Debt Limit Reached Monday, U.S. Government Forced to Act

May 16, 2011, 13:11 by R.E. Christian

The U.S. government reached its $14.29 trillion debt limit Monday and would take extraordinary measures to remain solvent, the Treasury Department said.

In effect, reaching the debt ceiling puts the government on notice, giving it 11 weeks before lawmakers must raised the ceiling or the country would go into default, Treasury said.

As of Monday, the Treasury said it had declared a "debt issuance suspension period" for the Civil Service Retirement and Disability Fund, "permitting Treasury to redeem a portion of existing Treasury securities held by that fund as investments."

The Treasury also said it would suspend issuing new Treasury securities to that fund and would temporarily cease reinvestment of securities held as investments in the Government Securities Investment Fund of the Federal Employees Retirement System Thrift Savings Plan.

The Treasury said it could create approximately $214 billion in "headroom" by taking extraordinary measures and that, "by law the CSRDF and G funds will be made whole once the debt limit is increased."

"Federal retirees and employees will be unaffected by these actions," Treasury said.

The Wall Street Journal reported Monday a deal on raising the debt limit still appeared a long way off although Democrats and Republicans were defining the gap differently.

Vice President Joe Biden, who is leading the meetings on budget cuts that Republicans are demanding, were beginning the make headway.

House Speaker John Boehner, R-Ohio, however, said, "I'm not seeing any real action," the Journal reported.

Source: UPI