Wrinkles and curveballs

Wrinkles and curveballs in the debt ceiling bill

Sen. Joe Manchin would get the gas pipeline he wants. The IRS would get a steeper than expected cut. And future executive actions would face new (but easily waived) fiscal handcuffs.

By POLITICO STAFF

The newly released legislative text enshrining the debt-limit compromise largely matches the deal that the White House and Speaker Kevin McCarthy had announced a day earlier: a proposal that would lift the $31.4 trillion ceiling through 2024 and place new limits on federal spending.

But the bill also includes its share of surprises and curveballs — including provisions that neither party had previewed in their attempts to drum up support for the deal, or which clashed with some of the pre-release spin. In other cases, the text makes even more clear what kinds of trade-offs President Joe Biden and McCarthy had to accept in ways that are already angering members of the parties’ bases.

These are a few of the details that could draw new attention in the coming days, as Congress takes up the bill just days before the deadline to avert a first-ever default on the national debt:

A greenlight for Joe Manchin’s favorite gas pipeline

In one unexpected development, the bill would approve all the remaining permits to complete the stalled Mountain Valley Pipeline, an Appalachian natural gas project that has been a top priority of West Virginia Sens. Joe Manchin and Shelley Moore Capito.

Manchin had tried last year to secure approval of the permit in return for providing the decisive support for Biden’s climate bill — only to see GOP opposition sink his permitting overhaul legislation.

On Sunday night, Manchin hailed the language in the debt bill that would greenlight the project, saying finishing the pipeline would lower energy costs for the United States and West Virginia. Neither side in the debt bill’s negotiations had disclosed Mountain Valley’s inclusion until the release of the legislative text Sunday night.

“I am proud to have fought for this critical project and to have secured the bipartisan support necessary to get it across the finish line,” Manchin said in a statement.

The Biden administration has also supported the project, arguing it is needed for U.S. energy security.

But the move is sure to set off bitter complaints from the environmental groups that have fought its construction for years and have turned the pipeline into a symbol of their struggle against fossil fuels. Protesters objecting to Mountain Valley disrupted an appearance by Energy Secretary Jennifer Granholm at POLITICO’s Energy Summit earlier this month.

“President Biden made a colossal error in negotiating a deal that sacrifices the climate and working families,” said Jean Su, the energy justice program director of an environmental group called the Center for Biological Diversity, said in a statement Sunday night.

But energy permitting rules would get only modest changes

As POLITICO had reported before the bill’s release, the text makes only modest updates to environmental permitting rules governing both fossil fuel and clean energy projects. This means that the major changes that members of both parties had sought will be left for Congress to hash out for some future legislation.

The deal would set one- or two-year time limits for certain kinds of environmental reviews of new projects, and would allow developers to go to court if agencies miss the deadlines.

Among other provisions, the bill also calls for designating a lead federal agency to conduct reviews for any particular project, an idea that has previously won favor among administrations of both parties. It would allow companies to assume a greater role in preparing their own environmental reviews, while leaving the ultimate responsibility to the government.

However, the bill doesn’t include major changes Republicans had sought, such as restrictions on the ability of project opponents to sue.

“It’s minimal, but statutory limits of one and two-year … isn’t nothing,” Sen. Kevin Cramer (R-N.D.), a former utility regulator who is active on permitting issues, told POLITICO in a text message. “Of course there is also hope of continuing the effort with momentum.”

Such a “shot clock,” or deadline, has been on the oil industry’s wish list for years.A White House report from 2020 found that the average review took more than four years to complete as of 2018, though it can be much longer for some projects.

Renewable energy trade groups, meanwhile, also broadly support changes that would place “reasonable” timelines on environmental assessments. Wind and solar projects are both experiencing breakneck growth, but permitting reviews can mire them in delay.

Both Republicans and the White House claimed victory. The Biden administration touted its ability to avoid a gutting of last year’s climate law — though the legislation was never considered seriously threatened.

IRS’ cuts steeper than some had expected

Biden agreed to trim $21.4 billion from one of his signature achievements — an $80 billion boost in Internal Revenue Service funding that Democrats had pushed through last year.

That’s a bigger cut than many earlier news reports describing the deal had envisioned.

While the debt legislation calls for only a $1.4 billion rescission immediately, the administration says it has agreed to take another $10 billion this fall to shore up other non-defense discretionary spending in annual appropriations bills.

And it says it will repeat that next year when lawmakers tackle fiscal year 2025 funding — swiping another $10 billion from that $80 billion and using it for other domestic programs.

“Pay-as-you-go” limits on executive actions — unless the administration waives them

The bill text applies Congress’ “pay as you go” rule — which requires new spending to be offset by savings elsewhere — to executive actions. That would mean presidential actions like student loan forgiveness could require a huge offset. Such restrictions, one Democrat warned before the text’s release, “could be disastrous.”

But the text says the White House Office of Management and Budget could waive the requirements if “necessary for the delivery of essential services” or “necessary for effective program delivery.” And it would protect OMB’s handling of the provision from legal challenges, saying: “No determination, finding, action, or omission under this title shall be subject to judicial review.”

The provision would expire at the end of 2024.

New SNAP restrictions’ impact on low-income people become clearer

While not exactly a surprise, the legislative text makes clear what both sides had disclosed late Saturday: The bill would tighten restrictions for the country’s leading anti-hunger program, the Supplemental Nutrition Assistance Program, by expanding the number of people who would have to work to receive the food aid.

Under existing law, adults up to 49 years old who do not have children must meet work requirements to continue to receive SNAP aid after a certain time period. The new agreement would gradually raise that age limit to 54, though the expanded limits would sunset in 2030.

An estimated 275,000 low-income Americans are at risk of losing their SNAP benefits due to the changes, the Congressional Budget Office estimated in April.

And that’s unacceptable, progressives said Sunday — despite the White House’s assurance that it had won new exemptions waiving the work requirements for all homeless people and veterans for the first time.

The White House argues that as a result of those new exemptions, the total number of people covered by SNAP is unlikely to change under the deal.

Even so, the policy will “increase hunger and poverty among [hundreds of thousands of older, low-income Americans], runs contrary to our nation’s values, and should be rejected,” the liberal-aligned Center on Budget and Policy Priorities said Sunday. The think tank added that “improvements for some don’t justify expanding to others a failed policy that will increase and deepen poverty.”

Biden brushed off the criticism Sunday night. Asked about the concerns of some Hill Democrats that the deal would lead low-income Americans to go hungry, the president responded that it was a “ridiculous assertion.”

Biden must resume collecting student loans, charging interest

The deal would force the administration to resume collecting federal student loan payments and interest for millions of Americans after Aug. 30, ending a payment pause that had originated as a response to the pandemic.

The Biden administration has repeatedly announced an end to the pause, only to extend it again, to the frustration of Republicans. But that path would be off the table under the debt ceiling deal.

But the bill does not specify how or when precisely the Education Department must resume collecting payments. That means the administration could proceed with its plan to offer borrowers some type of grace period or extra flexibility with payments as collections restart.

White House officials see the deal as codifying into law what the administration had already been planning to do, which was resume collecting payments in September.

“Despite Republicans’ efforts to end targeted student debt relief and move up our planned end to the payment pause, we will ensure a smooth return to repayment process,” Education Secretary Miguel Cardona said on Twitter on Sunday.

Cardona added that the “deal also protects our ability to pause student loan payments should that be necessary in future emergencies.” Republicans had pushed to permanently curtail the Education Department’s power to cancel or modify student loans.

McCarthy hailed the elimination of the student loan pause as a “victory.” In an interview with Fox News, he noted that the pause costs the government roughly $5 billion each month in forgone revenue.

But the deal would not affect Biden’s separate plan to forgive as much as $20,000 in student debt per borrower — something many Republicans had sought to repeal as part of the debt ceiling negotiations. That plan remains in limbo at the Supreme Court, which is expected to rule in the coming weeks on whether it can proceed.