U.S. President Joe Biden and House Speaker McCarthy reached a final agreement on the night of the 27th local time to raise the federal debt ceiling, avoiding the feared default of the U.S. government. The bill reflecting the agreement was released on the 28th, and its contents are attracting attention.
Instead of suspending the application of the debt ceiling until January 2025, the agreed bill included caps on non-defense government budget spending, keeping spending at about current levels.
The agreement also seems to have brought good news for the cryptocurrency industry.
The agreement, which President Biden described as a “compromise”, includes a “digital asset mining energy (DAME) excise tax” proposed by the White House and rejected by Republicans as part of the 2024 budget. do not have. DAME proposed that companies mining cryptocurrencies such as Bitcoin should be taxed at 30% of the cost of electricity used for mining.
Rep. Warren Davidson (Republican), a pro-cryptocurrency advocate, responded to the question, “I don’t see a DAME proposal in the bill’s text, but was it shelved?” It is to stop taxes,” he replied.
Yes, one of the victories is blocking proposed taxes.
— Warren Davidson 🇺🇸 (@Warren Davidson) May 29, 2023
Under the Biden administration’s proposed budget, miners could face a 10% tax increase over three years starting in 2024 on the electricity they use.
connection:Biden Administration Proposes 30% Tax on Crypto Mining Companies
Main details of the debt agreement
In this agreement, in addition to the above DAME, the new tax increase proposed by the Biden administration was shelved.
Raising the debt ceiling, which has become the focus, will be implemented in the form of suspending the application of the debt ceiling with a two-year deadline. The Treasury Department will be empowered to borrow without caps until January 2025, which is seen as a major victory for the current administration. It also aims to make the debt ceiling unusable politically during the 2024 presidential election.
The spending cap would set a cap on “discretionary spending,” which Congress allocates annually to federal agencies and government programs. The cap doesn’t apply to spending on Medicare or Social Security, which are health insurance programs for the elderly and disabled.
On the other hand, the Republican Party’s request for stricter work obligations as a requirement for receiving public assistance was partially approved. The Public Food Assistance Program (SNAP) for low-income people will raise the upper age limit for compulsory work from 49 to 54, and the cash benefit program will also change the work requirements. However, veterans and homeless people are exempt from the mandatory work regardless of age.
The Internal Revenue Service (IRS) will be hit hard by the budget cuts. The anti-inflation bill enacted by the Biden administration included an $80 billion budget increase over 10 years, of which $20 billion was set aside for other uses. Republicans have been strongly opposed to the Inflation Act’s allocation of funds to hiring tens of thousands of new IRS agents.
A Republican-proposed recovery of unused COVID-19 relief funds is now included in the agreement. The Congressional Budget Office estimates the amount at about $30 billion.
In the energy sector, an agreement was reached to review domestic licensing laws and to streamline the environmental assessment process. It is expected to reduce the time it takes to approve new projects.
If passed, the bill would grant all of the permits needed to complete the currently suspended natural gas pipeline construction project, the Mountain Valley Pipeline.
Congressional approval required
A bill that reflects the agreement must be passed by both houses of Congress. The bill is scheduled to be voted on in the House of Representatives on the 31st of the US time, but it seems that some Democratic radicals and conservative Republicans (the League of Liberal Democrats) have already criticized the bill.
President Biden and House Speaker McCarthy have been active in persuading lawmakers to ensure a default is avoided, and both have some confidence that the bill will pass Congress. is clarified.