By David Lauder
WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen on Tuesday activated one other uncommon money administration measure to keep away from a breach of the federal debt restrict, suspending each day reinvestments in a big authorities retirement fund that holds Treasury debt, the division stated. stated
In a letter informing Congress of the transfer to entry the Authorities Securities Funding Fund (G Fund), Yellen didn’t change the anticipated deadline of early June when the Treasury will now pay the nation’s payments with out a rise to $31.4 trillion. might not be capable of Authorized borrowing restrict.
“The regulation governing G Fund investments clearly provides the Treasury secretary the authority to droop G Fund investments to keep away from violating the statutory debt restrict,” Yellen informed Home Speaker Kevin McCarthy, a Republican. , and wrote in a letter to different Congress leaders. . “My predecessors have taken this foreclosures motion beneath related circumstances.”
Yellen final week suspended reinvestment in two different retirement and well being profit funds as the federal government nominally reached the debt ceiling. Republicans who now management the Home have threatened to oppose a rise within the debt ceiling with out spending cuts from the Biden administration.
The G-Fund train is without doubt one of the greatest instruments that the Treasury can use to reclaim borrowing capability beneath the debt ceiling. The fund, a part of the Thrift Financial savings Plan for federal staff, had web belongings of $210.9 billion on the finish of 2021, in response to its most up-to-date annual report.
Sometimes a cash market-like retirement fund reinvests its total steadiness each day in special-issue Treasury securities that depend towards the debt restrict. Withholding reinvestment permits extra widespread Treasury payments, notes and bonds to be issued.
However as soon as the debt ceiling freeze ends, the Treasury is required by regulation to replenish the fund, together with any misplaced earnings. Federal retirees and staff won’t be affected by this motion.
“I respectfully urge the Congress to take speedy motion to guard the complete religion and credit score of america,” Yellen wrote, repeating an everyday line in her letters to lawmakers.
(Reporting by David Lauder; Modifying by Tim Ahman and Jonathan Otis)