(June 3, 2013) — The US Treasury said it has suspended investments into a federal employee retirement fund for the second time in an effort to stay under the $16.7 trillion federal debt limit.
The move, announced on May 31, will provide $160 billion in additional borrowing capacity, the largest of the so-called extraordinary measures that the Treasury has at its disposal to ensure that the limit is not breached.
Treasury Secretary Jack Lew, in a letter to the US Congress distributed at the Treasury, said the Government Securities Investment Fund, or G-Fund, will be made whole once the debt limit is increased.
A senior Treasury official declined to provide Reuters with a new estimate for how much time Congress has before it must act to raise the limit. Previously, the Treasury had said it could continue to pay US obligations without an increase until some time after the Labor Day holiday on September 2.
If the debt ceiling is not raised by then, Lew has already warned Congress that the nation would run the risk of an economically damaging default.
In January 2013, aiCIO reported the Treasury had been forced to borrow from the G-fund, freeing up $156 billion worth of debt.
This borrowing spree followed a further incident a year before, when employer contributions were halted while negotiations to avoid breaching the debt ceiling were completed.
The US Treasury has been injecting supplements to the Federal fund for over 30 years in an attempt to resolve the deficit. Since 1979, the department has supplemented the scheme with an annual payment that reached almost $30 billion in 2006. These taxpayer-funded payments were scheduled to increase until 2080.
In 2011, the Obama administration and Congress battled for months before eventually agreeing to raise the debt ceiling to $16.4 trillion – the row hurt consumer confidence, shook financial markets and ultimately cost the US its top-tier credit rating.
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