U.S. Treasury Secretary Janet Yellen on Monday sent a letter to Congress explaining to lawmakers what actions her department had begun to take to address the debt ceiling, after it was neither raised nor suspended by the deadline.
Yellen informed lawmakers that she would employ "extraordinary measures," which refer to emergency actions aimed at conserving money and allowing the government to pay its obligations without accruing new debt for as many as three months.
Those measures include halting certain payments and redeeming some investments.
Yellen on Monday said the Treasury Department would limit investment in the so-called "G Fund" or the Government Securities Investment Fund starting on Monday. The G Fund, which is part of the Thrift Savings Plan for government employees, will be made whole once lawmakers act to raise the debt ceiling.
Yellen also said that the Treasury would be unable to fully invest in the Civil Service Retirement and Disability Fund, and it would suspend additional investments in the Postal Service Retiree Health Benefits Fund.
Federal employees and retirees will be unaffected by the actions.
Yellen told lawmakers on Monday that conditions that have arisen from the pandemic have rendered the timeframe over which the Treasury will be able to employ its money-saving efforts less certain.
"As I stated in my July 23 letter, the period of time that extraordinary measures may last this year is subject to heightened uncertainty related to the economic impact of the pandemic," Yellen wrote in her letter. "Therefore, I respectfully urge Congress to protect the full faith and credit of the United States by acting as soon as possible."
A senior Treasury official told FOX Business on Monday that there are scenarios whereby cash and extraordinary measures could be exhausted shortly after Congress returns from recess next month.
"For example … there will be a large reduction in the cash balance on October 1, due to outflows on that day to meet our obligations to the Department of Defense," the senior official said.
It is not the first time the U.S. Treasury Department has invoked extraordinary measures to protect the borrowing authority of the U.S. government, and it is generally not a pressing concern so long as an agreement is reached before the Treasury runs out of options.
The U.S. government has never defaulted on its debt.
The debt limit, which was suspended in 2019, was reinstated at the end of July.