The US administration has temporarily halted payments to the retirement and federal pension accounts of workers after the government hit its debt limit.
The American administration has also begun to dip into federal worker pension funds after reaching the United States' $14.3 trillion debt ceiling on Monday.
The latest development prompted the government to start borrowing from pensioners, Treasury Secretary Timothy Geithner informed US Congress, DPA reported.
Geithner sent a letter to Senate Majority Leader Harry Reid, warning that the government can move money around for about 11 weeks but if a new debt ceiling is not agreed to by August 2, the US government could effectively default on its obligations to its creditors.
He also warned of “catastrophic economic consequences for citizens.”
"We're trying to figure out what to do about the budget. The situation creates an urgency to do something to the budget in order to get that debt ceiling increased. Government pensions or agriculture will probably see a lot of changes, to make us able to lift that debt ceiling," said Maya McGuineas, the head of the Committee for a Responsible Federal Budget.
US President Barack Obama has warned of a double dip recession if his administration is not allowed to keep borrowing, but a Gallup public opinion poll indicates that nearly half of those polled oppose raising the national debt ceiling.
The new poll shows 47% of Americans do not want the debt ceiling raised.
If Congress fails to raise the debt ceiling by August 2, it would force the administration to choose between paying creditors or paying for military operations, social security and Medicare payments, and other commitments.