Debt ceiling: Treasury adds special measures to avoid default


Treasury Secretary Janet Yellen is taking another step to temporarily delay the US default.

Less than a week after announcing that the nation hit the debt ceiling of $31.4 trillion set forth by Congress, Yellen wrote to Speaker of the House Kevin McCarthy on Tuesday to say she was adding extraordinary measures that would allow the government to keep paying its bills on time and avert dire economic and financial consequences from default.

She will completely stop investing in Government Provident Securities Investments, part of the Federal Employees Retirement System, in U.S.-yielding securities.

It is in addition to measures announced last week, when Yellen said the Treasury would begin selling existing investments and halt the rollover of the Civil Service Retirement and Disability Fund. and the Postal Service’s Retirement Health Benefit Fund.

These funds are invested in specially issued Treasury securities, which count towards the debt limit. The Treasury Department’s actions will reduce the outstanding debt to the limit and temporarily allow the Department to continue paying government bills on time and in full.

Yellen’s actions are mostly behind-the-scenes accounting maneuvers. No retirees or federal employees will be affected, she wrote, and the funds will be refunded once the deadlock is over.

Yellen has said the special measures will last at least until early June, although she stressed that her forecast has “significant uncertainty”.

Despite Yellen’s warnings to Congress about prompt action, little, if any, progress toward a resolution has been made between House Republicans and the White House.

White House press secretary Karine Jean-Pierre on Monday reiterated that the Biden administration is unwilling to negotiate a debt limit, dismissing comments from West Virginia Democratic Senator Joe Manchin that placement was “a mistake.”

“It’s been done three times in the past, during Donald Trump’s previous administration, so this is not unusual,” she told CNN during a White House press conference. “This is something that should be done unconditionally, and we shouldn’t hold the vital programs hostage that the American people really earn and care about – Social Security, Medicare should not be put at risk. So he was taken hostage.”

McCarthy also criticized the administration’s position, tweets last week that he was ready to meet to discuss “raising the debt ceiling responsibly to address irresponsible government spending.” He noted that he accepted President Joe Biden’s invitation to sit down, although no such meeting has yet been set.

As part of lengthy negotiations to won speaker votes Earlier this month, McCarthy promised his conservative members that any attempt to lift the debt ceiling would be accompanied by spending cuts.

The Senate, meanwhile, is taking back seat in stalemate for now. Senate Republicans said they would wait to see how the House GOP moves to raise the borrowing limit before deciding whether they need to be involved in the process.

Despite the current situation, Senate Republican Leader Mitch McConnell told CNN on Monday that “we’re not going to default,” without elaborating.

Senate Majority Leader Chuck Schumer on Tuesday outlined the dire consequences of default, saying “every American will pay the price.” He urged House Republicans to disclose the financial measures they want to take.

“Well, I say to my Republican colleagues: 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 are talking about. ,” he said.


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