U.S. Treasury Secretary Janet Yellen listens to a reporter’s question at a news conference during the Annual Meetings of the International Monetary Fund and World Bank in Washington, U.S., October 14, 2022.
Elizabeth Frantz | Reuters
The U.S. Treasury will suspend full funding of a federal retirement program, the latest in a string of actions it has taken to prevent default after the government hit its debt ceiling, Treasury Secretary Janet Yellen told congressional leaders Tuesday.
The Treasury is taking so-called extraordinary measures to keep paying its bills after it breached its $31.4 trillion borrowing limit Thursday. Yellen has said she expects the actions to prevent default at least until June 5.
This is the third action the Treasury has taken to ensure the government, restricted from borrowing amid debt ceiling negotiations, still has enough money to pay its bills. Last week, Yellen suspended new investments in the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits 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 have “resorted to brinkmanship and hostage-taking” as they make “demands for draconian spending cuts.”
Yellen on Tuesday said interest-bearing securities for the Government Securities Investment Fund, or the so-called “G Fund,” will be underfunded until the debt limit is increased or suspended. The fund is part of the Thrift Savings Fund under the Federal Employees’ Retirement System.
“The statute governing G Fund investments expressly authorizes the Secretary of the Treasury to suspend investment of the G Fund to avoid breaching the statutory debt limit,” Yellen wrote in a letter addressed to House Speaker Kevin McCarthy, R-Calif., on Tuesday. “My predecessors have taken this suspension action in similar circumstances.”
She added that the fund will be “made whole” once Congress raises the debt ceiling. Yellen said federal retirees and employees “will be unaffected by this action.”