WASHINGTON The Treasury said on Tuesday it was temporarily tapping the retirement funds of government workers to avoid hitting the $16.4 trillion debt ceiling, adding retirees would nonetheless continue to receive benefits.
The Treasury has said it can only stave off default through such extraordinary measures until around mid-February to early March.
In a letter to U.S. House of Representatives Speaker John Boehner, Treasury Secretary Timothy Geithner said the government would stop fully investing in the Government Securities Investment Fund (G Fund).
Treasury has estimates the suspension of new investments into the measure would give it around $156 billion in additional spending capacity.
However, the letter said, the fund will be made whole once the debt limit is raised.
"Both my predecessors and I have taken this suspension action during previous debt limit impasses," Geithner wrote.
Geithner has said a failure to raise the debt limit could cause "irreparable" economic harm.
Fitch Ratings said on Tuesday the United States faces a "material risk" of losing its AAA credit rating if there is a repeat of the wrangling seen during last year's debt limit talks.
Standard & Poor's downgraded the U.S. credit rating following that debacle.
(Reporting by Pedro Nicolaci da Costa; Editing by David Gregorio)