Debt Ceiling Deal Details & More

Negotiators inked a deal to increase the federal debt ceiling and identify areas where they can curb spending. 

H.R. 3746, The Fiscal Responsibility Act will:

  • Cut over $2 trillion in government spending, while fully funding defense and veteran’s programs, Social Security and Medicare.
  • Cut total spending in FY24 to below FY22 levels with certain significant exemptions.
  • Claw back roughly $28 billion dollars of unobligated, unspent COVID funds.
  • Adjust the age of existing SNAP work requirements from 18-49, to 18-54 while maintaining current law exemptions for $1 billion per year in savings.
  • Implement Administrative Pay-Go with generous waiver language added.
  • Streamline the permitting process for transmission and some energy systems.
  • Restart student loan repayments but does not repeal loan waiver authority.
  • NOT repeal IRA energy tax incentives, CHIPS and Science tax incentives, or Labor and Apprenticeship Standards as the House GOP bill demanded.
  • NOT shift regulatory authority to the Congress or allow the House more power than Senate.
  • Was H.R. 3746 a big deal after all? Yes, but did the House GOP get much? Not really. The debt ceiling is now kicked another two years down the road.

But JPMorgan analysts put out a research note saying that the probability of reaching the X-date had reached 25 percent. If that’s the new normal, then they project there’s an objectively unacceptable 70 percent chance of some kind of debt default over the course of the next four showdowns.

The big picture: The budget deal announced with great fanfare could and should have been achieved at much lower political temperatures or economic discomfort.

The other side: If the U.S. successfully manages to continue borrowing money and paying its debts even with total debt higher than the mandated ceiling, that could restore its AAA credit rating from Standard & Poor’s and entrench its status as the world’s preeminent risk-free borrower.

Between the lines: When a politician puts their political career and the economic well-being of the country at risk, the natural assumption is that a bedrock and inviolable principle must be at stake. In reality, however, the eventual stakes here turn out to have been downright miniscule. None of this is to say that the discretionary spending cuts aren’t a plus for the GOP; it’s just to point out that these are wins they could have achieved through other means … like using the statutory budget and appropriations process established by the founders in the late 1700s. 

How far the country has come since the Inflation Reduction Act (IRA) became law. Companies have announced at least 31 new battery manufacturing projects in the U.S. That is more than in the prior four years combined. The pipeline of battery plants amounts to 1,000 gigawatt-hours per year by 2030 — 18 times the energy storage capacity in 2021, enough to support the manufacture of 10 million to 13 million electric vehicles per year. In energy production, companies have announced 96 gigawatts of new clean power over the past eight months, which is more than the total investment in clean power plants from 2017 to 2021 and enough to power nearly 20 million homes.

The investment appetite is defying geographic and political boundaries. From Oklahoma and Ohio to North Carolina and Nevada, new investment is breathing economic life into communities that have seen their economies decline. This is in part because the I.R.A. provides an explicit incentive to invest in places with contaminated industrial sites, communities with a significant economic reliance on traditional fossil fuel production or those with shuttered coal mines or coal-fired power plants.

The investment surge has prompted forecasters to significantly update their views on the long-term potential of the law. 

Recommended modifications to Federal Standards for Oversight of Registered Apprenticeship Programs (RAPS) key points:

  • Demonstration of Financial Sustainability
  • Upgraded Safety and Health Standards in Hazardous Industries
  • Prevent Downgrading of Area Training Standards
  • Ensure that RAPs Provide Broad-Based Training in a Marketable Occupation
  • Corrective Action Plans to Address Deficiencies in Past Performance
  • Prevent Evasion of Responsibility for Poor Past Performance
  • Coordination with the Wage and Hour Division of the U.S. DOL to Prevent Exploitation of Apprentices
  • Debarred or Suspended Sponsors and Interested Parties
  • Affirmative Action and Diversity

Also known as the Pro Codes Act, this bipartisan legislation is sponsored by Representative Rep. Darrell Issa (R-CA) and co-sponsored by Reps. Ross (D-NC) and Raskin (D-MD). In the Senate, Senator Chris Coons (D-DE) has introduced S. 685 with cosponsors Senators Tillis (R-NC), Cornyn (R-TX), Whitehouse (D-RI), and Hirono (D-HI). H.R. 1631 would make sure that as more codes get incorporated by reference into legal standards by courts, the Pro Codes Act will protect a code or standard’s incorporation by ensuring the copyright doesn’t extinguish. The bill ensures that the public retains free access to the information. Just as some online services have a free version of their product with limited functionality and a paid premium version with greater functionality, under this bill, those that invest in code development will still be able to sell the materials in certain formats so long as they are simultaneously providing free access to the information. The Pro Codes Act process enables SMACNA Standards to be adopted and recognized in the Model Building Codes (ICC, IAPMO) and other organizations such as NPFA, ASHRAE, etc. that reference our consensus-based standards.

SMACNA endorsed the IRA business and personal tax incentives before the Senate Finance Committee and heralded the laws enhanced labor standards and important preference for registered apprenticeship. SMACNA spoke out to oppose their repeal as part of the IRA. These highly valued tax incentives were enacted and have been quickly and successfully utilized, where regulatory guidance exists, with immediate market results following months of availability.

SMACNA emphasized that the majority of the long-advocated and largely bipartisan incentives to stimulate energy retrofits, efficient construction with higher labor standards and registered apprenticeship preferences are working now. IRA incentives have already generated many times more than the tax deductions and credits in leveraged private investment, creating jobs and economic growth at the state, city and even neighborhood levels, often in neglected areas outside urban centers. Some estimates range as high as $500 billion to as much as $1 trillion dollars in additional private–public investment with leveraged public building work is already under negotiation or with signed agreements.

The suggested IRA repeal efforts would:

  • cut the bipartisan zero-emission nuclear production credits,
  • gut highly valued IRS Section 179d’s commercial, public and industrial deductions,
  • deeply cut the residential efficiency 
  • credits,
  • repeal the advanced manufacturing 
  • production credits, and
  • cut into retrofit and construction grants,
  • repeal special tax-exempt bonds and other financing for construction projects.

SMACNA’s statement highlighted that repealing the IRA would retroactively kill hundreds of incentives now being utilized to stimulate private sector investments of importance in every state and in every 
Congressional District across the nation.