US debt ceiling bill to cut $1.5 trillion from deficit over decade

Bill struck between US president and House leader would also reduce mandatory spending by $10 billion

The US Capitol reflected in a puddle, as President Joe Biden waits to see if his debt-ceiling bill will be passed. Reuters

The US Congressional Budget Office said on Tuesday that its budget deficit projections would be reduced by about $1.5 trillion over the next 10 years if the debt-ceiling bill now up for a vote in Congress were enacted in its present form.

The projection comes after the deal struck last weekend between Democratic President Joe Biden and Republican House of Representatives Speaker Kevin McCarthy.

A vote on the deal is expected on Wednesday.

The agreement would suspend the debt limit until January 1, 2025, cap spending in the 2024 and 2025 budgets, regain unused Covid funds, speed up the permit process for some energy projects, and include extra work requirements for Americans who receive food aid.

"Reductions in projected discretionary outlays would amount to $1.3 trillion over the 2024–2033 period," the office said on Tuesday.

It said the bill would reduce mandatory spending by $10 billion and revenues would fall by $2 billion over the decade.

Interest on public debt would fall by $188 billion, it said.

The bill, if approved, will prevent the US government from defaulting on its debt and comes after weeks of heated negotiations between Mr Biden and House Republicans.

It has drawn fire from hardline Republicans and progressive Democrats, but Mr Biden and Mr McCarthy are banking on getting enough votes from both sides.

Mr McCarthy has predicted he would have the support of most of his fellow Republicans for the bill, and House minority leader Hakeem Jeffries said he expected Democratic support.

The 99-page bill would authorise more than $886 billion for security spending in fiscal year 2024 and more than $703 billion in non-security spending for the same year, not including some adjustments.

It would also authorise a 1 per cent increase for security spending in fiscal year 2025.