CNN
—
Treasury Secretary Janet Yellen is taking another step to temporarily delay a U.S. debt default.
Less than a week after announcing that the U.S. had reached the $31.4 trillion debt ceiling set by Congress, Yellen wrote to House Speaker Kevin McCarthy on Tuesday that she was adding extraordinary measures to allow the government to continue paying its bills on time and delay defaults disastrous economic and financial consequences.
She would stop investing 100% of the Thrift Savings Fund’s government securities investment fund in U.S. interest-bearing securities as part of the Federal Employees’ Retirement System.
This is in addition to measures announced last week, when Yellen said the Treasury Department would start selling existing investments and suspend reinvestment in the Civil Service Retirement and Disability Fund and Postal Service retiree health benefit funds.
These funds are invested in specially issued treasury bonds, which count toward the debt limit. The Treasury’s action will reduce the amount of outstanding debt subject to a cap and temporarily allow it to continue paying government bills in full and on time.
Yellen’s actions were largely a behind-the-scenes accounting maneuver. No federal retirees or employees will be affected, she wrote, and the funds will all be available once the impasse is over.
Yellen said the extraordinary measures should last at least until early June, though she stressed that her forecast was subject to “considerable uncertainty.”
Despite Yellen’s warning to Congress to act quickly, little progress has been made between House Republicans and the White House on resolving the issue.
White House press secretary Karine Jean-Pierre reiterated on Monday that the Biden administration was open to negotiating the debt ceiling, pushing back against comments from Senator Joe Manchin, D-West Virginia, that the position was “a mistake”.
“It’s been done three times in the past under Donald Trump’s administration, so it’s not unusual,” she told CNN at a White House briefing. “It’s something that should be done unconditionally, we shouldn’t be holding America hostage Key programs that people really win and care about – Social Security, Medicare, shouldn’t be held hostage.”
McCarthy also blasted the administration’s stance, tweet Last week, he was set to meet to discuss “responsibly raising the debt ceiling to address irresponsible government spending.” He noted that he accepted President Joe Biden’s invitation to sit down but had not yet set a time for the meeting.
As part of protracted negotiations to win the Speaker’s vote earlier this month, McCarthy promised members of his Conservative faction that any effort to raise the debt ceiling would be accompanied by spending cuts.
Meanwhile, the Senate is currently taking a back seat in gridlock. Senate Republicans said they would wait to see how House Republicans managed to raise the borrowing limit before deciding whether they needed to add themselves to the process.
Despite the dire situation, Senate Republican Leader Mitch McConnell told CNN on Monday that “we’re not going to default,” without elaborating.
Senate Majority Leader Chuck Schumer laid out the dire consequences of a breach on Tuesday, saying “every American will pay the price.” He called on House Republicans to reveal the fiscal measures they want to take.
“Well, I say to my fellow Republicans: 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’re talking about,” he said.
