(Archived Content)
The Honorable Max Baucus
Chairman
Committee of Finance
United States Senate
Washington, D.C. 20510
Dear Mr. Chairman:
I wrote on April 2 to inform Congress that, in order to protect the full faith and credit of the United States government, by reason of the public debt limit I would be unable to fully comply with the requirements of 5 U.S.C. § 8438(e), beginning on April 4, 2002 and ending on or about April 18. The statute grants the Secretary of the Treasury explicit authority to suspend investment in the Government Securities Investment Fund (G-Fund) to avoid breaching the statutory debt limit.
As the April 2 letter noted, G-Fund beneficiaries are fully protected and will suffer no adverse consequences from this action. The statute ensures that once the Secretary of the Treasury can make the G-Fund whole without exceeding the public debt limit, he is to do so. Under the governing law in this case, the G-Fund will receive complete restoration of all funds temporarily affected by this necessary action, including full and automatic restoration of any interest that would have been credited to the Fund.
Today, I am writing to notify you that recent revenues have enabled the Treasury to fully restore the G- Fund as required by law. The G-Fund and its beneficiaries are now in the same financial position as if investments had never been suspended, including a full credit for interest owed. Please find enclosed a report of G-Fund status and operations in accordance with statutory requirements.
The need to raise the debt ceiling has only been postponed. 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 stopgap measures will not be sufficient to avoid reaching the debt limit. Therefore, I urge you to enact the President's request for a $750 billion permanent increase in the debt ceiling as soon as possible.
Sincerely, Paul H. O'Neill |