Following day-long talks with Congressional leaders of both parties, President Obama concluded a meeting with House GOP leaders still no further than where the talks began about whether to increase the nation's borrowing limit before the Oct. 17 deadline.
The approximately 90-minute meeting ended without a final conclusion. After departing the White House, House leaders went back to the Capitol to come up with some kind of solution by the end of the night.
Following the meeting, the White House released a statement saying "after a discussion about potential paths forward, no specific determinations were made. The president looks forward to making continued progress with members on both sides of the aisle."
In very early trading, S&P 500 futures fell 0.43 percent after Wall Street posted its second best day of the year Thursday.
Around 4:30 p.m. Eastern time, House Republicans brought to the White House a proposal that would have extended the nation's borrowing limit by six weeks, and included a provision that would permanently end Treasury's ability to enact extraordinary measures to prevent a debt default now and in the future. Historically, these measures have been a critical tool in pushing back debt ceiling deadlines in past fiscal logjams, like the one in 2011.
In response to the House Republican proposal, the White House said while it doesn't outright reject a debt ceiling increase with some conditions, it reiterated its desire for the House to pass the Senate's year-long borrowing limit extension proposal.
"While we are willing to look at any proposal Congress puts forward to end these manufactured crises, we will not allow a faction of the Republicans in the House to hold the economy hostage to its extraneous and extreme political demands. Congress needs to pass a clean debt limit increase and a funding bill to reopen the government," the White House said in a statement.
Democratic congressional leaders met with the president and Vice President Joe Biden at 1:45 p.m. Eastern time to discuss ways to avoid crossing next week's debt limit deadline. Following the meeting, Senate Majority Leader Harry Reid reiterated his party's stance on a clean debt ceiling extension -- a postilion that matches the president's. Still, he said he would be "open" to looking at a short-term increase from Republicans, but the Senate will "wait and see."
House Republican leadership is set to follow in the Senate's footsteps to the White House around 4:35 p.m. Eastern time to officially lay out its proposal to the president and vice president. It's unclear whether the legislators will return to the Capitol following the meeting to craft and introduce a bill in the House.
Lew to Congress: Raise the Debt Limit ... Now
But as the clock ticks down to Oct. 17, the date the Treasury Department has said it would run out of borrowing authority, Treasury Secretary Jack Lew warned Thursday, markets and the economy could feel the effects of even a potential debt default before the actual deadline passes.
In a hearing before Congress on Thursday, Lew said it was never a plan not to pay America's bills, and that prioritization is just default by another name.
"Unfortunately, we now face a manufactured political crisis that is beginning to deliver an unnecessary blow to our economy -- right at a time when the U.S. economy and the American people have painstakingly fought back from the worst recession since the Great Depression," the Treasury Secretary said in prepared remarks.
Markets Rally, But Not Everyone Buys In
U.S. stock markets lurched higher on the glimmer of hope for a debt deal in Washington to avoid default, with the major market averages rallying more than 1 percent in morning trading. However, several individual market participants aren't so sure the news is all positive.
"This development is just an initial step to agreeing to agreeing. [The] only thing that comes of today's meeting is a four-to-six week delay and says noting about what happens in the interim," said Peter Boockvar, chief market analyst at The Lindsey Group.
The potential six-week extension staves off what could possibly be a huge downside risk for U.S. equity markets. In 2011, when a similar threat of default stared Congress and Wall Street in the face, the Dow Jones industrial average plunged nearly 600 points after Standard & Poor's downgraded the U.S. sovereign debt rating from a platinum "AAA" to a "AA+." Now, with a similar circumstance in mind, markets worry another downgrade could linger on the horizon if Congress doesn't come to some kind of deal before next week's deadline.
Michael Block, chief strategist at Rhino Trading Partners, sees one more scramble before a final deal is struck.
"I think they fumble one more time, get one last piece of electioneering out of their system tonight, and then go into lockdown to get this done over the weekend," he said.