CBO Scores $1.5T Deficit Reduction From Debt Limit Deal (1/2)

The Congressional Budget Office late Tuesday published their estimates of the budget impact of the Debt Limit-related legislation currently under consideration.

• As had been expected for the scoring (and the key reason for attracting Republican support), the "Fiscal Responsibility Act of 2023" pulls down the deficit by a cumulative $1.53T vs the existing baseline over 2023-2033.
• The bulk of that deficit reduction comes via $1.33T from caps on future discretionary spending (including hard caps over the first two years, 2024-2025) and an associated $188B reduction in the cumulative impact on lowering interest payments over the decade.
• Other areas that were contentious in the Republican-Democrat negotiations - like work requirements - are effectively deficit-neutral, per the CBO. Ironically, the agreement will INCREASE the number of people who receive SNAP/TANF benefits over the course at a higher net cost of $2.1B over a decade; also the reduction in IRS funding is forecast to add a net $900mln to the deficit.
• House Speaker McCarthy is advertising savings from the bill of $2.1T - this exceeds the CBO's estimate by $600B. That amount appears to assume that discretionary spending growth will continue to be capped at a lower rate than currently assumed - but whether occurs beyond the "hard" caps of the next two years depends ultimately on political agreement to make that happen.

Source: CBO