President Joe Biden stated Thursday that Congressional leaders have reached an agreement to avoid a default, despite the upcoming “x-date” on June 1 if a debt ceiling agreement isn’t reached.
Biden said, “I have presented a proposal that would reduce spending by more than $1 trillion and freeze spending for the next two years.”
He added, “In addition to the almost $3 trillion in deficit reduction I previously proposed, through a combination of spending cuts and revenue increases.”
While the proposal has not yet been agreed upon, White House Press Secretary Karine Jean-Pierre confirmed the President’s stance, according to CNN, reaffirming that discussions with House Speaker Kevin McCarthy’s team have been fruitful and both parties agree that default is not an option.
Jean-Pierre, however, noted that differences in budget priorities persist, with Republicans urging spending cuts to facilitate an increase in the debt limit.
In a letter to McCarthy, a group of 35 Republicans presented new demands and strategies, including border security upgrades, opposing the FBI’s new headquarters, and mandating that Treasury Secretary Janet Yellen demonstrate her work in estimating the default date.
The group also promoted an independent bill to retract unspent Covid funds and some IRS funding, which they suggested would “delay the x-date.”
Quincy Krosby, chief global strategist at LPL Financial, believes that McCarthy’s previous remarks “that he doesn’t believe everybody will be pleased with the outcome is the greatest news yet in the arduous journey towards a debt ceiling resolution.”
The strategist claimed that the latest developments “coupled with reports that the sides are working late into the night and returning each other’s calls, has only contributed to the cautious optimism that a deal is in the works.”
SPY Price Action: On Thursday afternoon, the SPDR S&P 500 ETF Trust, which follows the S&P 500 index, increased 0.73 percent to $414.09.
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