The Big Part of the Debt Ceiling Deal Congress Isn’t Talking About

Congress is set to pass legislation Wednesday night that will raise the nation’s borrowing limit and reduce the federal deficit, the result of lengthy negotiations between House Republicans and the White House.

But the bill is only part of the full deal. A New York Times analysis of public descriptions of the agreement finds that the full deficit savings will be only about two-thirds of what is captured in the bill. That’s because the agreement struck by House Speaker Kevin McCarthy and President Biden will require Congress to authorize much more spending as part of a second set of bills expected to pass in coming months.

Those future changes, which the White House is calling “agreed-upon adjustments,” and which many observers have called side deals or even gimmicks, would increase federal spending in unconventional ways and then direct that money into the part of the budget that the current bill cuts the deepest.

Instead of a total deficit reduction of $1.5 trillion over a decade, as the Congressional Budget Office has projected, the full package would probably reduce deficits by about $1 trillion, including interest payments, over a decade. That’s a major shift from where Republicans started negotiations — the bill they passed last month would have reduced deficits by $4.8 trillion.

Because the second half of the deal will not come up for a vote right away, lawmakers could change their minds. But negotiators are confident enough in the agreement that they are moving forward with the debt limit bill this week. That legislation also includes an incentive for Republicans to pass the second part: If they don’t do so by the end of next April, defense spending will be automatically cut, an outcome most of them say they would like to avoid.

Most of the savings in the current legislation come from spending caps on a part of the budget known as nondefense discretionary spending. That category includes programs across the government that Congress must fund each year through legislation, including domestic law enforcement, environmental protection and air traffic control. The Congressional Budget Office projects that the caps would result in lower spending than its “baseline” forecasts — what would otherwise happen if current spending kept pace with inflation.

But many of the side deals negotiated between the White House and congressional Republicans would pump money back into domestic spending, reducing the effects of the caps. The White House has identified several categories of spending that would be increased in a future bill, which would effectively backfill the cuts made to these programs. None of them are technically described as discretionary spending, which is why some critics have called them gimmicks. One, for example, would authorize additional spending for “emergencies,” then allow it to be spent on normal domestic programs. Altogether, the additional spending could increase the deficit by $138 billion for the first two years, a change that is likely to compound over time.

The bill also modifies the defense budget, with plans to increase it slightly next year and then cut it slightly in 2025. But the changes to defense spending are much smaller relative to nondefense programs. (Our charts show the effects of the proposals in dollar terms, but many budget experts say it is more useful to compare the size of the budget deficit with the size of the economy, which is expected to grow.)

Outside of discretionary spending, the bill makes some policy changes to the food assistance program known as SNAP, and to the cash assistance program known as TANF. But the C.B.O. did not think either would result in much savings to the federal deficit. In fact, the office estimated that the changes to SNAP would result in more people receiving food assistance than do under current law. The bill would also claw back some unspent Covid relief money. And it reduces the amount of new funding available to the Internal Revenue Service over the next decade, a reduction that the C.B.O. believes will actually increase the deficit, by reducing the amount the government collects in taxes.

But the budget cuts will not apply to the federal budget across the board, or even to the largest or fastest-growing portions of it. Social Security and Medicare — programs that are very popular and politically difficult to change — are untouched.

Compared with legislation passed by Republicans in the House last month, the current deal is modest. That earlier proposal would have cut discretionary spending by a larger share, and would have extended those cuts for a decade, not just for two years. Enacting cuts of that scale would have been quite challenging, especially if Republicans tried to spare favorite programs like defense and veterans’ health care from reductions. Many of the policy changes in that bill have also been scaled back in negotiations.

The last time Congress and the White House negotiated a major deficit reduction bill in exchange for raising the debt limit, in 2011, the range of affected programs was much broader, including Medicare and other spending categories this bill leaves alone. But many of the cuts enacted in that deal were quickly reversed by future legislation.

As the 2011 deal showed, all of these estimates depend on what Congress does in the future. There is a chance this Congress will renege on the current deal, making this legislation the final word on the deficit for a while. It’s also possible that the entire deal holds, and the next Congress will still make vastly different spending choices.

Washington budget forecasts tend to predict the future in 10-year increments. A lot can happen in 10 years.