Debt Ceiling Vote Limits Government Spending

Both the House and Senate were supposed to be on their usual Memorial Day recess this week, but the urgency of the debt ceiling crisis changed those plans. On Wednesday, the full House passed H.R. 3746, the Fiscal Responsibility Act of 2023, by a vote of 314-117. The outlines of this bill came together over the Memorial Day weekend between House Republicans and White House negotiators. It would suspend the debt ceiling until January 2025, set limits on federal spending in fiscal years (FY) 2024 and 2025 for defense and non-defense programs, rescind some unspent COVID relief funding, and reallocate some of the Internal Revenue (IRS) funding provided in the Inflation Reduction Act, among other items. Congressional leaders in the House and Senate are now working to pass the legislation and send it to the President before the country defaults on its obligations on or about June 5. 

Notably, the Fiscal Responsibility Act will place caps on FY 2024 and FY 2025 non-defense funding, which includes funding for education and workforce development programs. The bill will hold non-defense spending roughly flat in FY 2024 and increase it by 1 percent in 2025. If Congress does not complete this year’s appropriations process before January 1, 2024, the bill would also enact an automatic continuing resolution that would prevent a government shutdown by implementing a 1 percent across-the-board funding cut from the previous fiscal year. 

Attention now shifts to the Senate, but expectations are that the upper chamber will approve the measure expeditiously.