On Saturday, May 27, House Speaker Kevin McCarthy (R-CA) and President Joe Biden reached an agreement to suspend the debt ceiling until January 2025 in conjunction with new spending reforms intended to reduce the federal deficit.
Text of the 99-page bill, called the Fiscal Responsibility Act (FRA), was released the following day, beginning the countdown imposed by a House rule that requires legislation to be made available to lawmakers for at least 72 hours before it can be considered on the floor.
The bill would rescind $1.4 billion of the supplemental funding provided to the Internal Revenue Service (IRS) by the Inflation Reduction Act (IRA). The cut is significantly reduced from Republicans’ initial proposal included in the Limit, Save, Grow (LSG) Act to repeal $71 billion in IRS funding—nearly 90% of the total IRA allocation. However, in addition to the small statutory clawback, the White House informed lawmakers on Sunday of its “handshake agreement” with House Republicans to redesignate an additional $20 billion of the IRS’s pot of IRA funding for “other non-defense priorities” (more below).
The FRA does not include any tax provisions, despite last-minute requests from the Biden administration to increase federal revenue by eliminating perceived “loopholes” and tax subsidies used by the fossil-fuel industry. Notably, none of the proposals included in the LSG Act to repeal most of the IRA green-energy tax incentives were embraced in the final FRA agreement.
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