Treasury Secretary Janet Yellen is taking another step to temporarily delay a US default.
Less than a week after announcing the nation had reached its $31.4 trillion debt ceiling set by Congress, Yellen wrote to House Speaker Kevin McCarthy on Tuesday to say she was adding to the extraordinary measures that would allow the government to continue paying its bills on time. and stop the catastrophic economic and financial consequences of default.
It will cease fully investing the Government Securities Investment Fund of the Provident Thrift Fund, which is part of the Federal Employees Retirement System, in interest-bearing securities in the United States.
This is in addition to measures announced last week, when Yellen said the Treasury Department would begin selling existing investments and suspend reinvestment of the Civil Service Retirement and Disability Fund and the Postal Service Retirees Health Benefit Fund.
This money is invested in special-issue Treasury notes, which count against the debt limit. The Treasury’s actions will reduce the amount of outstanding debt subject to the cap and temporarily allow it to continue paying government bills on time and in full.
Yellen’s actions are essentially behind-the-scenes accounting maneuvers. No federal retirees or employees will be affected, she wrote, and the funds will be completed once the deadlock is over.
Yellen said the unusual measures should continue through at least early June, though she stressed that her projections are subject to “a great deal of uncertainty.”
Despite Yellen’s warnings to Congress to move quickly, little, if any, progress was made toward a solution between House Republicans and the White House.
White House press secretary Karen Jean-Pierre reiterated on Monday that the Biden administration is not open to negotiating a debt limit, dismissing comments from Democratic West Virginia Sen. Joe Manchin that the position was a “mistake.”
“It’s been done three times in the past, in the previous administration under Donald Trump, so it’s not unusual,” she told CNN during a White House briefing. “This is something that should be done without strings attached, and we should not take hostage the major programs that the American people really earned and care about – Social Security, Medicare should not be put into a hostage situation.”
McCarthy also criticized the administration’s stance, Twitter Last week he said he was ready to meet to discuss “a responsible increase in the debt ceiling to tackle irresponsible government spending”. He indicated that he accepts President Joe Biden’s invitation to sit down, though no such meeting has been specified.
As part of the drawn-out negotiations to win the speaker vote earlier this month, McCarthy promised his Conservative members that any effort to raise the debt ceiling would be accompanied by spending cuts.
Meanwhile, the Senate is taking a back seat to the showdown for now. Senate Republicans say they will wait to see how the House GOP maneuvers a way to raise the borrowing limit before deciding whether they need to insert themselves into the process.
Despite the current situation, Senate Republican Leader Mitch McConnell told CNN Monday that “we will not default,” without elaborating.
Senate Majority Leader Chuck Schumer on Tuesday laid out the dire consequences of default, saying, “Every American will pay the price.” And he called on Republicans in the House of Representatives to disclose the financial measures they want to take.
“Well, I say to my fellow Republicans: If you want to talk about spending cuts, then you have an obligation — an obligation — to show the American people exactly what kind of cuts you’re talking about,” he said.