President Joe Biden said Thursday that Congressional leaders have agreed there “will be no default,” despite the countdown toward an expected June 1 “x-date” unless a debt ceiling deal is reached.
“I put forward a proposal that will cut spending by more than $1 trillion, that freezes spending for the next two years,” Biden said.
“That’s on top of the nearly $3 trillion in deficit reduction I previously proposed — through a combination of spending cuts and new revenue raises.”
Though the proposal hasn’t been agreed to, White House Press Secretary Karine Jean-Pierre reiterated the President’s stance, according to CNN, noting that discussions with House Speaker Kevin McCarthy’s team have been fruitful and both sides agree that a default isn’t a viable option.
Jean-Pierre acknowledged that differences persist regarding budget priorities, with Republicans advocating for spending cuts to facilitate the debt limit increase.
A group of 35 Republicans proposed new demands and strategies in a letter to McCarthy, with requests including border security enhancements, blocking the FBI’s new headquarters and mandating that Treasury Secretary Janet Yellen “prove” her work when estimating the default date.
The group also advocated for a standalone bill to retract unspent Covid funds and some IRS funding, which they say would “push back the X-date.”
Quincy Krosby, chief global strategist at LPL Financial, said McCarthy’s earlier comments “that he doesn’t think everybody is going to be happy at the end of the day, is the best news yet coming out of the arduous path towards a debt ceiling deal.”
The strategist said the latest news, “coupled with reports that the sides are working late into the night and returning each other’s calls, has only added to the cautious optimism that a deal is the offing.”
SPY Price Action: The SPDR S&P 500 ETF Trust SPY, which tracks the S&P 500 index, was moving 0.73% higher to $414.09 Thursday afternoon.
Read next: Will Friday’s PCE Inflation Release Raise Traders’ Bets On Further Fed Rate Hikes?
