Despite the talk of the debt limit as something that may strike in the future, we actually already hit the debt ceiling around New Year’s Eve. The only reason that wasn’t big news is that by now we’re accustomed to the Treasury engaging in some accounting gimmicks as a workaround. Today, for example, the Treasury Department announced that they’re suspending contributions to the G Fund entity of the Thrift Savings Plan for federal employees.
The idea of the G Fund is to provide the TSP with a risk-free option that “invests exclusively in a nonmarketable short-term U.S. Treasury security that is specially issued to the TSP” and has interest as its income. This is, in economic terms, a slightly weird idea since it’s really just shuffling money from one government account to another for no particular reason. So back during the Robert Rubin era, the Treasury Department determined that it could just stop making payments temporarily to squeeze out some extra financing authority. And so they have.