be used to create an army of auditors to harass ordinary Americans and small businesses.

The GOP settled for moving $10 billion a year for two years into other non-defense discretionary categories.

Medicaid, SNAP, TANF

The age limit for work requirements attached to Supplemental Nutrition Assistance Program (SNAP) benefits will increase.

This was a major point of contention during negotiations. Republicans saw the move as helping both individuals and the economy by helping people move from welfare to work. Democrats believed it would be another burden on people who were already having difficulty finding employment that paid enough to support them.

The compromise solution requires able-bodied non-parents receiving Supplemental Nutrition Assistance Program benefits who are 50 to 54 years old to work for 20 hours a week. The previous age requirement was 18 to 49 years old.