The Clinton administration is going ahead with "extraordinary actions" to avoid a historic government default.
In a letter to House Speaker Newt Gingrich, Treasury Secretary Robert Rubin said Wednesday the government "is proceeding with the three actions we will take to avoid defaulting on our obligations."Although the government reached its $4.9 trillion limit on borrowing in November, Rubin has kept it afloat by using money from federal employee retirement funds to meet obligations and depositing federal IOUs in its place.
Another $25 billion in scheduled interest payments was due Thursday, and Rubin announced earlier he would take "extraordinary actions" to make the payments. Those actions are:
- Tapping another $6.4 billion in the civil service retirement fund;
- Suspending reinvestment of $3.9 billion in Treasury securities held by the Exchange Stabilization Fund, the same fund used for the Mexican financial rescue;
- Exchanging about $8.6 billion of Federal Financing Bank assets, namely debt obligations of the U.S. Postal Service and Tennessee Valley Authority, for Treasury securities. The Federal Financing Bank provides financing services to help independent government agencies fund their day-to-day operations.
Rubin also said the postal service has agreed to prepay $800 million to the financing bank, a move that will retire Treasury securities and free up borrowing authority under the debt ceiling.
Some Republicans have criticized Rubin's book-juggling - and a few have even called for his resignation - saying he has exceeded his statutory authority.
But GOP leaders retreated from earlier threats to let the government default and told President Clinton they would raise the debt ceiling by the end of the month, when Rubin has said he would run out of maneuvering room.
Congress also passed legislation last week that allows the government to borrow $30 billion outside the debt ceiling, ensuring it can mail Social Security checks the early part of March.