President Joe Biden and House Republican Kevin McCarthy are in talks to reach a debt-ceiling agreement that could avoid a default as soon as June 1. Discretionary spending, the chunk of the U.S. budget set annually by Congress, is the central pillar of the deal. This spending, which powers a wide swath of military and domestic programs, reached $1.7 trillion in 2022 and accounts for 27% of the overall $6.27 trillion spent.
Biden has offered to hold discretionary spending flat from the current 2023 fiscal year, while House Republicans have proposed capping growth at 1% annually for 10 years. Both sides are also at odds over how long any spending caps should last, with Republicans offering six years and the White House two.
If a general agreement is reached, it could help the U.S. avoid default, but would likely set up another series of budget battles as lawmakers would still have to agree on funding levels for everything from fighter-plane construction to border enforcement.
The Republican-led House Appropriations Committee has unveiled legislation that would boost spending on veterans’ care, border security, and other priorities next year. This could require cuts of more than 13% in other areas like scientific research and environmental protection if they want to keep overall spending at the same level as this year.
The Democratic-controlled Senate is not likely to accept those figures, which could lead to a government shutdown if the two sides do not reach agreement by Sept. 30, the end of the fiscal year.