U.S. Treasury Secretary Timothy Geithner told Congress he would start tapping into federal pension funds on Monday to free up borrowing capacity as the nation hits the $14.294 trillion US legal limit on its debt.
The U.S. Treasury will issue $72 billion in bonds and notes on Monday, pushing the nation right up against its borrowing cap at some point during the day, according to a Treasury official.
Geithner said he would suspend investments in two government retirement funds, which will give the U.S. Treasury $147 billion in additional borrowing capacity.
"I will be unable to invest fully" in the civil service retirement and disability fund and the government securities investment fund, he said in a letter to congressional leaders.
The Treasury has said the suspension of the investments and other measures it could take would give the government until about Aug. 2 before it will start defaulting on obligations, such as paying bond investors.
Congress is in charge of increasing the debt ceiling, but Republicans are demanding deep cuts to federal spending for the price of their support in raising it.
Geithner reiterated previous pleas for action. "I again urge Congress to act to increase the statutory debt limit as soon as possible," he said.
Previous administrations have also tapped the retirement funds at times to avoid breaching the debt limit. Over the past two decades, Treasury has suspended investments five times, with the most recent suspension in 2006.
"Federal retirees and employees will be unaffected by these actions," Geithner said, since Treasury must make the funds whole once the debt limit is raised.
But the measures still disrupt Treasury's operations, as it must run two sets of books among other things.