April 27, 2023

On April 26, the House voted 217-215 to approve a bill (H.R. 2811) that would raise the nation’s debt limit for one year and scale back federal spending. The legislation – dubbed the Limit, Save, Grow Act of 2023 – would suspend the nation’s borrowing limit, currently set at $31.4 trillion, through March 31, 2024 or until the federal debt increases by another $1.5 trillion, whichever comes first. The bill also would freeze fiscal year 2024 discretionary spending at 2022 levels (a reduction of approximately $130 billion) and limit the growth of spending over the next decade to one percent annually. In addition to these reforms, H.R. 2811 would rescind unobligated COVID-19 relief funding while also rolling back programs that were approved as part of the Inflation Reduction Act (IRA), including a number of clean energy tax credits and funding for increased tax enforcement.

The legislation also includes a number of structural changes to social safety net programs, including Medicaid, the Supplemental Nutrition Assistance Program (SNAP), the Temporary Assistance for Needy Families (TANF) program, and others. Specifically, H.R. 2811 would create new work requirements for certain individuals receiving federal benefits. For SNAP, the bill would extend work requirements for childless adults until they reach the age of 56, replacing the current work rules that are in effect through the age of 49. The measure also would make it more difficult for states and counties to obtain waivers in areas of high unemployment.

For Medicaid, the GOP package proposes a rule that would require certain recipients between the ages of 19 and 56 to meet income or work thresholds. Among other things, the bill would require beneficiaries to work 80 hours per month or complete 80 hours of community service per month. It should be noted that the provision does contain some exemptions from the requirements, including for those who are pregnant or caring for young children. Exemptions also would be available for those that have a disability, those participating in a substance use treatment program, or those enrolled in an educational program.

In an effort to secure the support of several Republican holdouts, GOP leaders agreed to a series of changes to the measure before it was considered on the House floor. For example, the legislation was amended to expedite the implementation date for the tighter constraints on social programs. The revised bill also would bar states from saving up unused single individual work exemptions under SNAP, beginning in October. Additionally, the measure would rescind additional programs authorized by the IRA, including those aimed at incentivizing energy efficiency projects and a new program within the Department of Transpiration designed to improve access to neighborhoods.

For its part, the Biden administration has come out in strong opposition to the House GOP framework, referring to the proposal as a nonstarter. Instead, they are calling on Republicans to increase the debt ceiling with no strings attached, though Speaker McCarthy has made clear that Republicans would not raise the limit without meeting certain conditions. While Democrats are continuing to insist on a clean debt limit measure, passage of the Republican proposal may set the stage for a potential compromise package.

It should be noted that the U.S. nearly broached its current borrowing authority in January, but the Treasury Department has employed a series of so-called “extraordinary measures” since that time to prevent the nation from defaulting on its debt obligations. Those measures are set to run out this summer, perhaps as early as June.

Lawmakers Reintroduce Cannabis Banking Legislation

This week, Senators Jeff Merkley (D-OR) and Steve Daines (R-MT) reintroduced cannabis banking legislation (S. 1323) that would help improve access to financial services for state-legal businesses, as well as the ancillary businesses that provide them with goods and services. The CSAC-endorsed legislation – known as the SAFE Banking Act – would exempt depository institutions and their employees from federal prosecution or investigation solely for providing banking services to a state-legal cannabis-related business.

This so-called “safe harbor” is intended to provide certainty for financial institutions to offer their products and services without fear of retribution from the federal government. The measure also makes clear that the safe harbor is extended to Community Development Financial Institutions (CDFI) and Minority Depository Institutions (MDI) that make commercial loans to minority-owned businesses. Finally, the measure has been amended from previous iterations to provide those in the cannabis industry access to federally backed mortgage loans.

The SAFE Banking Act is cosponsored by 39 bipartisan members of the Senate, including 7 Republican lawmakers. The House companion legislation (H.R. 2891) is spearheaded by Representatives David Joyce (R-OH) and Earl Blumenauer (D-OR). It should be noted that previous iterations of the bill have been approved by the House on a bipartisan basis. Despite bipartisan support, the measure was never considered in the Senate. However, Banking Committee Chairman Sherrod Brown (D-OH) has expressed a willingness to advancing the legislation through his panel.