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APPENDIX Description of the Extraordinary Measures

Secretaries of the Treasury in both Republican and Democratic administrations have used their authority to take certain extraordinary measures in order to prevent the United States from defaulting on its obligations as Congress deliberated on increasing t he statutory debt limit. Four of these extraordinary measures are available at this tim e. The other measures that have been taken in the past are either unavailable or of limited use. The extraordinary measures currently available are: (1) suspending sales of State and Local Government Series Treasury securities; (2) determining that a “debt issuance suspension period” exists, which permits the redemption of existing, and the suspension of new, investments of the Civil Service Retirement and Disability Fund and the Postal Service Retirees Health Benefit Fund; (3) suspending reinvestment of the Gove rnment Securities Investment Fund and (4) suspending reinvestm ent of the Exchange Stabilization Fund. These measures are described in more detail below. These extraordinary measures, all of which have been employed during previous debt limit impasses, have the effect of creating or conserving headroom beneath the debt limit. These measures are limited and therefore can postpone only briefly the need for an increase in the statutory debt limit. On average, the public debt of the Unit ed States is increasing by approximately $100 billion per month (although there are significant variations from month to month). In total, the extraordinary m easures currently available free up approxim ately $200 billion in headroom under the limit, as described below.

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State and Local Government Securities

The Treasury Department has authority to suspend its issuance of State and Local Government Series Treasury securiti es (SLGS). This however, is a limit ed measure that does not create headroom under the debt limit. SLGS are special purpose Treasury securities issued to state and local government entities. In ordinary times, the Treasury Department issues SLGS to state and local governments to assist these governments in complying with Federal tax laws when they have ca sh proceeds to invest from their issuance of tax exempt bonds. When Treasury issues these securities, they count against the debt limit.

There is no statutory or other requirement for the Treasury Department to issue SLGS; they are issued in order to assist state and local governments, and Treasury may suspend SLGS sales as the debt subject to limit approaches the d ebt limit. This action does not free up headroom under the debt limit. Rather, it conserves headroom (

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