The Treasury Department has once again suspended investing in the Thrift Savings Plan’s G Fund to avoid breaching the debt ceiling.
In a May 31 letter to congressional leadership, Treasury Secretary Jack Lew said that he had temporarily halted investments to give the government more headroom while Congress finds a way to agree on how to raise the debt ceiling. The government now holds roughly $16.7 trillion in debt.
“I respectfully urge Congress to protect America’s good credit and avoid the potentially catastrophic consequences of failing to act by increasing the debt limit in a timely fashion,” Lew said.
Lew said that, by law, the G Fund must be made whole when the debt limit is increased and that federal retirees and employees will be unaffected. This means that Treasury will deposit the funds it should have been investing during the suspension period, including interest.
Congress and the White House agreed in January to suspend the debt ceiling until May 18, but they have since failed to agree to raise the ceiling further. Lew told lawmakers May 17 that he was preparing to enact “the standard set of extraordinary measures” — including the G Fund suspension — to allow the government to continue to pay its bills. Lew said those stopgap measures should keep the government running at least through Labor Day.
Treasury previously suspended G Fund investments in January, and also in May 2011, when the government reached the debt ceiling. The fund was made whole both times.