US Taps Pension Fund to Avoid Debt Ceiling

US Taps Pension Fund to Avoid Debt Ceiling

The US government stopped investing in a federal employee pension fund Tuesday to avoid breaching the nation’s legal borrowing limit, the Treasury Department said.

The action is among the extraordinary bookkeeping measures the Treasury announced on December 31 to keep the government’s debt below the current $16.4 trillion limit.

In a letter to leaders of Congress, Treasury Secretary Timothy Geithner said he was unable to invest fully in the fund beginning Tuesday “to avoid breaching the statutory debt limit.”

Geithner said the fund would be “made whole once the debt limit is increased.”

Federal employees and retirees would not be affected by the action, he said.

On Monday, Geithner called on Congress to raise the debt limit, warning that failing to do so would “impose severe economic hardship on millions of individuals and businesses.”

President Barack Obama has warned Republicans against using the borrowing limit as a bargaining chip in budget negotiations.

Republicans insist that it be part of any deal with the Democrats on a longer-term budget to rein in big deficits and debt.