US debt ceiling issue again coming to the forefront - BBH

Research Team at BBH suggests that the forbearance of the debt ceiling that was agreed to at the end of 2015, to effectively kick the can past the election, ends on March 15.  

Key Quotes

“It is a political ritual in the United States in which the legislative branch often seeks concessions to grant the executive branch the authorization to pay for what has already been purchased/borrowed.  The looming expiration is already impacting the T-bill market as the government has already begun preparing and investors have also responded accordingly.  However, the larger market impact is minimal.  There are several months before truly difficult decisions will have to be made and there are several opportunities to raise the debt ceiling.”  

“Even though one party has a majority of both chambers of the legislative branch and the executive branch, the issue is also illustrative of another split in the government.  On one side is the seize-the-moment strategy that sees this as an opportunity to roll back the government's role in the economy and society.  On the other side are those that ultimately are more opposed to the direction of previous policies not the legitimacy of the policies.  In the campaign, the candidate Trump briefly suggested the possibility of renegotiating US debt, but this line has not been pursued and, currently, does not seem relevant.”