Debt-Ceiling Deal Reached, Vote To Come

Executive summary:

  • Democratic and Republican party leaders reached an agreement to extend the debt ceiling until Jan. 1, 2025.
  • Members of the House of Representatives and Senate will likely vote on the deal in the coming days. We believe it’s much more likely than not that the debt-ceiling legislation will be passed by Congress
  • The deal likely represents a crisis averted, but until the votes are tabulated, it still warrants careful monitoring.

Over the weekend, the Biden White House and Republican House leaders reached a debt-ceiling deal, with the text of the bill released on May 28. The agreement extends the debt ceiling to $31.4 trillion until Jan. 1, 2025. It also keeps overall government spending flat in 2024 and raises it by 2% in 2025. In addition to these headline numbers, the agreement also expands work requirements for older Americans who receive government assistance. It also contains provisions to modestly increase military expenditures—to $866 billion in 2024 and $895 billion in 2025.