The Treasury Department in U.S. is finally here with a concrete step to remain within the Federal debt limit. It has been decided by the department to keep funding the government without crossing the national debt limit. This is indeed a commendable step.
As per the settlement between the Obama administration and Congress, increase in the debt ceiling has been approved. The “debt-issuance suspension period” has been announced by the U.S. government under the specific act which governs the Civil Service Retirement and Disability Fund. This will help the government to convert the remaining treasury securities used for funding and put it to good use for other improvements.
However, this isn’t going to harm benefit payments for civil services in anyway until the extraordinary measures wear out. Once the measures to avert breaching will exhaust, the U.S. government will face limitation again.
The announcement was made by Jacob J. Lew, the Treasury Secretary. He wrote a letter to the lawmakers for the announcement. The new suspension period is supposed to be from 20th May to 2nd August. Investments attributed to the Postal Service Retiree Health Benefits Fund may also get suspended. This is definitely a new improvement for funding activities by the government.
In the beginning of the year, Congress suspended the probable borrowing limit momentarily so that the matter of budget can be highlighted. Improvement in budget plan is essential to work on both personal and national debt. This may even help to work on reducing the wide dependency on debt relief USA services.
The uncontrolled expenses by the government have really made it necessary to take the vital step about funding. The annual deficit limit is going strong at $1 trillion per year. As a result, the borrowings are increasing to meet the other obligations. This may aggravate the problems regarding national debt in a big way. To control the debt limit, the suspension is somehow necessary.
According to the reports by the Treasury, the suspension in funding may take place in May only. The sales of non-marketable securities issued by the local and state government may face the suspension.
The U.S. budget deficit will also be minimized to $642 billion by the end of this year. This is supposed to be the least shortfall in past five years. Last year the shortfall was nearly $1.1 trillion. This will somehow help in modifying the national debt limit as it’ll not be possible to touch the borrowing limit before the fall.
After considering all the aspects and probable pros and cons of the suspension, economists are not that much certain that it’ll surely work for the overall benefit. It’ll need time to spread the effect. However, government has promised that it’ll not affect the funding much. Yet, it’s not quite clear at all that how it’ll impact the funding. If the suspension works, then it’ll surely change the picture of U.S. economy. Till the span gets over it’s not possible to reach any conclusion. It’s rather better to hope for the best.