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Treasury tells Congress it’ll droop some federal retirement funding after debt restrict breach

U.S. Treasury Secretary Janet Yellen listens to a reporter’s query at a information convention throughout the Annual Conferences of the Worldwide Financial Fund and World Financial institution in Washington, U.S., October 14, 2022. 

Elizabeth Frantz | Reuters

The U.S. Treasury will droop full funding of a federal retirement program, the most recent in a string of actions it has taken to forestall default after the federal government hit its debt ceiling, Secretary Janet Yellen instructed congressional leaders Tuesday.

The Treasury is taking so-called extraordinary measures to maintain paying its payments after it breached its $31.four trillion borrowing restrict on Thursday. Yellen has stated she expects the actions to forestall default no less than till June 5.

That is the third motion the Treasury has taken to make sure the federal government, restricted from borrowing amid debt ceiling negotiations, nonetheless has sufficient cash to pay its payments. Final week, Yellen suspended new investments within the Civil Service Retirement and Incapacity Fund and the Postal Service Retiree Well being Advantages Fund till June 5.

Lawmakers try to strike a deal to carry the U.S. borrowing restrict and forestall a first-ever default on U.S. debt. Some members of the brand new Republican Home majority have pushed to tie spending cuts to a rise within the borrowing restrict.

Senate Majority Chief Chuck Schumer, D-N.Y., stated Tuesday that Republicans have “resorted to brinkmanship and hostage-taking” as they make “calls for for draconian spending cuts.”

Yellen on Tuesday stated interest-bearing securities for the Authorities Securities Funding Fund, or the so-called “G Fund,” will likely be underfunded till the debt restrict is elevated or suspended. The fund is a part of the Thrift Financial savings Fund below the Federal Workers’ Retirement System.

“The statute governing G Fund investments expressly authorizes the Secretary of the Treasury to droop funding of the G Fund to keep away from breaching the statutory debt restrict,” Yellen wrote in a letter addressed to Home Speaker Kevin McCarthy, R-Calif., on Tuesday. “My predecessors have taken this suspension motion in related circumstances.”

She added that the fund will likely be “made complete” as soon as Congress raises the debt ceiling. Yellen stated federal retirees and workers “will likely be unaffected by this motion.”

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