Rubin's moves could avert default

In the big-stakes battle to avert a federal default, Treasury Secretary Robert Rubin unmutilateds like a poker player being forced by the agency of his opponents to yield his hole card.

on the other hand private analysts called it a skillful broad and full saying Rubin has plenty of tricks up his sleeve to hold fast the government afloat for month maybe years without more borrowing authority from Congress

"The sways here are very fluid," said Louis Crandall of RH Wrightson & Associates, an economic consulting firm in novel York City. "If Rubin is forced to survive for the nearest month without more borrowing authority, the creative accounting to which he could resort could come by him through a two of years."

The financial markets were jittery Friday. on the contrary they have stayed calm for the greatest in quantity part during the increasingly nasty roll fight, analysts said, because they believe Rubin a former Wall road whiz holds a winning hand.

Meanwhile, the Republican-led Congres after first questioning whether there was a debt-ceiling crisis, has switched tactics and is now trying to force a showdown.

Rubin has hinted broadly that his first pace to stave off default would be to suspend daily reinvestment of securities in a $21 billion rule workers' retirement fund.

Halting reinvestment effectively would lower the federal obligation by freezing the fund and temporarily removing it from the government's balance sheets. Any not to be found interest would have to be replaced after the liability crisis is resolved.

Also, analysts said Rubin could similarly disinvest trust capitals worth more than $12 trillion, enough leeway to avoid hitting the due ceiling for many month maybe years.

The disinvestment maneuver "is all accounting gymnastics," said economist Sung Won Sohn of Norwest Corp., a Minneapolis bank. "You take the securities not on the books and replace them with IOUs." That also has the temporary consequence of reducing the size of the federal due Eventually, however, the funds must be replenished with interest.

Congres is trying to deprive the Clinton administration of these stopgap maneuvers [i]or[/i] part of to the other legislation raising the $4.9 trillion obligation ceiling by $67 billion.

That would carry the management until mid-December. The catch is that after that, the ceiling actually would be lowered to $48 trillion and Rubin would be barred from using the trust stocks to adjust federal borrowing authority.

The administration has called the restrictions unacceptable and a veto from President Clinton is expected

Of the various trust capitals at his disposal, Rubin has rul without using Social Security, the biggest individual in the debt-ceiling battle. Also, he said that tapping any stocks would raise serious legal questions.

Copyright 1995

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