Treasury suspends some federal retirement funding

Treasury suspends some federal retirement funding

U.S. Treasury Secretary Janet Yellen listens to a reporter’s query at a information convention throughout 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 has suspended new investments in a federal retirement program, the newest in a string of actions it has taken to forestall default after the federal government hit its debt ceiling, Treasury Secretary Janet Yellen advised congressional leaders Tuesday.

The Treasury is taking so-called extraordinary measures to maintain paying its payments after it breached its $31.4 trillion borrowing restrict Thursday. Yellen has stated she expects the actions to forestall default at the least till June 5.

This is the third action 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. Last week, Yellen suspended new investments within the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund till June 5.

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

Senate Majority Leader 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 the company can now not make investments totally within the Government Securities Investment Fund, or so-called “G Fund,” till the debt ceiling is raised or suspended. The fund is a part of the Thrift Savings Fund beneath the Federal Employees’ 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 House Speaker Kevin McCarthy, R-Calif., on Tuesday. “My predecessors have taken this suspension motion in comparable circumstances.”

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