What you need to know about the debt ceiling deal

House Speaker Kevin McCarthy’s compromises with far-right members of his own Republican party to gain leadership of the House in January may be coming back to haunt him.

Last week, 11 members of the far-right GOP contingent known as the House Freedom Caucus expressed their displeasure with McCarthy, voting with Democrats to block a procedural vote on two Republican bills to limit regulations on gas stoves, as well as halting business on the House floor for days in what has been described widely as a revolt.

Included in the bipartisan bill to raise the debt ceiling that is about to become law (the Senate passed it late Thursday night; it now goes to the president’s desk) is a provision that has raised alarms from advocates for student loan relief.

While the debt ceiling deal codifies the White House’s plan to resume loan payments at the end of this summer, it also includes a provision that prevents the executive branch from further extending this pause on payments and interest without congressional approval.

The debt ceiling battle of 2023 was full of sound and fury, and signified ... well, not nothing, exactly, but not very much.

Despite heated rhetoric over hostage-taking and talk of default, President Joe Biden and House Speaker Kevin McCarthy arrived at a relatively normal budget deal reached with the help of an imminent deadline.

Congress got one major step closer to averting a default on Wednesday after the House approved debt ceiling legislation 314-117, with a sizable number of both Republicans and Democrats supporting the bill. Ultimately, 149 Republicans and 165 Democrats voted for the bill.

The House vote was expected to be the more contentious of the two chambers, and the bill now heads to the Senate, where it’s set to have a relatively smooth path to passage. The House vote on the deal is significant given reports that upward of 20 Republicans intended to vote against the bill, and worries that House Speaker Kevin McCarthy would be short the support necessary for it to pass. In the end, a number of conservative Republicans as well as progressive Democrats opposed the bill, while a bulk of moderates in both parties backed it.

With a potential default date just days away, lawmakers have managed to avert economic calamity by coming to a deal in principle to raise the debt ceiling and cap government spending for two years.

While the full details of the bill have not yet emerged, the reported elements of the deal included concessions from both parties, effectively ensuring that lawmakers won’t have to revisit the debt ceiling until after the 2024 presidential election.

Though there are reports that an agreement is near, a lot could go wrong if congressional Republicans and the White House are unable to work out a deal to raise the debt ceiling by late next week. At some point in the next few weeks, checks from the federal government would stop going out since the country wouldn’t be able to pay its bills. Interest rates would rise, the stock market would fall, and the country would likely enter a recession potentially resulting in millions of job losses.

But do most Americans know this? And who would they blame for the economic calamity that would ensue?

Nobody knows exactly what will happen to the economy if the United States breaches the debt ceiling, though every possible option ranges from mildly bad to total and complete disaster to the tune of trillions of dollars. As the clock ticks on negotiations, it’s getting increasingly likely that we may get to see the consequences live and in color.

The debt ceiling is a federally imposed limit on how much debt the federal government can rack up, how much money it can borrow to pay its bills. It has been in place since 1917. Every time the government gets close to that ceiling, Congress needs to raise it and say it’s okay to keep taking on debt. It’s done so nearly 80 times since 1960.

In case you haven’t heard, the United States is in the middle of a perilous debt-ceiling showdown. Congress needs to expand the amount of money the US can legallyborrow, but Republicans and the Biden White House can’t agree on the terms.

That is pushing America closer and closer to the date of default, which means America won’t be able to pay its bills. That would, as you’ve also probably heard, cause economic pandemonium in the United States, but also abroad, potentially triggering a global financial crisis and recession.

The debt ceiling standoff is getting very real, very quickly. On Friday, the Congressional Budget Office warned that the federal government could run out of cash within the first two weeks of June. While the Treasury Department has been using extraordinary measures since January to keep paying US debt, officials there have said those measures could be exhausted by June 1, potentially setting up the US for a catastrophic default later this summer.

The most straightforward way to avoid disaster would be for Congress to vote for a clean debt ceiling increase, as it has repeatedly done in past years, but the Republican-led House has said it won’t raise the ceiling without deep spending cuts and a rollback of President Joe Biden’s clean energy agenda, all of which the president has said is off the table.

The United States has a time bomb written into federal law, and no one knows whether it is constitutional or not.

As anyone who has paid attention to the last dozen years of fighting over the federal budget knows, Congress must periodically raise the nation’s debt ceiling, the amount of money that the US Treasury is allowed to borrow, because the US spends more than it takes in. If the debt ceiling is raised or repealed on schedule, nothing happens. The Treasury will continue to pay for all federal expenses Congress has ordered it to pay, and it will continue to borrow money to pay for these obligations when necessary.

So it’s come to this: another debt ceiling crisis.

This is the fifth standoff I’ve covered as a reporter. There was the big one in 2011, of course, but then the 2013 standoff related to Obamacare, the lower-profile standoff in 2015, and the 2021 fight that required a temporary change to the Senate filibuster. I’m 32 years old. As I tell myself in the mirror every morning, that is not old. And I’m on my fifth debt ceiling crisis. All of this has happened before, and it will all happen again.

With a June default date looming, President Joe Biden is meeting with Democrat and Republican leaders on Tuesday to discuss the urgent issue of the debt ceiling, the legal cap that the US can borrow.

The gathering, which will include Senate Majority Leader Chuck Schumer, Senate Minority Leader Mitch McConnell, House Speaker Kevin McCarthy, and House Minority Leader Hakeem Jeffries, is an important first step in keeping the US from defaulting on its debt. But because Democrats and Republicans are so dug in on how to approach debt ceiling negotiations, the meeting isn’t expected to result in significant progress just yet.

If the 2023 debt ceiling standoff feels familiar, that’s because it is.

More than a decade ago — in 2011 — Congress was in a very similar position after Republicans retook the House, and Democrats held the White House and the Senate. Then, as now, the GOP was balking on an increase to the debt ceiling unless they got the spending cuts they demanded.

This spring, Congress finds itself standing at a familiar precipice. Once again, if lawmakers don’t agree to suspend or raise the debt ceiling, the federal government risks defaulting on its loans, which would likely cause a massive economic crisis.

On Wednesday, House Republicans passed a bill they view as an opening salvo to negotiations, as both parties stare down a stalemate. Meanwhile, President Biden has invited congressional leaders from both parties to the White House to break the impasse.