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U.S. hits debt limit, Janet Yellen says Treasury taking extraordinary measures

US Treasury Secretary Janet Yellen holds a news conference in the Cash Room at the US Treasury Department in Washington, US July 28, 2022.

Jonathan Ernst | Reuters

The Treasury Department started taking so-called extraordinary measures to keep paying the federal government’s bills as the US hit its debt limit Thursday, Treasury Secretary Janet Yellen said.

In a letter addressed to House Speaker Kevin McCarthy, R-Calif., Yellen said the Treasury will suspend new investments in the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund from Thursday until June 5, 2023. But she warned both moves are subject to “considerable uncertainty” if Congress does not pass a bill to increase the $31.4 trillion debt ceiling.

The funds will be replenished once the debt ceiling is increased or suspended, and the actions will not affect federal retirees and employees, Yellen said.

The Treasury secretary warned last week that the US government would hit the statutory debt ceiling on Thursday, after which extraordinary measures would be taken to keep the government from defaulting on its debt obligations.

The department’s authority might sustain government operations until June, Yellen said Friday when she warned McCarthy that lawmakers should “act in a timely manner to increase or suspend the debt limit,” in part to replenish money lost from the retirement and disabilities savings funds.

The White House also urged Congress on Friday to raise the debt ceiling “without conditions.”

The US government has not defaulted on its debt, but the debt ceiling has been raised 22 times from 1997 to 2022, according to the Government Accountability Office. The Biden administration will prioritize negotiations for a new bill to increase the debt limit after the mid-April tax deadline, according to a senior White House official.

This is breaking news. Please check back for updates.

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