The federal government has taken an “extraordinary measure” to avoid hitting the debt ceiling. Treasury Secretary Steve Mnuchin said the government is stopping investment into 2 retirement funds for federal employees.
The 2 funds are the Civil Service Retirement and Disability Fund (CSRDF) and the Postal Service Retiree Health Benefits Fund. As an attempt to avoid exceeding the debt ceiling, Mnuchin said the government can no longer invest in these funds. He did say though, that once the debt limit is raised, the funds will be made whole again.
This is what is done with the G Fund.
The fund provides defined benefits to retired and disabled federal employees covered by the Civil Service Retirement System (CSRS). It invests in special-issue Treasury securities which count against the debt limit.
The Treasury Department has the authority to suspend investing money received by the CSRDF. This authority can be used when the Secretary of the Treasury determines the additional investments can’t be made without exceeding the debt limit. The Department can also redeem existing investments by the CSRDF when the Secretary determines a “debt issuance suspension period”.
A new debt limit was imposed starting December 8, 2017. Congress suspended the debt ceiling in September, allowing the government to borrow as much money as it wanted. When that suspension ended, Congress imposed a new debt ceiling of $20.493 trillion. If the government wants to continue to borrow at its usual pace, Congress will have to raise the limit once again.
The Congressional Budget Office said in a recent report that the federal government should be able to operate via the use of these “extraordinary measures” until March or April, but at that point, the government would start to run out of money if the debt ceiling isn’t raised.
“Federal retirees and employees will be unaffected by these actions,” Mnuchin said. However, he urges Congress to raise the ceiling as soon as possible.