US Government Debt Different - Finance Department - University of ...

Jeremy Kreisberg & Kelley O’Mara (Under the Supervision of Professor Howell Jackson)employees, matures daily and is reinvested in special-issue Treasurysecurities, which count against the debt limit. 32 However, during adeclared DISP, the Secretary of the Treasury can suspend issuanceof additional amounts of obligations into the G-Fund “if issuancescould not be made without causing the public debt of the UnitedStates to exceed the public debt limit.” 33 Under this authority, on thefirst day of the DISP, $19 billion in principal and $1.5 million ininterest was suspended from investment in securities for the G-Fund,instantly creating headroom beneath the limit. 34 Over the elevenweeks of the DISP, $137.5 billion was suspended from investmentin Treasury securities, allowing the nation to continue to borrow thecorresponding amount without exceeding the statutory debt limit. 35On August 2, 2011, when the debt limit was raised, $137.5 billionin principal was restored to the G-Fund; 36 on August 3, 2011, $378million in deferred interest 37 was paid to the Fund to make it whole. 38263b. Civil Fund: Reinvestments Suspended and ExistingSecurities RedeemedAs with the G-Fund, Secretary Geithner announced on May 16,2011 that he would “be unable to invest fully the portion of theCivil Fund not needed immediately to pay beneficiaries.” 39 Duringa DISP, new contributions to the Civil Fund, which providesdefined benefits to retired and disabled federal employees, need32FAQs, supra note 29.335 U.S.C. § 8438(g)(1) (2009).34Dep’t of Treasury, Report on the Operation and Status of the Government Securities InvestmentFund May 16, 2011 to August 3, 2011 (Aug. 24, 2011) (available at http://www.treasury.gov/initiatives/Documents/G%20Fund%20Letters.pdf). Report pursuant to 5 U.S.C. § 8438(h)(2009).35Id. Total suspended daily investments from May 16, 2011 – Aug. 1, 2011 equaled$137,543,151,298.36Id. Repayment pursuant to provision 5 U.S.C, § 8438(g)(3) (2009): “Upon expiration ofthe debt issuance suspension period, the Secretary of the Treasury shall immediately issue to the[G-Fund] obligations . . . as are necessary to ensure that . . . the holdings of obligations of the. . . [G-Fund] will replicate the obligations that would then be held by the [G-Fund] . . . if thesuspension of issuances . . . had not occurred.” (emphasis added).37Id. Payment pursuant to 5 U.S.C. § 8438(g)(4) (2009), which states that Treasury mustrepay interest, as if the DISP had not occurred.385 U.S.C. § 8348(g)(2) (2009): “Any issuances of obligations to the [G-Fund] which, solelyby reason of the public debt limit are not issued, shall be issued . . . as soon as such issuances canbe issued without exceeding the public debt limit.” (emphasis added).39Geithner, supra note 21. Discretionary decision pursuant to 5 U.S.C. § 8348(j)(1) (2006).