Bloomberg News

U.S. Suspends Pension-Fund Payments Amid Debt-Limit Debate

January 23, 2012

(Updates with House plans for a vote in fourth paragraph.)

Jan. 17 (Bloomberg) -- The U.S. suspended investments into a federal employee retirement fund to avoid breaching the $15.194 trillion debt limit.

Treasury Secretary Timothy F. Geithner informed Senate Majority Leader Harry Reid of the move in a letter today. The so-called G-Fund will be “made whole once the debt limit is increased,” Geithner said.

Lawmakers this week will debate a symbolic vote on the debt limit. Under legislation passed in August after months of negotiations between the Obama administration and Republican lawmakers, the president has authority to veto any disapproval resolution that clears both chambers of Congress. The limit would then be raised Jan. 27.

House Republicans plan to adopt a resolution tomorrow rejecting President Barack Obama’s Jan. 12 request to raise the debt limit by $1.2 trillion, though the measure will die either in the Senate or by presidential veto. That will allow Obama to lift the cap on his own after Republicans have gone on record against it.

The debt-ceiling increase is to meet commitments already made by the government. The Treasury has been relying on accounting maneuvers similar to ones employed last year to ensure that the limit isn’t breached.

Since the budget law was approved, the debt limit has been raised twice, by a total of $900 billion. In the latest request, the ceiling would rise to $16.394 trillion, which the Treasury estimates will fund the government until late 2012.

In the last certification vote, the Republican-controlled House passed a resolution of disapproval, while the Senate didn’t.

--With assistance from Cheyenne Hopkins, Brian Faler, Hans Nichols and Roger Runningen in Washington. Editors: Gail DeGeorge, Christopher Wellisz

To contact the reporter on this story: Ian Katz in Washington at ikatz2@bloomberg.net

To contact the editors responsible for this story: Chris Wellisz at cwellisz@bloomberg.net


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