Yellen Activates Another 'Extraordinary' Measure To Avert Breaching Debt Limit: 'I Will Be Unable To Invest Fully...'

Treasury Secretary Janet Yellen activated another extraordinary cash management measure on Tuesday to avert breaching the federal debt limit by suspending daily reinvestments in a large government retirement fund that holds Treasury debt, the department said.

In a letter to House Speaker Kevin McCarthy, Yellen pointed out that she has determined "by reason of the statutory debt limit, I will be unable to invest fully the Government Securities Investment Fund (G Fund) of the Thrift Savings Fund, part of the Federal Employees' Retirement System, in interest-bearing securities of the United States."

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The Maneuver: Yellen pointed out that the statute governing G Fund investments expressly authorizes the Treasury Secretary to suspend investment in the G Fund to avoid breaching the statutory debt limit.

"My predecessors have taken this suspension action in similar circumstances. By law, the G Fund will be made whole once the debt limit is increased or suspended. Federal retirees and employees will be unaffected by this action," she wrote in the letter.

The G-Fund maneuver is one of the most prominent tools that the Treasury can deploy to reclaim borrowing capacity under the debt ceiling, according to a Reuters report.

The fund, part of the Thrift Savings Plan for federal employees, held net assets of $210.9 billion at the end of 2021, Reuters stated, citing a recent annual report.

Last week, Yellen suspended reinvestments in two other retirement and health benefit funds as the government nominally hit the debt ceiling, according to the Reuters report.

She also urged Congress to act promptly to protect the full faith and credit of the United States.

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US Debt Crisis: Yellen Activates Another 'Extraordinary' Measure