The federal government was expected to temporarily cease investments to two government employee retirement funds — the $116 billion defined contribution Government Securities Investment Fund and the defined benefit Civil Service Retirement and Disability Fund — when it reached its $14.3 trillion debt ceiling sometime Monday.
The size of the Civil Service fund couldn't be learned by press time.
In addition to holding back investments to the two funds — projected to free up $17 billion from the Civil Service fund and $130 billion from the so-called G Fund, which is part of the $290 billion Federal Thrift Savings Plan — the Treasury also is authorized to redeem some existing investments within Civil Service, which is expected to give Treasury $67 billion in headroom.
Republicans in Congress have delayed increasing the debt ceiling over demands to reduce spending.
Treasury Secretary Timothy Geithner sent a letter to members of Congress on Monday informing them that the “debt issuance suspension period” will run through Aug. 2, when borrowing authority of the federal government will be exhausted.
The two funds will be repaid once Congress approves increasing the debt limit, Mr. Geithner said in the letter. He added that federal retirees and employees will be unaffected.
“I have written Congress on previous occasions regarding the importance of timely action to increase the debt limit in order to protect the full faith and credit of the United States and avoid catastrophic economic consequences for citizens,” Mr. Geithner said in the letter. “I again urge Congress to act to increase the statutory debt limit as soon as possible.”
According to Treasury, the department also tapped the two funds in 1996, 2002, 2003, 2004 and 2006.