Treasury Secretary Steven Mnuchin informed Congress on Monday that he will stop making payments into two government retirement funds now that the debt limit has gone back into effect.
In a letter to congressional leaders, Mnuchin said that he would stop making investments into a civil service retirement fund and a postal service retirement fund.
These are among the actions that Mnuchin is allowed to take to keep from exceeding the debt limit, which went back into effect on Saturday at a level of $22 trillion.
The debt limit had been suspended for a year under a 2018 budget deal. The Congressional Budget Office estimates that Mnuchin likely has enough maneuvering room to avoid a catastrophic default on the national debt until around September.
The U.S. government has never missed a debt payment although budget battle between then-President Barack Obama and Republicans in 2011 pushed approval of an increase in the debt limit so close to a default that the Standard and Poor’s rating agency downgraded a portion of the country’s credit rating for the first time in history.
The Congressional Budget Office said in a report that issuing new securities for the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund pushed the debt up by $3 billion each month. Mnuchin said both funds would be made whole once Congress approves an increase in the debt limit.
“I respectfully urge Congress to protect the full faith and credit of the United States by acting to increase the statutory debt limit as soon as possible,” Mnuchin said in his letter.