Top House Republicans and the Biden White House on Thursday sounded upbeat on Washington’s debt-ceiling talks, as investors continued to track the efforts to reach a bipartisan deal on lifting the ceiling for federal borrowing and thereby avoid a market-shaking default.
The New York Times late Thursday reported a deal was near that would raise the debt ceiling for two years while cutting some federal spending. Negotiators were working into the evening were starting to draft legislative text, the Times said.
House Speaker Kevin McCarthy told reporters on Thursday evening that “We’ve been talking to the White House all day, we’ve been going back and forth, and it’s not easy. It takes a while to make it happen, and we are working hard to make it happen.”
Earlier in the day, McCarthy has said his deputies and President Joe Biden’s negotiators had worked well past midnight Wednesday and “made some progress.”
“There’s still some outstanding issues, and I’ve directed our teams to work 24/7,” the California Republican said.
In addition, GOP Rep. Kevin Hern of Oklahoma, who heads the influential Republican Study Committee, told Reuters that he thought a deal was likely by Friday afternoon.
Meanwhile, President Joe Biden said Thursday afternoon that negotiators are “making progress.”
McCarthy and former President Donald Trump talked briefly by phone about the debt-limit negotiations, and Trump later said getting a deal is “not going to be that easy,” according to a New York Times report.
But White House press secretary Karine Jean-Pierre offered positive remarks when asked about the McCarthy-Trump call.
“The speaker is allowed to speak to whoever he chooses and wants to speak to, so I’m not going to certainly dive into that or step on that,” she said during a press briefing.
“I just mentioned how the two teams met this morning virtually at 11:30 — that is a good sign.”
“There’s a path forward to a bipartisan, reasonable budget agreement,” Jean-Pierre added. “As long as both sides understand that no one is going to get everything that it wants, then we can get there.”
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Treasury Secretary Janet Yellen has been warning that the government could become unable to meet all of its obligations as soon as June 1 if Congress doesn’t raise the debt ceiling, though some Republicans have expressed skepticism about her deadline.
As a deal looks possible, analysts are forecasting when a debt-limit bill would get enacted. McCarthy has said he’ll follow a rule to post any bill for 72 hours before votes.
“If a deal is announced today, then Congress could vote as soon as Tuesday,” said Brian Gardner, chief Washington policy strategist at Stifel, in a note on Thursday, adding that the House is out of session next week but would be called back.
“If an agreement is not reached until the weekend, then a vote would not occur until the following weekend (June 3-4),” Gardner added.
In August 2011, lawmakers approved an increase to the limit just hours before a potential government default. Within days, the U.S. lost its triple-A credit rating from S&P for the first time in history, with the ratings agency saying the American political system had become less stable.
U.S. stocks plunged in August 2011 following that downgrade from S&P.
On Wednesday evening, Fitch Ratings warned that it might cut the country’s triple-A credit rating.
The main stock gauges
closed mostly higher on Thursday, boosted by Nvidia Corp.’s
strong earnings report.
MarketWatch’s Robert Schroeder contributed to this report.