Treasury Implements Extraordinary Measures as Debt Ceiling Nears

MYTH: Failing to increase the debt limit automatically causes a government shutdown. REALITY: Failing to raise the debt limit does not shut down the federal government, unlike failure to pass appropriations legislation, which does. Federal employees are still able to work, and checks, such as Social Security and federal annuity payments, are still issued.

to many Americans, financial assistance for small businesses and more. Congress will likely again use reconciliation to pass the Biden administration’s America’s Families Plan; it is expected to include expanded paid family and medical leave, which would likely extend to federal employees.

Furthermore, legislation passed through reconciliation cannot be projected to increase the federal deficit beyond 10 years, only within a decade. Notably, reconciliation bills cannot change or impact Social Security in any way, meaning some of NARFE’s legislative priorities—such as repeal or reform of the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), or changing how cost-of-living adjustments are calculated—could not be included in a reconciliation package.

Until recently, Congress has used budget reconciliation relatively sparingly. According to the House Committee on the Budget, Congress has only sent 26 reconciliation measures to the president, of which 22 were enacted and four were vetoed. To put this number in perspective, Congress has enacted nearly 10,000 bills into law through traditional methods since 1980.

—BY SETH ICKES, GRASSROOTS ASSISTANT

In early August, Treasury Secretary Janet Yellen sent a letter to Congress notifying lawmakers that the debt limit suspension in place through July 31 had come to an end. With the debt limit reinstated, the outstanding debt of the United States was at the statutory limit. As a result, the Treasury informed Congress that it would begin using extraordinary measures to delay an eventual breach of what is commonly referred to as the debt ceiling.

The debt ceiling is a limit that Congress sets on the amount of debt the federal government can carry at any given time. When that limit is nearly reached, Congress must increase it to allow the federal government to borrow additional money to pay for its already incurred costs—or face default.

The implementation of extraordinary measures in this instance comes as no surprise, as past treasury secretaries have taken the same action in recent years when the country was approaching the debt ceiling.

As in the past, the extraordinary measures include suspending investments in the Civil Service Retirement and Disability Fund (CSRDF), the Postal Service Retiree Health Benefits Fund (PSRHBF) and the Thrift Savings Plan’s (TSP) Government Securities Fund.

Use of these measures should enable the Treasury to continue funding government operations through September 30, giving Congress additional time to raise the debt ceiling. Nevertheless, questions routinely arise from the federal community about the suspension of these investments, especially about the TSP’s G Fund.

The G Fund is made up of special-issue Treasury securities that count against the debt limit and mature daily. The balance of the fund is ordinarily reinvested but can be suspended in the event that the treasury secretary determines that the fund