Budget Brief 23-18
June 2, 2023

The Fiscal Responsibility Act of 2023 (H.R. 3746) has been approved by the House and Senate. The legislation’s main purpose is to raise the nation’s debt limit before a default. To that end, it suspends the debt limit through January 1, 2025; on January 2, a new statutory limit will be set at the amount that reflects additional federal borrowing that occurred up to that point.

In addition to addressing the debt limit, the legislation includes several other provisions, some of which target deficit reduction. Most notably, it:

  • Establishes statutory caps on discretionary funding for fiscal years (FYs) 2024 and 2025, enforced by sequestration
  • Sets non-statutory limits on most discretionary funding from FY 2026 through FY 2029
  • Rescinds a portion of funds appropriated for the Internal Revenue Service (IRS) under the Inflation Reduction Act (IRA)
  • Modifies work requirements for the Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF)
  • Rescinds unobligated balances from specified accounts in six COVID-relief laws
  • Appropriates $22 billion for the Nonrecurring Expenses Fund of the Department of Commerce
  • Amends permitting of energy-related projects
  • Terminates the current suspension of payments, interest accrual, and collections on defaulted student loans 60 days after June 30, 2023
  • Requires the executive branch to follow administrative pay-as-you-go (PAYGO) procedures for certain administrative actions

This Budget Brief summarizes the agreement, focusing on provisions with the greatest impact on states.