Keynesians everywhere issued a collective gasp on May 16, 2011 as the United States government hit its debt limit.
In a letter to Congress, Treasury Secretary Geithner said that the government would have to stop funding some obligations because it could no longer borrow money.
Addressed to “The Honorable Harry Reid” with copies to Speaker of the House John Boehner, House Minority Leader Nancy Pelosi and Senate Minority Leader Mitch McConnell, Geithner’s letter said:
“I am writing to notify you, as required under 5 U.S.C. § 8348(l)(2), of my determination that, by reason of the statutory debt limit, I will be unable to invest fully the portion of the Civil Service Retirement and Disability Fund (“CSRDF”) not immediately required to pay beneficiaries. For purposes of this statute, I have determined that a “debt issuance suspension period” will begin today, May 16, 2011, and last until August 2, 2011, when the Department of the Treasury projects that the borrowing authority of the United States will be exhausted. During this “debt issuance suspension period,” the Treasury Department will suspend additional investments of amounts credited to, and redeem a portion of the investments held by, the CSRDF, as authorized by law.”