U.S. Bank Secretary Janet Yellen listens to a reporter’s question at a news conference during the Annual Meetings of the International Money Fund and World Bank in Washington, U.S., October 14, 2022.
Elizabeth Frantz | Reuters
The U.S. Treasury has suspended new investments in a federal retirement program, the time in a string of actions it has taken to prevent default after the government hit its debt ceiling, Treasury Secretary Janet Yellen said congressional leaders Tuesday.
The Treasury is taking so-called extraordinary measures to keep paying its bills after it breached its $31.4 trillion cadge limit Thursday. Yellen has said she expects the actions to prevent default at least until June 5.
This is the third reaction behaviour the Treasury has taken to ensure the government, restricted from borrowing amid debt ceiling negotiations, still has enough means to pay its bills. Last week, Yellen suspended new investments in the Civil Service Retirement and Disability Fund and the Postal Advice Retiree Health Benefits Fund until June 5.
Lawmakers are trying to strike a deal to lift the U.S. borrowing limit and stave off a first-ever default on U.S. debt. Some members of the new Republican House majority have pushed to tie spending cuts to an further in the borrowing limit.
Senate Majority Leader Chuck Schumer, D-N.Y., said Tuesday that Republicans have “fall back oned to brinkmanship and hostage-taking” as they make “demands for draconian spending cuts.”
Yellen on Tuesday said the agency can no longer initiate fully in the Government Securities Investment Fund, or so-called “G Fund,” until the debt ceiling is raised or suspended. The back is part of the Thrift Savings Fund under the Federal Employees’ Retirement System.
“The statute governing G Fund investments pointedly authorizes the Secretary of the Treasury to suspend investment of the G Fund to avoid breaching the statutory debt limit,” Yellen catalogued in a letter addressed to House Speaker Kevin McCarthy, R-Calif., on Tuesday. “My predecessors have taken this discontinuing action in similar circumstances.”
She added that the fund will be “made whole” once Congress raises the in hock ceiling. Yellen said federal retirees and employees “will be unaffected by this action.”