WASHINGTON, DC – The Treasury Department has revealed plans to borrow $ 673 billion in the current quarter while using emergency measures to prevent the government from an unprecedented default on the national debt.
Treasury Secretary Janet Yellen on Monday announced a new round of measures to keep the government below the newly established debt limit, including stopping investments in some pension funds for civil servants.
The department said its borrowing plans for the July-September period assume Congress will pass either a suspension of the current debt limit or an increase in the limit.
The debt ceiling had been suspended for two years. This allowed the government to borrow as much as needed to pay its bills and service its debt. But under legislation passed two years ago, the limit was reverted to Sunday’s debt level – $ 28.4 trillion.
Yellen said not raising the debt ceiling would be catastrophic. She said emergency measures to prevent the government from exceeding the limit are only expected to last until this fall.
“I respectfully urge Congress to protect the full faith and credit of the United States by acting as soon as possible,” Yellen said in his letter Monday to congressional leaders.
She explained that she would stop investing funds in the Public Service Retirement and Disability Fund that are not immediately needed to pay benefits. She said she would take similar action with a postal service fund and the Government Securities Investment Fund.
All of these steps were taken by former Treasury secretaries in debt service deadlocks with Congress. The law requires that all funds not invested or withdrawn from pension funds be returned with interest once the debt ceiling has been raised or suspended.
Congress has always dealt with the debt ceiling before the government runs out of room for maneuver. However, a standoff in 2011 between Republicans in Congress and the Obama administration sparked the first-ever cut of a portion of the government’s credit rating by the Standard & Poor’s rating agency.
The $ 673 billion the government plans to borrow this quarter is down from an estimate of $ 821 billion it made for the May 3 quarter. The government borrowed $ 319 billion in the April-June quarter.
The Treasury Department said it plans to borrow $ 703 billion in the October-December quarter, assuming Congress passes a new debt limit or suspension in the coming weeks.