U.S. House Speaker Kevin McCarthy proposed a bill to raise the U.S. debt limit by $1.5T.
The proposal includes a measure to cut federal spending in exchange for staving off a potential U.S. default until March 2024.
- The proposed bill would entail cutting discretionary spending by $130B, reducing it to 2022 levels.
- It would also include a 1% annual cap on discretionary spending increases for the next decade.
- Other
parts of the bill include stricter work requirements for people
receiving anti-poverty benefits and reduced regulations for energy
projects.
- It would also eliminate tax breaks for electric vehicles and other clean-energy initiatives.
- McCarthy estimates that the bill would reduce budget deficits by $4.5T over the next ten years.
- Some of the bill's proposed measures are viewed as non-starters by the Biden administration and congressional Democrats.
- The House is set to vote on the Republican proposal next week.
Zoom Out:
- Treasury Secretary Janet Yellen enacted "extraordinary measures" to avoid a U.S. sovereign debt default in January.
- She warned of a financial and economic "collapse" if debt ceiling negotiations are not resolved when the temporary measures end in June.
