President Joe Biden and House Speaker Kevin McCarthy released Sunday evening the legislative text for a bill to lift the nation’s debt ceiling and fund the government for two years in exchange for new limits on federal spending, moving one step closer to ending a partisan standoff that has brought the government to the verge of defaulting for the first time in U.S. history.
The compromise deal, which now faces an uncertain future in the House and Senate, is far from the “clean” debt ceiling increase Democrats had initially sought, but it also leaves out many of the provisions that Republicans pushed for in their House-passed debt ceiling bill.
“The agreement represents a compromise, which means not everyone gets what they want,” Biden said in a statement. He urged both chambers to pass the deal quickly, saying it would prevent “what could have been a catastrophic default and would have led to an economic recession, retirement accounts devastated, and millions of jobs lost.”
But some conservatives have expressed early concerns that the agreement does not do enough to cut future deficits, while liberals see it as a major concession. If passed by Congress, the deal to raise the debt ceiling would enact changes in environmental permitting, institute tighter work requirements for food stamps, and claw back some money from the Internal Revenue Service (IRS), according to the 99-page legislative text.
With the health of the economy hanging in the balance and financial markets watching closely, lawmakers said they expect a vote in the House on Wednesday, in hopes of enacting the legislation before a looming June 5 deadline to avert a default.
Here’s a look at what’s in the deal:
New work requirements for federal aid programs
In a major win for Republicans, the debt ceiling deal institutes new work requirements for low-income Americans who receive food assistance under the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps.
The deal raises the age limit until which able-bodied, low-income adults without dependents would be required to work to receive food stamps, from 50 to 54. The expanded restrictions would expire in 2030.
Biden’s negotiators were able to secure some exemptions for homeless people and veterans, whose circumstances can make it difficult to comply with the program’s work requirements. But the agreement on work requirements is seen as a significant concession by Democrats, who had initially rejected the proposed change and said it would lead to fewer people being able to afford food but not actually increase job participation.
The deal is also expected to modify the formula used by states to calculate cash assistance for low-income households under the Temporary Assistance for Needy Families program, but no changes to Medicaid were made.
Clawing back money from the IRS
In another concession to Republicans, the Biden Administration agreed to claw back $20 billion of the $80 billion in new IRS funding that was designed to crack down on wealthy Americans and corporations that evade taxes.
That $80 billion in funding was included in the Inflation Reduction Act, Biden’s signature economic bill, in order to increase government revenue and help pay for the climate and health-care spending in the measure. But it has since become an attack line for congressional Republicans, who have warned, despite the claim having been debunked, that tens of thousands of new IRS agents would be hired to pry into the lives of hard-working Americans.
Democrats say the money is meant to modernize the tax collection agency, which has been plagued by understaffing, and could yield $200 billion in additional revenue over the next 10 years. Since the fall, the IRS has hired 5,000 customer service agents to assist Americans throughout tax season, upgraded its phone and online chat features, and fully staffed 361 Taxpayer Assistance Centers around the nation, a Treasury Department official told TIME in March.
Rescinding unspent COVID-19 rescue money
The deal takes back around $30 billion in unspent COVID-19 relief funds that were approved by Congress during the Biden and Trump presidencies, with exceptions made for veterans’ medical care, housing assistance, and the Indian Health Service. The rollbacks also include slashing $400 million from the Centers for Disease Control and Prevention’s Global Health Fund.
Some Democrats and public health advocates have warned that such cuts would hurt efforts to prepare for the next big virus and take money away from the persistently underfunded public-health system, affecting vulnerable populations the most. The spending cuts would also delay the replenishment of the Strategic National Stockpile, raising the possibility that the U.S. could face a shortage of essential medical supplies should another pandemic emerge, creating a repeat of the early days of COVID-19 when masks, swabs, ventilators, and other supplies had to be rationed.
The White House says the deal, however, would protect critical funding to prepare for future pandemics.
A faster approval process for energy projects
Biden’s agreement with McCarthy also includes a provision intended to speed up the approval process for energy projects, which can sometimes drag on for years. As part of the deal, only a single federal agency will be required to take charge of a project’s environmental review, rather than having multiple agencies each perform their own environmental assessments, as it currently stands.
Both parties have expressed support for the change, though Republicans also sought new restrictions on lawsuits from project opponents, which is not part of the deal.
In addition, Sen. Joe Manchin, a centrist Democrat from West Virginia, managed to slip into the deal a provision meant to accelerate the construction of the Mountain Valley Pipeline—a multi-billion-dollar natural gas pipeline in his state that’s been repeatedly stalled on environmental concerns.
Funding for veterans
The deal boosts spending for the military next year by about 3% and also increases funding to improve medical care for military veterans, including a $20.3 billion fund dedicated to veterans who have been exposed to toxic substances or environmental hazards.
An end to the freeze on monthly student loan payments
Biden refused to retreat on his plan to cancel up to $20,000 of student debt for tens of millions of Americans, but the deal reached Saturday does codify his plan to end the ongoing freeze on monthly student loan payments and interest at the end of the summer.
The move comes amid calls from GOP lawmakers, who have blasted the roughly $5 billion cost each month of keeping nearly all federal student loans paused, to resume collecting payments. In their own House-passed debt ceiling bill, Republicans would have permanently curtailed the Education Department’s authority to freeze student payments.
The White House didn’t go that far, but the future of the program remains uncertain as the Supreme Court prepares to decide in the coming weeks about the legality of Biden’s student loans plan.
A two-year cap for discretionary spending
Negotiators agreed to cap annual discretionary spending for two years, keeping non-defense spending levels flat next year and raising them by 1% in 2025. That means funding for most domestic programs—such as housing, education and road safety initiatives—will stay the same next year at around $936 billion.
Over the course of negotiations, spending caps had emerged as a major sticking point for Republicans, who initially sought 10 years of annual spending limits before ultimately settling on two years.
A higher debt ceiling beyond the 2024 election
In exchange for the spending cuts, the deal would raise the limit on how much the government can borrow through the end of 2024, meaning that Biden will not have to deal with the debt ceiling again until after the next presidential campaign.
This was a top priority for the Biden Administration, since debt limit negotiations during a period of divided government often create a major headache for the president. If the deal passes, it will ensure that the U.S. does not have to go through debt limit talks again until the next House term.
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