U.S. Treasury Secretary Steven Mnuchin on Friday said he would extend for two more months one of the extraordinary cash management measures that the Treasury is using to stave off a debt-limit default.
Mnuchin said in a letter to House of Representative Speaker Paul Ryan that he would continue to withhold investments from the Civil Service Retirement and Disability Fund, until Sept. 29.
The Treasury’s previous “debt issuance suspension period” for the federal employee pension fund was due to expire on Friday.
Mnuchin had to take the step because Congress has not passed an extension or increase in the federal debt limit, and the Treasury needs to withhold funds from the pension fund in order to preserve its borrowing capacity. It has taken several similar measures since the last extension of the debt limit expired in March at just under $20 trillion.
Mnuchin urged lawmakers this week to act on the borrowing limit before their August recess, but his request fell on deaf ears. The House of Representatives is on recess until Sept. 5.
Mnuchin and fiscal watchdog groups have estimated that the Treasury will fully exhaust its remaining borrowing capacity in October, raising the risk that the United States cannot meet all of its payment obligations with incoming tax revenue.
The Treasury is required by law to make the pension fund whole, including interest, when the debt limit is increased.
In testimony before the House Financial Services Committee on Thursday, Mnuchin said that Congress’ budgeting process, including the role the debt limit plays, “needs to be looked at.”
“I’m all for [that] there should be very strong controls of spending money. But once we’ve agreed to spend the money, we should make sure that the government can pay for it,” Mnuchin said.