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Treasury Begins 'Final Extraordinary Measures' As Debt Ceiling Deadline Looms

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WASHINGTON -- The Treasury Department began using "final extraordinary measures" Tuesday in anticipation of the country's statutory debt limit being reached on Oct. 17, Treasury Secretary Jack Lew said in a letter to House Speaker John Boehner (R-Ohio.).

"There are no other legal and prudent options to extend the nation's borrowing authority. The impact of these measures was incorporated into the forecast that I shared with you last week, and Treasury continues to believe that extraordinary measures will be exhausted no later than October 17, 2013," Lew wrote.

The deadline hasn't changed since Lew sent an earlier letter to Boehner last week. But Tuesday's letter underscores the urgency surrounding the proposed increase in the nation's borrowing authority, after Congress failed on Monday to pass a continuing resolution to fund the federal government.

Lew said the resulting shutdown will have little effect on when the government hits the debt ceiling. "Although the current lapse in appropriations creates some additional uncertainty, we do not believe it will impact our projections materially unless it continues for an extended period of time," he wrote.

The "final extraordinary measures" are fairly technical, but according to the letter they include:

  • Treasury will suspend, as necessary, the daily reinvestment of the portion of the Exchange Stabilization Fund that is invested in Treasury securities.
  • Treasury will enter into a debt swap with the Federal Financing Bank and the Civil Service Retirement and Disability Fund (CSRDF), which will lead to the elimination of a limited amount of debt that counts against the debt limit. Although this measure is of limited value, I have determined that it should be used given the urgency of the situation.
  • With regard to the CSRDF, I have previously determined that a "debt issuance suspension period" exists through October 11. I have now determined that, by reason of the statutory debt limit, I will continue to be unable to fully invest the portion of the CSRDF not immediately required to pay beneficiaries, and that the debt issuance suspension period will continue through October 17.

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