U.S. Treasury Secretary Janet Yellen listens to a reporter’s question during a press conference during the annual meetings of the International Monetary Fund and the World Bank in Washington, U.S., October 14, 2022.
Elizabeth Frantz | Reuters
The US Treasury will to suspend fully funding a federal pension program, the latest in a series of steps it has taken to prevent default after the government hit its debt ceiling, Treasury Secretary Janet Yellen said on Tuesday. to the leaders of Congress.
The Treasury is taking so-called extraordinary measures to keep paying its bills after it exceeded its $31.4 trillion borrowing limit on Thursday. Yellen said she expects the shares to prevent the default until at least June 5.
It’s the third action the Treasury has taken to ensure that the government, which is barred from borrowing under the debt ceiling negotiations, always has enough money to pay its bills. Last week, Yellen suspended new investments in the Civil Service Retirement and Invalidity Fund and the Postal Pensioners Health Benefit Fund until June 5.
Lawmakers are trying to strike a deal to lift the U.S. borrowing limit and prevent a first-ever default on U.S. debt. Some members of the new Republican House majority have pushed to tie spending cuts to an increase in the borrowing limit.
Senate Majority Leader Chuck Schumer, D.N.Y., said Tuesday that Republicans had “resorted to tightrope and hostage-taking” as they made “draconian demands for spending cuts “.
Yellen said on Tuesday that the interest-bearing securities of the Government Securities Investment Fund, or the so-called “G-Fund,” will be underfunded until the debt limit is raised or suspended. The fund is part of the Thrift Savings Fund under the Federal Employees Retirement System.
“The law governing Fund G investments expressly authorizes the Secretary of the Treasury to suspend Fund G investments to avoid exceeding the statutory debt limit,” Yellen wrote in a letter to House Speaker Kevin McCarthy. R-Calif., Tuesday. “My predecessors took this suspension action under similar circumstances.”
She added that the fund will be “full” once Congress raises the debt ceiling. Yellen said federal retirees and employees “will not be affected by this action.”