A Debt Ceiling Deal “In Principle” As June 5 Looms
President Joe Biden and Speaker Kevin McCarthy (R-CA) made a debt ceiling deal. Their agreement “in principle” holds that the debt ceiling will be raised until 2025, after the next election. The deal holds funding flat for domestic programs and slightly increases funding for the military and veterans affairs. It would also add work requirements for federal food stamps and family welfare benefits and expedite a major natural gas pipeline from West Virginia to Virginia championed by Sen. Joe Manchin (D-WV).
Will the deal pass Congress in time? Treasury Secretary Janet Yellen said Friday that the nation could breach its debt limit on June 5, giving Congress days to pass debt limit legislation, released Sunday night as the Fiscal Responsibility Act of 2023. In the House, nine Republicans have pledged not to vote for the deal, which may hit the House floor for a final vote as soon as tomorrow night, Politico reports. In the Senate, some Republican support will be required for procedural votes to pass. Senate Majority Leader Chuck Schumer (D-NY) has prepared the chamber for Friday or weekend votes if necessary.
The debt deal reduces IRS funding. The debt limit deal also claws back about $20 billion of the $80 billion in IRS funding approved last year. Officials believe this would not change the short-term abilities of the IRS. TaxNotes reports (paywall) that $10 billion will be repurposed in the fiscal 2024 appropriations process, and $10 billion in fiscal 2025 will be used “to secure higher resources for non-defense priorities.”
Meanwhile, China is considering tax breaks for its tech manufacturers. Bloomberg reports the Chinese government may offer new tax incentives for high-end manufacturing companies to boost its economy and secure its supply chain. The new incentives could save those manufacturers of goods, including semiconductors, hundreds of billions of yuan. Previously, China announced tax breaks totaling 1.8 trillion yuan, or $255 billion.
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