Tangle - The Biden-McCarthy debt ceiling deal.

Starting point is 00:00:00 Based on Charles Yu's award-winning book, Interior Chinatown follows the story of Willis Wu, a background character trapped in a police procedural who dreams about a world beyond Chinatown. When he inadvertently becomes a witness to a crime, Willis begins to unravel a criminal web, his family's buried history, and what it feels like to be in the spotlight. Interior Chinatown is streaming November 19th, only on Disney+. The flu remains a serious disease. Last season, over 102,000 influenza cases have been reported across Canada, which is Chinatown is streaming November 19th, only on Disney+. yourself from the flu. It's the first cell-based flu vaccine authorized in Canada for ages six months and older, and it may be available for free in your province. Side effects and allergic reactions can occur, and 100% protection is not guaranteed. Learn more at flucellvax.ca.

Starting point is 00:01:00 From executive producer Isaac Saul, this is Tangle. Good morning, good afternoon, and good evening, and welcome to the Tangle podcast, an independent, nonpartisan, subscriber-supported politics podcast where we summarize the best arguments from across the political spectrum on the news of the day, and then I give you my take. I am your host, Isaac Saul, and on today's episode, we're going to be talking about the debt limit deal struck by President Biden and Republicans in Congress. Hope everybody had a great Memorial Day weekend. Before we jump in, as always, we'll kick it off with some quick hits. First up, Stuart Rhodes, the founder of the far

Starting point is 00:01:57 right militia group Oath Keepers, was sentenced to 18 years in prison on seditious conspiracy charges for his role in January 6th. It is the longest prison sentence yet related to the riots at the Capitol building. Number two, on Thursday, the Supreme Court cut back the federal government's ability to regulate wetlands under the Clean Water Act, ruling in favor of an Idaho couple that had sued the EPA. The ruling on this specific case was unanimous, though the five conservative justices went further in narrowing the scope of the Clean Water Act. Number three, Florida Governor Ron DeSantis raised $8.2 million in the first 24 hours after his presidential

Starting point is 00:02:38 announcement. Number four, the Texas House of Representatives voted to impeach State Attorney General Ken Paxton, a Republican, on allegations of bribery, obstruction of justice, and misusing public funds. Number five, Turkey's President Recep Tayyip Erdogan won a runoff election by a 52-48 margin, securing a third term in office. Congress is set to vote this week on a bipartisan agreement to suspend the debt ceiling and avert a potential government default. House Speaker Kevin McCarthy and President Biden were able to finally reach a two-year agreement over the weekend. This after weeks of negotiations, both leaders are now working to convince lawmakers in their respective parties to back the deal. Members of Congress, they returned to Capitol Hill today. The fight over raising the debt ceiling and preventing a government default enters a critical new phase. The White House and Republican leaders reached a tender deal this weekend.

Starting point is 00:03:44 That agreement gets its first test in a House committee. That's this afternoon. So it's not 100 percent what everybody wants. But when you look, the country is going to be stronger. This is going to be transformational. The agreement also represents a compromise, which means no one got everything they want. But that's the responsibility of governing. Days before a potential default, President Biden and House Speaker Kevin McCarthy announced an agreement to suspend the debt limit for two years.

Starting point is 00:04:12 The Fiscal Responsibility Act will cut spending, speed up permitting for some energy projects, enact new work requirements for food stamps and TANF, recover $28 billion in unspent COVID money, and redirect roughly $20 billion of IRS funds to other agencies. While party leaders have agreed to the deal, it still faces an uncertain path in the House and Senate, where some opposition has popped up on both sides of the aisle. Biden and McCarthy are both framing the outline of the agreement as a victory. Biden is emphasizing the deal has avoided any potential default while refusing to make major cuts to domestic spending. McCarthy is pointing to new restrictions on federal spending and an increase in some work requirements. Here are the major

Starting point is 00:04:55 highlights of what made it into the deal. The debt ceiling is suspended until 2025. This is a major win for Biden, who wouldn't have to face any debt ceiling standoffs again until after his potential re-election. Funding is held flat. The deal would keep non-military spending roughly flat for the 2024 fiscal year and cap any spending increase in 2025 at 1%. It also includes a provision that would force a 1% cut in spending if all 12 appropriation bills aren't passed at the end of this year. IRS funding was reduced. Last year, Biden passed about $80 billion of increased IRS funding through the Inflation

Starting point is 00:05:34 Reduction Act to help increase enforcement. $21.4 billion of that funding would be cut as part of the deal, and Biden says the money would be reallocated to other domestic programs. The deal also calls back about $30 billion of unspent COVID-19 funds that were allocated during the pandemic and would now be recovered. Congress has allocated about $4.6 trillion in COVID funding since 2020. There is a new deal on work requirements. Under existing laws, adults up to 49 years old who don't have children must meet work requirements to receive SNAP or food stamps. The new agreement would raise that age to 54, putting an estimated 275,000 people at risk of losing their benefits, according

Starting point is 00:06:17 to the Congressional Budget Office. However, Biden says new exemptions waiving the requirements for all homeless people and veterans would keep the number of people receiving SNAP roughly flat. The deal would also force the Biden administration to resume collecting student loan payments on August 30th, which the administration said it was already planning to do. The deal would not impact Biden's plan to forgive up to $20,000 of debt per borrower, which is currently under review by the Supreme Court. In a surprise detail, Senator Joe Manchin, the Democrat from West Virginia, won approval for the remaining permits to complete the stalled Mountain Valley Pipeline, an Appalachian natural gas project that has been

Starting point is 00:06:55 a Manchin priority. Neither side had disclosed the project's inclusion in the negotiations. There were some modest updates to environmental permitting rules for both fossil fuel and clean energy projects. The deal would set one or two year time limits on environmental reviews of projects and allow developers to go to court if agencies miss those deadlines. It also designates a lead federal agency to conduct reviews of projects. Congress will be left to resolve larger reforms. And finally, the deal allows for increased spending on the military and veterans affairs in line with inflation. The agreement also represents a compromise, which means no one gets everything they want, but that's the responsibility of

Starting point is 00:07:36 governing, President Biden said on Sunday. Not included in the deal were the closing of certain tax loopholes requested by the White House, the repeal of clean energy tax credits requested by Republicans, or the blocking of the White House's student loan debt cancellation plans requested by Republicans. You can find our previous coverage of the debt limit with a link in today's episode description. Today, we're going to break down some reactions from the right and the left, and then my take. First up, we'll start with what the right is saying. The right is strongly divided on the deal, with some celebrating it as a win for McCarthy and others criticizing him for not getting enough concessions. Some argue the deal, with some celebrating it as a win for McCarthy and others criticizing him for not getting enough concessions. Some argue the deal meaningfully slows down

Starting point is 00:08:30 spending and gives Republicans some wins on their agenda. Others say Biden gave up none of his priorities, while Republicans won very little in the deal. The Wall Street Journal editorial board said divided government is rarely pretty, but sometimes it can yield good results. The deal is a significant victory for the GOP priorities in return for raising the debt ceiling that had to be raised anyway, the board wrote. Biden tried to jam the GOP into a clean debt limit increase, but Republicans forced him to the table when they passed the Limit Save Grow bill. The lesson is that political unity pays. The deal caps non-discretionary spending at $704 billion for fiscal year 2024, a significant cut from the projected 2024 baseline of $757 billion. If the House and Senate fail to enact the 12 appropriations bills by the end of this calendar

Starting point is 00:09:19 year, all discretionary accounts are subject to a 1% cut, the board added. This automatic sequester would apply to accounts Democrats have disguised as emergency, like infrastructure dollars, etc. This is a protection against the Democratic Senate that wants another year-end omnibus spending blowout. The first regular order budget in years would give the House GOP leverage to win more policy victories in negotiations with the Senate. In the Daily Caller, Steve Cortez said the deal is not everything conservatives want, but it's a great start. Conservatives should welcome the deal, which represents tangible

Starting point is 00:09:54 success and a key starting marker for fiscal sanity in Washington, Cortez said. Republicans clawed back tens of billions of dollars of unspent COVID allocations, which not only saves taxpayers in the near term, but it also helps to stem the pernicious tide of inflation that was unleashed by exactly this kind of exorbitant borrowing and spending. McCarthy even realized actual cuts in non-defense discretionary spending as part of the negotiations. Historically, even when the GOP exerted control over all three bodies, debt limit raises always accompanied spending increases. But not now, Cortez said.

Starting point is 00:10:29 The deal forces Biden to begin student loan repayments again, saving taxpayers an estimated $5 billion per month. The agreement also slashes $400 million in taxpayer funds from the CDC's Global Health Fund that sent money to China and to globalist bureaucracies. None of this comes at the expense of seniors or veterans. Understandably, many on the political right want more, but this is the first step toward taking back the Senate and the White House. In red state, Joe Cunningham said McCarthy somehow did worse than doing nothing at all. The text of the bill confirms that spending is frozen at fiscal year 2022 levels,

Starting point is 00:11:06 but there doesn't appear to be a dollar limit to the debt ceiling increase that comes along with that, Cunningham said. Conservatives are upset about this fact, as well as just how little the White House ultimately had to give up in exchange for the increase. The savings Republicans won pale in comparison to the 1% non-military spending increase allowed next year, much less other problematic spending initiatives like the green subsidies in the so-called Inflation Reduction Act. McCarthy's initial tweet touting the deal got fact-checked since this debt limit deal doesn't cut spending, it just limits how fast spending grows, Cunningham said. What's more, there are reports that every Democrat in the House, including the Progressive Caucus, is ready to vote for the deal, which should be a pretty clear sign McCarthy got

Starting point is 00:11:48 rolled. Getting work requirements for social welfare is all fine and dandy, but meaningful cuts in spending from literally anywhere else would make that spending a smaller problem. A deal that increases the federal debt by $4 trillion isn't a deal at all. All right, that is it for the rightist saying, which brings us to what the left is saying. The left is mostly critical of the deal, saying Republicans took a high-risk gamble that turned up only modest changes. Some argue that the brinksmanship has already done more harm than good. Others say the deal was a win for both sides, though more important for Speaker McCarthy politically. In the Washington Post, Catherine Rample said Congress

Starting point is 00:12:35 beclowned itself. The deal is a debt limit increase until 2025, and in exchange, Congress would expand spending on defense and veterans programs, leave Social Security, Medicare, Medicaid and tax rates untouched, keep most other domestic spending roughly flat, trim funding for the internal revenue services, modestly amend the permitting process for energy projects and tweak the existing work requirements in the food stamp program, Rample said. This much-bollyhooed deal didn't seem terribly different from whatever budget agreement would have materialized anyway later this year during the usual annual appropriations process under a divided government. To Biden's credit, the most objectionable ransoms from Republicans, like sharp cuts to safety net programs and measures to effectively block

Starting point is 00:13:20 all agency regulations, are all gone. Yet China and Russia benefited from our obvious fiscal dysfunction, portraying us as unstable and unreliable. G7 discussions were hijacked by concerns over a possible default. Biden had to cut his diplomatic trip short to prevent Republicans from throwing a temper tantrum, and we may have already incurred higher borrowing costs thanks to the delay. Based on Charles Yu's award-winning book, Interior Chinatown follows the story of Willis Wu, a background character trapped in a police procedural who dreams about a world beyond Chinatown. When he inadvertently becomes a witness to a crime, Willis begins to unravel a criminal

Starting point is 00:13:58 web, his family's buried history, and what it feels like to be in the spotlight. Interior Chinatown is streaming November 19th, only on Disney+. The flu remains a serious disease. Last season, over 102,000 influenza cases have been reported across Canada, which is nearly double the historic average of 52,000 cases. What can you do this flu season? Talk to your pharmacist or doctor about getting a flu shot. Consider FluCellVax Quad and help protect yourself from the flu. It's the first cell-based flu vaccine authorized in Canada for ages six months and older, and it may be available for free in your province. Side effects and allergic reactions can occur

Starting point is 00:14:34 and 100% protection is not guaranteed. Learn more at FluCellVax.ca. In the Los Angeles Times, Jackie Calm said the arsonists are taking credit for putting out the fire. This needless brinksmanship has undermined global confidence in the nation's financial reliability and in the dollar as the world's reserve currency and still could spark default and a recession, Colm's wrote. All for the relatively modest spending cuts and policy concessions McCarthy extracted, which came at some immediate cost and will do little to reduce long-term debt,

Starting point is 00:15:08 especially if Republicans extend the Trump tax cuts as they propose. What would make this mess worth it is adding a provision to repeal or neutralize the World War I-era law that created the debt limit in the first place. Biden and others have called this irresponsible, but what's irresponsible is Republicans' weaponization of the law. They've perverted what was originally a fiscal reform to help Congress oversee Treasury's borrowing, making it into a recurring hostage and ransom scheme when a Democrat is president. This standoff is actually added to the deficit, and it could still get worse, especially if Congress can't pass the deal in time.

Starting point is 00:15:44 In Bloomberg, Jonathan Bernstein said that while McCarthy and Biden both won, and it could still get worse, especially if Congress can't pass the deal in time. In Bloomberg, Jonathan Bernstein said that while McCarthy and Biden both won, the deal is especially important for McCarthy. McCarthy's aptitude and authority as House Speaker have been very much in question since he was elected to the job earlier this year, but this result on the debt limit might help improve his standing, Bernstein said. Most notably, McCarthy will have proved that he can bargain on behalf of his party and demonstrated within the Republican conference that he is willing to take the brunt of criticisms, an important part of a party leader's job in Congress. He was already helped by passing the Republican-only bill to kick off budget negotiations,

Starting point is 00:16:19 which prove he can count votes and pass what he wants. As for Biden, he will benefit primarily from having avoided not just the consequences of a default, the threat of which is now safely pushed back until beyond the 2024 presidential election, but the possibility of a government shutdown, Bernstein said. There will still be partisan squabbling in Congress, but the deal should dramatically reduce how much casual voters will notice. And voters generally don't like partisan squabbling. Alright, that is it for the left and the right are saying, which brings us to my take. My first reaction when I saw the outline of the deal was something along the lines of Catherine

Starting point is 00:17:05 Rambles. This is it? This is what we risked the default for? This is what all the fuss was about, what might have cost us our credit rating, and what could still put us at risk of a default? Modest is the best word to describe pretty much everything about this agreement. Coming in, I'd been critical of Republicans for leveraging the debt ceiling to get the cuts they want. Now that I'm seeing the final deal, I feel even more confident in that criticism. I firmly believe that in a divided government, they could have gotten these wins through the normal legislative process rather than just a debt ceiling standoff. In a purely practical sense, this was all just a lot of bluster for very few changes, all in an extremely high risk environment.

Starting point is 00:17:46 Politically, of course, the story is a little different. For Speaker McCarthy, I think this is a big win. Criticisms from fellow conservatives aside, he is proving wrong those who said he wouldn't be able to manage a raucously divided caucus. So far, he's doing pretty well. He managed to keep Republicans together on a tough vote to spark these negotiations initially, and has managed to squeeze just enough out of Biden that he can hammer home some talking points to the public. More than anything, though, he wins by projecting the image of a leader who can govern, who can take on the president, and can keep the House Republicans together. In Washington, D.C., that is valuable currency. Of course, this deal is far from done. It's unlikely, but a few House or Senate Republicans who want to make a point could derail this legislation, which would make

Starting point is 00:18:30 things really dicey. Treasury Secretary Janet Yellen extended the date of a potential default to June 5th, but that deadline is still far too close for comfort if this bill runs into any hiccups at all. Meanwhile, what actually got done? Pretty much the only novel idea here is the less talked about administrative pay go, which is a new requirement that federal agencies offset new costs and regulation with cost reductions elsewhere. It's an interesting concept that the Government Accountability Office, the GAO, will run point on flagging Congress for potential violations and allowing it to vote down certain regulations on a majority vote. But even this idea has a critical hook. Biden can simply veto any vote of disapproval, meaning it could serve only to elevate the debate publicly and end up being entirely toothless.

Starting point is 00:19:17 Otherwise, Manchin got a pet project approved in West Virginia, there was a small change in work requirements for SNAP, permitting reforms might speed up, which I'm very happy about, and non-military spending will stay flat for a year after growing astronomically over the last four. In a vacuum, the net of these changes might be a positive for the country, but at what cost? And how big a risk? Again, nothing in the deal will rein in our unsustainable debt, which would have required substantial changes to Social Security, Medicare, or Medicaid. Gargantuan and wasteful defense spending is still going up and faces little new scrutiny. Pathways to increasing revenue will walk backwards, if considered at all, with increased IRS enforcement taking a hit, and tax increases, of course, entirely left out. I'm not pushing my support for any of those policy changes

Starting point is 00:20:05 individually, but we all know they are the biggest and most meaningful areas where we can address our debt situation, and none of them was touched. So, was it worth it? To me, the answer is a definitive no. On the one hand, maybe it's a good thing this brinkmanship didn't get rewarded with major concessions. On the other hand, it still seems hard to justify all the risk and hot air of the last few weeks for what we got. I suppose in this political moment, I should be happy that for now, we appear to be on track to avoid any economic calamity. All right, that is it for my take, which brings us to your questions answered. This one is from Richard in St. Louis, Missouri. Richard said, I just wanted to mention something

Starting point is 00:20:49 I thought was missing from the piece you pulled to create the addition on Tim Scott's candidacy, as well as your own take, which is whether Tim Scott, or for that matter, Nikki Haley, seriously thinks he can win the nomination even on a long shot, or if he is really aiming to elevate his profile in order to be the actual nominee's running mate. So this is a good call-out and probably an oversight on my part. For what it's worth, yes, I think both Nikki Haley and Tim Scott are probably auditioning for vice president just as much as they are running. I could see a world where Trump plucks either one as a running mate if he secured the nomination, and I think they'd both be willing to take the job.

Starting point is 00:21:28 Perhaps that's why they are, so far, playing nice with each other. At the same time, I don't think that's true of everyone in the Republican primary field. Vivek Ramaswamy will probably stay in the private sector with a big boost in name recognition when this is done. If former Vice President Mike Pence runs, it definitely will not be to go through another four years as Trump's sidekick. DeSantis is clearly making a bet on beating Trump, not joining him. And the other people whose hats are in the ring, like Chris Christie and Asa Hutchinson, are running explicitly as anti-Trump Republicans. It's possible as the race develops that Haley or Scott turn a page and go on the attack, risking any potential vice presidential pathways by trying to beat Trump.

Starting point is 00:22:08 But for now, yes, I think it is true they're both exploring two paths to the White House. Next up is our under the radar section. Consumer spending, the primary driver of economic growth, rose 0.8% in April, hitting another record. Americans spend more on vehicles and services such as insurance and health care, the Wall Street Journal reported. The increased spending came as inflation also accelerated, staving off concerns about a recession but complicating the Federal Reserve's plan to pare back on interest rate hikes. Now, a potential pause in the rate hikes appears less than likely. Axios' Kate Marino has the story, and there's a link to

Starting point is 00:22:50 it in today's episode description. All right, next up is our numbers section. The proposed military spending budget next year under the latest debt ceiling deal is $886 billion. The proposed military budget in two years is $895 billion. The estimated total savings in federal spending over the next 10 years that the terms of the debt ceiling agreement stay in place is $860 billion, according to the New York Times. The estimated cost of the Mountain Valley pipeline that just got approval in West Virginia is $6.6 billion. The average time an environmental review takes under the National Environmental Policy Act of 1970 is 4.5 years. The new cap in years that would be imposed on those environmental reviews is one or two years. All right, and finally, our have a nice day section. Researchers at the Hadassah University Medical Center in Jerusalem announced an unprecedented achievement in the treatment of

Starting point is 00:23:53 multiple myeloma cancer, the second most common hematological disease. The innovative treatment for the once incurable disease uses genetic engineering technology to boost the patient's immune system against the cancer. More than 90% of the 74 patients treated at Hadassah went into complete remission, oncologists said. We have evidence of a very positive overall response rate with minimal side effects and they are mild, Polina Stepensky, who heads the department conducting the research, said. These are dramatic results. This is a huge hope for patients with a disease that has not yet had a cure. Jerusalem Post has the story, and there's a link to it in today's episode description. All right, that is it for today's podcast.

Starting point is 00:24:40 As always, if you want to support our work, please go to readtangle.com. Don't forget, we have a live event coming to Philadelphia, Pennsylvania. If you go to readtangle.com backslash live, you can find some information about that. August 3rd, Philly. And we are also now on YouTube. Go check out our YouTube, Tangle News on YouTube. Give our videos some watch and subscribe there as well to keep up with some unique content we are pumping out in video format. All right, we'll be right back here same time tomorrow. Have a good one. Peace. Our podcast is written by me, Isaac Saul, and edited by John Law. Our script is edited by Ari

Starting point is 00:25:20 Weitzman, Bailey Saul, and Sean Brady. The logo for our podcast was designed by Magdalena Bukova, who's also our social media manager. Music for the podcast was produced by Diet75. For more on Tangle, please go to readtangle.com and check out our website. Thanks for watching! in a police procedural who dreams about a world beyond Chinatown. When he inadvertently becomes a witness to a crime, Willis begins to unravel a criminal web, his family's buried history, and what it feels like to be in the spotlight. Interior Chinatown is streaming November 19th, only on Disney+. The flu remains a serious disease. Last season, over 102,000 influenza

Starting point is 00:26:20 cases have been reported across Canada, which is nearly double the historic average of 52,000 cases. What can you do this flu season? Talk to your pharmacist or doctor about getting a flu shot. Consider FluCellVax Quad and help protect yourself from the flu. It's the first cell-based flu vaccine authorized in Canada for ages six months and older, and it may be available for free in your province. Side effects and allergic reactions can occur, and 100% protection is not guaranteed. Learn more at FluCellVax.ca.

Tangle - The Biden-McCarthy debt ceiling deal.

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