Transcript for Market Soars on GOP's Short-Term Debt Limit Proposal
-- -- -- -- Devin Dwyer in New York with this ABC news digital special report day ten now the government shut down in Washington. But weighed more heavily today that deadline to raise the US debt limit now just one week. For a possible first ever default. ABC Susan -- -- is in our Washington area bureau with more Susan. Good to C -- what's the latest there can after named DeVon. Ten days into the government shut down and we're seeing a small very small step toward progress on the debt limit. Just seven days before the United States reaches its debt limit. Treasury Secretary jackal to testifying on Capitol Hill this morning gave a dire assessment of what the government default would look like. If congress fails to meet its responsibility. It could deeply damaged financial markets. The ongoing economic recovery. And the jobs and savings of millions of Americans lose warning comes as a Republican leaders in the house are presenting -- plan to rank and file members -- this morning. To extend the debt limit for six weeks. The plan would not end to the shut down but it would put off the threat of default until December. Allowing time for negotiations on a broader budget deal. At a debate. President Obama has said he would accept a short term debt ceiling increase. Extend the debt -- If they can't do it for a long time do it for. The period of time -- which these negotiations -- taking place but Obama and other top Democrats have also said that they would not negotiate until Republicans and the shut down. And removed the threat of default. And just move on to solve the problem open government. The president is meeting with eighteen house Republican leaders later today it's a small step where there had been very little common ground. -- it is in a small step indeed what are you seeing beyond the hill outside of Washington. About this possible breakthrough any any reaction that you're tracking. Let's just -- glimmer of the deal at this point but it's the first optimistic news to come from Washington and so long Wall Street for one is quite happy about it that's right they are to. Maybe she citizens only in Washington -- season. All right well the markets up for most of its losses since the start of this shut down today up -- for more when investors are looking at. Ought to bring an ABC news business and economics correspondent Rebecca Jarvis America's great to see it today it's a big day on the Dow up 200 points the last I checked -- -- Having its highest gain in years. Well it's it's actually the second best day for the markets so far this year -- and so that's a pretty significant thing. In the context of what's been going on this year and especially in the context of what's been happening in recent weeks leading up to -- shut down and throughout the shut down. The markets have taken this -- with a grain of salt but they have been trending lower. In light of the government shutdown and now when it looks like Republicans have come to the table with something that will at least get us past this October 17 deadline. For some kick the can down the road might be the expression some -- used. But it would at least get -- past that sort of dire day that doomsday. The market is cheering that on but I also want to point out we seen this before this isn't the first rodeo where we've seen at least one of the parties come to the table with an idea that might create some consensus that might get -- past. That doomsday scenario. And in actuality a lot of the time what happens is the markets investors buy the rumor and then they ultimately sell the news because -- news turns out to not be as good. As the rumor itself and in this case what would -- news be well it could be that essentially we don't have a short term measure that both. The house and the senate and the White House can get onboard -- That's right we're all excited about the prospect of a deal but we haven't even heard anything definitive from the White House yet very tepid. -- reaction to this proposal that you -- from house Republicans but he saw -- the Dow up 230 points right now. What are you going to be watching for just in the next few days as this kind of drags on any signs that that that Wall Street might. Sour on this thing. Well it certainly once we start hearing from the White House and I believe we're going to be hearing from President Obama later today once we start hearing from the White House and from Democrats on this proposal. That could certainly change the mood on Wall Street especially. If we start hearing more things that would. Indicate that they can't come to a consensus that they can't. Coalesce around this particular deal. And this sort of temporary. Increase of the debt limit to then get to -- six month or six weeks later rather that it would work out for the markets but the other thing that Wall Street is watching. Is not just Washington but now they're looking at -- -- they are looking at corporations because it's earning season. So that's been a factor into how investors behave as well -- how they perceive the markets because. Corporate America we're gonna hear from them for the first time about how they -- -- shut down how it's impacting business. And especially if you look at the retailers. Out there. The -- looking at this from the standpoint of what is this -- doing to the psychology of the consumer we are. Right before the major holiday shopping season that accounts for 20% of retailers' profits. And ultimately if consumers get nervous and they feel like Washington can't get its act together so they can't. Planned to spend money in the holiday season back could really impact corporation. That's right talk about business groups and and retail the retail federation some reports -- -- today in the times in the journal. About how these groups are really starting to lean on Republicans -- Republican allies to do something right. All these groups want to see Washington getting its act together and they want to see some consensus out of Washington. So that people on main street can plan accordingly so that. We know what to expect in the next couple of months of 2013 and in particular for those furloughed employees who have been out of work now for a handful of days almost two weeks at this point so that they can plan accordingly and spend accordingly with their family budgets that trickles into the overall economy. And they can have a great impact especially on retail. And again. -- right before the holiday shopping season which is heat for retailers of course we've seen this show before the last time the government flirted with the fall 2011. Consumer confidence -- you're talking about plummeted -- stock market went down. And we heard did this Treasury Secretary Jack -- today on Capitol Hill talking about some of the dangers of default. If we actually do cross that line what happens if lawmakers don't heed his warnings well ultimately. It would be an experiment because we've never actually done that before we've never. Of our interest payments that's why people put their money in the United States because they trust the United States what we saw the last time this came up. Is that S and -- Standard and Poor's. Lowered our credit rating for the first time in history. The United States is is has a sterling credit rating because. They're basically the place that people put their money because they believe they'll get paid -- the fact that that happened last time the Dow dropped in a matter of a couple of days 14%. People lost. Literally thousands of dollars six trillion dollars in wealth was wiped out. Across the world. And this has there are real significant impact. To folks at home if they even flirt with this deadline -- -- mean we're not just talking about. When we talk about credit markets free scene and and that the value of the dollar. Going down I think that that as you just alluded to a little bit there it has a very tangible impact for folks -- -- it it historically. Has had a very tangible impact for folks. And one of the things is that this is untested water once if we get beyond that point then it is really literally untested water and that's where. A lot of people who are watching Wall Street economists traders. Are saying. That would be a totally different scenario than the one we are flirting with now which is wait until the last minute get an eleventh hour deal. That may or may not be a great deal but at least it gets us to the next eleventh hour negotiation which is what. If we go with this six week extension. You can probably bet we're gonna see this same thing happen over again and just so we're on the same page before we let you go Rebecca. Win exactly arena reached -- fault we hear a lot of talk about October 17 but. Economists and some policy makers are -- little murky about when that -- is what do you know about when we're gonna hit that that moment. Well that is actually so. October 17 -- the moment that we heard about -- There's also could be the view economists many economists are looking at this as. We may have actually Intel -- ballot November 1 because there's a lot of obligations that this country owes Social Security debt payments. But there's also tax revenue that's coming in and there is a growing sense among economists that if we sort of move the funds around a little bit for a couple of weeks we can make good. But that come November 1 that's when things ultimately. And ultimately -- -- that's when there's a real problem but I can appreciate anybody who's watching right now saying I'm sick of it crisis fatigue. It's like one crisis to the next to the next. And I can appreciate that people are. Maybe even thinking that as they hear about these different deadlines and they don't know where a -- they don't know what to believe and -- Wall Street is is somewhat on the same -- That's right regardless of the exact date we're sort of in the midst of crisis right now people. Are really sick -- -- but excellent analysis from ABC news business. -- correspondent Rebecca Jarvis Rebecca thanks so much thanks seven hour let's go to Washington now for ABC's. -- -- joins us in she's gonna help us break down. This possible breakthrough that happened today on Capitol Hill -- proposal from house speaker. John Boehner just moments ago laid out potential short term solution here -- the debt ceiling fight not much on the government -- -- bring us up to speed on the latest. What is this deal actually look like if it is in fact a deal. -- -- this deal would extend it this the debt city ceiling debate -- it would. Instead of hitting this crisis. 22 and so. We wouldn't be -- this wall on October 17 which as Rebecca that we don't know it has never -- before we don't know what will happen. And it would it. Allow those negotiations are going on now if we can call them negotiations. To extend two around November 22 so if they push it back to the 22 is there any sign at this point that the extra time -- allow. Both sides to reach some sort of grand bargain this has been elusive for so law. Well I want to stress they're still a standoff ongoing right now and just because we have this movement doesn't mean really that either decides have -- Are really sitting down negotiating right now what we do know as Susan said earlier is that each and Republican House Republicans will be going to White House today senate Republicans will be going tomorrow. -- the White House and said that they are not willing to budge on two issues and that is. And that the government shut down so they're not good to negotiate on whether it be an extension of obamacare -- or would negotiate on the debt ceiling and so. Those two things they want the government to pay the bill their bills and then after that -- the debt ceiling is raised then they're willing to -- and talk. And is it your understanding. You follow -- -- very closely today but. Are Republicans proposing to raise the debt ceiling for the six weeks period with no strings attached just to get people to the table -- that. It's simple as that would that be essentially meeting the white. -- -- and that's what it looks like but as you note -- that doesn't mean house Republicans are gonna go along with it -- that's not what they want. All that house Republicans we've heard from is for a long term. Debt ceiling. -- to raise the debt ceiling there is going to be some -- detects cat attacked whether it be. Tax reform entitlement reform so this would just be to increase that -- that we don't kind of fall off this clip on October 17 or November 1 how. How much weight does Wall Street in the markets -- -- obviously they play a very big role we just heard are from Rebecca Jarvis but what -- seen in Washington I mean are Republicans beginning to tune in to some of their allies. Who have been complaining about that -- lack of movement on this issue is this really started to have an impact. It seems like that is now have an impact and that. The is that Wall Street and -- bit the business community is really leaning on Republicans to act on this and I want this is also because. -- donor community as it belongs on Wall Street a lot of people but that fund these campaigns are on Wall Street and so that's why. They are. They have. Somewhere to stand on to lean on that -- because they they donate to get their campaigns wider in Washington and. My money speaks as you know right -- wells it is interesting to see in fact the New York Times is reporting today. Right at some of those donors may forget put their money elsewhere wondered if that -- maybe light a fire under some of these guys but what. Term focus a little bit after the government shut down you know we're we're now in its tenth day it's taken a little bit of -- of a backseat. To the debt ceiling in panic if you will given the significance of that to the global economy but. I know you're closely tracking the impacts. Which is had sort of been a slow roll call across the country of the shut down what's the latest today where you've seen. Well it's interesting because it does seem like here in Washington the folks is really on that debt ceiling date of October 17. And what could happen if we don't. -- -- debt ceiling but. The government shut down as you say is indeed ten and -- impacts all over the country we're seeing from the national parks are so close I was just. I just -- some reporting on the Grand Canyon people that traveled from all over the world for one day they're now taking to the to the skies to see the Grand -- obviously more important issues -- holidays like. Will -- which is a problem at this means the program in north -- all over the country where that gives money to. Low income mothers and children to feed their children that is really taking impact in North Carolina and so we're seeing these. These -- -- all over the country and it is really hurting people even advocating a backseat to these big debt ceiling talk. Because as he said were still in. We know and really insight. That's right so many lives impacted even if -- some of these government workers are now back on the job nowhere and it's getting paid. Essentially totally solve this. A lot of those businesses and other. Aspects of the economy that rely on those consumers also hurting right now so. -- ripple effects definitely continuing -- thanks so much for being with us. And watch -- and ABC's church walls. -- right now we're waiting White House spokesman Jake party's daily briefing from the podium we expect to get his reaction to those proposals from house Republicans. While we wait for his briefing you can watch that stream on abcnews.com. For now thanks for joining us this has been an ABC news digital special report. And Devin Dwyer in New York.
This transcript has been automatically generated and may not be 100% accurate.