US Treasury Secretary Steven Mnuchin on Thursday announced his department is suspending contributions to government retirement and disability funds in order to keep the country’s debt under the mandated limit.
Mnuchin said the new financing steps were required, and permitted by law, to avoid breaching the roughly $20 trillion debt ceiling set by Congress.
“I respectfully urge Congress to protect the full faith and credit of the United States by acting to increase the statutory debt limit as soon as possible,” he said in a recent letter to House of Representatives Speaker Paul Ryan.
Congress in late 2015 suspended the debt limit through March 15, but have taken no action either to increase the limit or reinstate the suspension to avoid the risk of a default on US obligations.
Mnuchin’s predecessors also had been forced to resort to “extraordinary measures” when the US debt level has bumped up against the ceiling, which gave the Treasury a few months of leeway while negotiations with Congress continue.
Congress historically has raised the debt ceiling as a matter of course with bipartisan support. But during the prior presidency of Democrat Barack Obama, Republicans used the debt limit as leverage to force other policy changes and limit spending, repeatedly taking the country to the brink of default.
The battles came to a head in August 2011 when, amid the impasse, Standard & Poor’s downgraded US debt for the first time from its coveted AAA rating.
Mnuchin said the Treasury Department as of Thursday “is unable to fully invest the portion of the Civil Service Retirement and Disability Fund (CSRDF) not immediately required to pay beneficiaries.”
It also is “unable to invest fully the Government Securities Investment Fund (G Fund) of the Federal Employees’ Retirement System” or the Postal Service Retiree Health Benefits Fund, he said.
But the Treasury chief said no retirees would be impacted by the action, and the fund “will be made whole once the debt limit is increased.”
The department as of Wednesday already had suspended the sale of state and local government securities which count against the debt limit.
In his March 8 letter to Ryan, Mnuchin stressed: “Honoring the full faith and credit of our outstanding debt is a critical commitment.”
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