WASHINGTON – The newly passed debt ceiling law will almost certainly lead to a default in 2024 for the winning presidential candidate and the next Congress.
The President Joe Biden signed a measure over the weekend that suspends the debt ceiling until Jan. 1, 2020, and gives the Treasury Department an extra few months to take “extraordinary measures” in order to pay their bills.
If Biden is re-elected, it’s likely that there will be more controversy than just over the debt ceiling. In the first year, the party in control of Congress and the White House is likely to set the agenda for consequential issues which will influence the tax, spending and healthcare policy of the next decade. The new law on debt limits also includes a budget agreement for two years that will expire in 2025. The enhanced Obamacare subsidies, as well as major portions of the 2017 Republican Tax Cuts named after former President Donald Trump, will also expire by the end of 2025.
Rep. Brendan Boyle (D-Pa.), ranking member of House Budget Committee told NBC News the “incredible” consequences of the next elections.
The stakes are high for the 2024 elections, not only for our democracy but also for domestic policy. Boyle said that many of the major laws passed in the past few years will expire by 2025. If Democrats take control of the House, he would be the chairman of the House Budget Committee. The next election winners will be able to influence policy for the remainder of the decade.
The enhanced subsidies for those who purchase health insurance through the Affordable Care Act, which were passed by Democrats in a party line vote as part of the Inflation Reduction Act expires at the end 2025. This is a moment of high stakes for the signature achievement of the Obama and Biden administration. The estimated million Americans will feel the impact of the enhanced subsidies.
The comprehensive Republican tax law that Trump signed will expire in 2025. The corporate income tax reductions have been made permanent. However, the income tax cuts across all spectrums are scheduled to expire. The $10,000 limit on the deduction for state and local taxes (also known as SALTs) will be removed and set to unlimited.
Rep. Dusty Johnson, R-S.D., the chair of the center-right Main Street Caucus said: “It is hard to overstate just how important 2024’s elections will be.” Dusty Johnson (R-S.D. ), the chair of the Main Street Caucus, is the center-right leader. “We have major policy issues which will help set the trajectory for our nation over the next decade.”
He said, “Listen up, 2024 will be a big year, big year.”
Whoever wins the election in 2024 will determine the dynamics of the next deadline for the debt ceiling. If Biden is re-elected and Republicans maintain control of the House it could lead to a replay of the recent showdown on whether the country pays its bills or defaults.
Rep. Richard Neal (D-Mass. ), the ranking member of Ways and Means Committee said Democrats will make it a priority to extend ACA subsidies and pursue “a fairer” version of Trump’s tax cuts. This means that the Trump tax cut for higher incomes would be eliminated.
Obamacare and Trump’s tax law passed along party lines under the “reconciliation process”, which allows a Senate to avoid a filibuster, but also requires policies that increase the deficit to sunset. Biden has invested personally in the ACA funds, just as Trump, who is the GOP’s frontrunner in polls for the year 2024, has invested personally in his tax laws.
Neal stated that there are still many contentious issues to be addressed. “I believe that for the election, these concerns are paramount.”
A Republican-controlled Washington would be less inclined to renew the ACA funding — and more inclined to extend the GOP tax cuts, perhaps with some adjustments.
“Clearly, they have a lot support.” Johnson stated that the 2017 tax cut helped to grow the American economy. “But it doesn’t mean the policy cannot be changed in some way.”
Former Capitol Hill policy advisers say that it is difficult to predict how issues will play out until we know who controls the White House and the two chambers of Congress in the next election.
“2025 will be a major year in economic policy.” The stakes of the 2024 elections will be clear, said Charlie Ellsworth. He was a former legislative assistant who worked for Senate Democratic Leader Chuck Schumer.
Brian Riedl was the chief economist of then-Sen. Rob Portman of Ohio said that 2025 will bring “extraordinary tax and spending negotiations.”
“Paradoxically the number of policies that require attention — expiring taxes cuts, spending limits, and health policies — could actually ease negotiations, by giving each party a stake in their outcome and a wide field of policies to compare and contrast,” said Riedl. He is now a fellow of the Manhattan Institute, a right-leaning think tank.
Riedl said, “And hanging over the debate will be the impending bankruptcy of the Social Security Trust Funds and Medicare, due a few more years.”
