Tuesday, February 7, 2023
Feb. 7, 2023

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Treasury buys more time for debt limit

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WASHINGTON — U.S. Treasury Secretary Janet Yellen sent a letter Tuesday to congressional leaders saying she’s suspending the reinvestment of some federal bonds in a government workers’ savings plan — an additional “extraordinary” measure to buy time for President Joe Biden and Congress to raise the nation’s debt limit.

The government bumped up against its legal borrowing capacity Thursday, prompting Treasury to take accounting steps regarding federal employees’ retirement and health care plans that will enable the government to stay open until roughly June.

Yellen said in the letter that as of Monday she also determined that the government “will be unable to invest fully” in the government securities portion of the thrift savings fund in the federal employees’ retirement system.

She noted that her predecessors have taken a similar action in the past, noting that by law the accounts “will be made whole once the debt limit is increased or suspended.”

But it’s an open question to how the White House and Congress find common ground on the artificial cap imposed by Congress.

Biden and Republican House Speaker Kevin McCarthy have differences over how to raise the debt ceiling, setting off the possibility of the extraordinary measures being exhausted this summer and risking a government default that could wreak havoc.

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