As a battle between Republicans and Democrats over raising the federal debt ceiling unfolds, the U.S. Treasury has begun using extraordinary cash management measures to keep the U.S. government from breaching the $31.4 trillion borrowing limit.
The measures will allow the Treasury to claw back more than $500 billion in borrowing capacity, but it's unclear how long that will last beyond early June as tax revenues ease andHere's a rundown of the Treasury's tools to keep borrowing under the limit.On Jan 24, the Treasury suspended daily reinvestments in a federal employee retirement fund known as the G Fund, which had a balance of $294 billion as of Dec. 31.
The fund must be made whole, including lost interest, when the debt ceiling is raised or suspended, protecting federal employees.The Treasury on Jan. 19 suspended investments in the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefit Fund -- except for amounts needed to pay benefits.
The suspensions allow Treasury to reclaim about $8.3 billion in borrowing capacity per month, or a total of $41.5 billion for the five-month "debt issuance suspension period" declared by Treasury Secretary Janet Yellen though June 5 -- a period that could be extended. On June 30, the Treasury can regain another $143 billion in borrowing capacity when $131 billion in investments in the Civil Service Retirement and Disability Fund matures. A $12 billion interest payment to the fund also is due on that date. If Yellen extends the suspension period past June 30, the Treasury can suspend these investments and reclaim borrowing capacity in a one-time action that must be reversed once the borrowing limit is raised.
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