The United States Secretary of the Treasury Steven Mnuchin initiates launching special accounting measures designed to allow the country to continue to pay its debts without crossing the debt ceiling. The new extraordinary provisions will apply until June 5.
The US debt ceiling has been restored since March 1, when it was earlier canceled by Congress. However, the Treasury may use so-called extraordinary measures to prevent impossibility of payment of debts. Steven Mnuchin reported on Monday that he would use similar measures to reallocate funds from the federal state pension fund.
In a letter dated March 4, the finance minister appealed to Congress asking “to increase the statutory debt limit as soon as possible”.
Steven Mnuchin may extend the period within which the funds for the pension fund may be allocated after June 5. He also has other moves that allow a delay in insolvency after that date.
The US Congress, however, is in no hurry to take action, and legislators are expected to look at the time when the ministry of finance is about to get out of hand. The federal government may use extraordinary measures by no later than the end of the summer or the beginning of autumn, according to the estimates of the extra-parliamentary Budget Office.
The Chairman of the House Budget Committee Democrats, John Yarmuth, said last week that he could not imagine raising the debt ceiling before mid-April.
The federal constraint on the debt ceiling was adopted for the first time almost a century ago, the aim being to facilitate the borrowing of money. Subsequently, however, this measure becomes an influential political tool that has the potential to have an effect on financial markets, as the impossibility of raising the limit may lead to insolvency on some of the government’s obligations.
Some experts insist on dropping the debt ceiling as they believe that the disputes at the Congress cost taxpayers money by increasing economic uncertainty. On the other hand, its supporters believe that using it to negotiate cuts in spending is in the interest of the public at times of historically high levels of indebtedness in the country.