(Archived Content)
G-Fund beneficiaries made whole
On April 4, in order to protect the full faith and credit of the United States, Treasury was required to use measures that Congress provided specifically to keep outstanding Treasury debt within the statutory debt limit. These actions were necessary because Congress has not yet enacted legislation to raise the debt ceiling above the current $5,950 billion.
As Secretary O'Neill informed Congress on April 2, the Treasury would use its statutory authority on April 4 to suspend investments in the Government Securities Investment Fund (the G-Fund), just as Secretary Rubin did in 1995. This period was estimated to extend from April 4 to about April 18. The Secretary emphasized that this action would not affect G-Fund beneficiaries.
Yesterday, April 16, with new revenues, the Treasury was able to fully restore the G-Fund, including full credit for all foregone interest. From the perspective of G-Fund beneficiaries, it is as if nothing happened.
Permanent $750 billion increase needed soon
The Federal Government will confront the debt ceiling again this summer, unless Congress raises the debt ceiling beforehand. On June 28, for instance, the Treasury must pay about $65 billion in interest to the Social Security trust fund. Current projections estimate reaching it again in the second half of June. A revised estimate will be made in early May, after analyzing the April tax receipts.
This summer, similar stop-gap measures will not be sufficient to avoid reaching the debt limit. We hope that Congress will enact the $750 billion permanent increase as soon as possible, and we will continue to work with Congress to achieve that goal. We will also work to maintain our regular and predictable auction calendar.