US Treasury Begins Taking 'Extraordinary Measures' After Debt Limit Reinstated
00:28 GMT 03.08.2021 (Updated: 13:21 GMT 06.08.2022)
© AP Photo / Patrick SemanskyThis May 4, 2021 file photo shows the Treasury Building in Washington
© AP Photo / Patrick Semansky
WASHINGTON (Sputnik) - The US Treasury Department has started taking extraordinary cash-conservation measures to avoid bursting the federal borrowing limit after a two-year suspension of the debt ceiling expired at the end of July, Treasury Secretary Janet Yellen said.
“Due to the reinstatement of the debt limit, on July 30 Treasury suspended until further notice the sale of state and local government series securities. This letter serves to notify you… of additional extraordinary measures Treasury began using today,” Yellen said on Monday in a letter addressed to US House Speaker Nancy Pelosi, a Democrat, and copied to Republicans leaders in both chambers of Congress.
Yellen warned in another letter last week that there would be “irreparable harm” to the US sovereign rating and economy if the debt limit was not raised, amid signs that Republican lawmakers did not want to approve a higher debt ceiling.
Separately, the bipartisan Congressional Budget Office cautioned last week that the US government will most likely run out of money between October and November unless the debt ceiling is raised.
23 July 2021, 18:56 GMT
Yellen said the extraordinary measures included suspending fully or partly investments in the Civil Service Retirement and Disability Fund, the Postal Service Retiree Health Benefits Fund and a section of the Federal Employees Retirement. These were flexible investments that could be made in due course, and other US treasury secretaries have also suspended them previously in times of emergency, she said.
Yellen reminded the Congressional leaders in her letter last week that the current level of US debt reflected the cumulative effect of all prior spending and tax decisions made by both Democratic and Republican administrations over time.
Increasing or suspending the debt limit did not increase government spending or authorize spending for future budget proposals, but a failure to meet debt obligations could result in repercussions such as the first-ever US credit rating downgrade suffered in 2011, she said.