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By Staff Reporters
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As the US just crashed into the $31.4 trillion debt ceiling as the Treasury Department began taking what it called “extraordinary measures” to prevent the government from defaulting on its debts and sparking an economic crisis.
These measures are a series of deep-cut accounting moves that allow the Treasury to continue making its payments. They include:
- Suspending reinvestments into government funds for retired federal employees, such as the Civil Service Retirement and Disability Fund.
- Selling existing investments in those funds to free up more outstanding debt.
And while these measures definitely aren’t ordinary…they probably aren’t so “extra,” either. The Treasury has resorted to them more than 12 times since 1985, including during the last debt-ceiling standoff in 2021.
Still, these steps amount to chugging water after eating a ghost pepper—the pain will return. Treasury Secretary Janet Yellen said her extraordinary measures will last through early June, giving lawmakers about five months to work out a deal to raise the debt ceiling.
NOTE: The US has never defaulted on its debt, but even the threat of it could be disastrous. The country’s first credit downgrade in history came during a debt-ceiling showdown in 2011.
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Filed under: "Ask-an-Advisor", Accounting, Investing, Retirement and Benefits, Risk Management, Taxation | Tagged: debt ceiling, Janet Yellen, Risk Management, Treasury Department, US Debt, US Debt ceiling |
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