Public Health Implications of Debt Limit Increase
May 31, 2023
Over the Memorial Day holiday weekend, President Joe Biden and Speaker Kevin McCarthy (R-CA) announced a bipartisan deal to raise the debt ceiling, rescind some unobligated COVID-19 funding, and implement limits on federal spending. This week, Congress will debate whether the legislation, titled the Fiscal Responsibility Act of 2023 (H.R. 3746), will be signed into law before the X date (i.e., when the federal government is expected run out of funding to meet its financial obligations) of June 5. A House vote is expected today and the Senate is expected to vote as early as Friday or Saturday of this week.
View the full bill text and a section-by-section summary of the legislation.
Outlook
The ASTHO government affairs team believes this legislation has a high likelihood of being approved by Congress because it represents a bipartisan compromise of leadership in both political parties.
Below is a summary of the legislation’s key provisions.
Debt Ceiling
Raises the debt ceiling through Jan. 1, 2025.
Caps on Spending
Establishes caps on discretionary spending for FY24 and FY25. The cap for non-defense discretionary spending (i.e., the pot of money used to pay for CDC, NIH, HRSA, FDA, Education, and other agencies) is relatively level for FY24 after making several adjustments that serve as separate specific spending allowances. The cap for FY25 is limited to 1% growth.
Analysis
Caps on spending for the next two years mean it will be very difficult for Congress to provide increases in federal funding for programs, projects, or activities without significantly decreasing funding for other areas of the budget.
Incentivize Regular Order
If Congress does not approve all annual appropriations bills by January of the calendar year, an automatic continuing resolution is established for the remaining bills not enacted, providing funding for the federal government at 99% of current levels beginning on April 30. This is essentially a sequestration that applies across the government on April 30, even if some appropriations bills are already enacted for those agencies, such as Defense. There are 12 annual appropriations bills, and more controversial bills like Labor, HHS, and Education (containing CDC, ASPR, HRSA, and SAMHSA) tend to be the ones that run the longest on continuing resolutions due to difficult negotiations on funding and policy riders. These new provisions do not change what happens on Sept. 30, and Congress still needs to pass a normal continuing resolution. In the absence of that action, a Shut Down threat remains on Oct. 1.
Rescinds Unobligated Federal COVID-19 Funding
The legislation specifically rescinds certain unobligated federal accounts and amounts of money appropriated through various emergency supplemental funding bills. Given the way Congress appropriated COVID-19 funding, and the way funding was later transferred between federal accounts and agencies, it is extremely difficult to discern which federal public health programs are affected by the rescissions. However, it appears that the funding provided to the Infectious Disease Rapid Response Reserve Fund has not been fully rescinded and remains intact. ASTHO will be seeking additional guidance from our federal partners for additional information.
Supplemental Nutrition Assistance Program (SNAP) Work Requirement Adjustments
According to the section-by-section summary, “SNAP’s able-bodied adults without dependents time limit and subsequent work requirement applies to individuals aged 18-49. This section would gradually adjust through the age of 54 while exempting the homeless, veterans, and individuals aging out of foster care. These provisions sunset on Oct. 1, 2030.”
Modification of General Exemptions
According to the section-by-section summary, “states are allowed to annually exempt up to 12% of ABAWDs not otherwise exempt from the work requirement. USDA has interpreted the law as allowing states to carry over unused exemptions from year to year, building up large balances and allowing them to exempt more individuals from work requirements. Beginning in 2024, this provision would end the ability of states to carry forward these exemptions. Additionally, beginning in 2024, the percentage of available exemptions is permanently reduced from 12% to 8%.