Overdrawn Fed Govt Dips into Pension Funds to Pay Bills
January 17th, 2013
Don’t worry, folks! We can stay below the national debt limit! We’ll just take it from the pension funds!!!!
Phew. Emergency averted.
The federal employees surely won’t mind helping out the government as their investments are involuntarily “borrowed”.
Treasury Secretary Timothy Geithner wrote a letterÂ to bipartisan Congressional leaders stating that heÂ “will be unable to invest fully” the federal employees retirement system fund.
I am writing to notify you, as required under 5 U.S.C. Â§ 8348(l)(2), of my determination that, byÂ reason of the Â statutory debt limit, I will be unable to invest fully the portion of the Civil ServiceÂ Retirement and Disability Fund (âCSRDFâ) not immediately required to pay beneficiaries. ForÂ purposes of this statute, I have determined that a âdebt issuance suspension periodâ will beginÂ today, May 16, 2011, and last until August 2, 2011, when the Department of the TreasuryÂ projects that the borrowing authority of the United States will be exhausted. During this âdebtÂ issuance suspension period,â the Treasury Department will suspend additional investments ofÂ amounts credited to, and redeem a portion of the investments held by, the CSRDF, as authorizedÂ by law.
In addition, I am notifying you, as required under 5 U.S.C. Â§ 8438(h)(2), of my determination that, by reason of the statutory debt limit, I will be unable to invest fully the Government Securities Investment Fund (âG Fundâ) of the Federal Employeesâ Retirement System in interest-bearing securities of the United States, beginning today, May 16, 2011. The statute governing G Fund investments expressly authorizes the Secretary of the Treasury to suspend investment of the G Fund to avoid breaching the statutory debt limit.
Each of these actions has been taken in the past by my predecessors during previous debt limitÂ impasses. By law, the CSRDF and G Funds will be made whole once the debt limit is increased.Â Federal retirees and employees will be unaffected by these actions.
I have written to Congress on previous occasions regarding the importance of timely action toÂ increase the debt limit in order to protect the full faith and credit of the United States and avoid catastrophic economic consequences for citizens. I again urge Congress to act to increase theÂ statutory debt limit as soon as possible.
Timothy F. Geithner
The fund Geithner is dipping into to pay the bills is called the G fund. This is the pension fund for federal employees. Without “other people’s money” the US Federal Government cannot pay its bills without breaching the much-touted “debt ceiling”. This frees upÂ Â free up $156 billion in borrowing authority while the debt limit debates lumber on Â in Congress.
The funds affected areÂ Â CivilÂ Service Retirement and Disability Fund and treasury securities held as investments by the Government Securities InvestmentÂ Fund of the Federal Employeesâ Retirement System Thrift Savings Plan.
But those with funds being tapped shouldn’t worry. A soothing letter has been issued to them byÂ TSP Executive Director Greg Long.
As we await legislation on raising the Federal debt limit, I would like to address your concerns about the possible suspension of issued securities to the Government Securities Investment (G) Fund. In the event that the U.S. Government reaches the statutory Federal debt limit, the Federal Government may temporarily be unable to issue new securities to the G Fund because to do so would exceed the present debt limit. However, G Fund investors are always fully protected and G Fund earnings are fully guaranteed by the Federal Government due to statutory protections in the Thrift Savings Plan Investment Act of 1987. This protection, known as the âmake-wholeâ provision, will work to ensure that G Fund investors are completely unaffected by the limitation on securities issued by the U.S. Treasury. G Fund account balances will continue to accrue earnings and be updated each business day, and loans and withdrawals will be unaffected.
The Government Accountability Office has published a report which explains the full protection provided to G Fund investors when the U.S. Government reaches the statutory Federal debt limit. The report can be found here: http://www.gao.gov/products/GAO-12-701
If you have any additional questions, please call the toll-free ThriftLine at 1-877-968-3778 and speak to a Participant Service Representative.
Greg T. Long
You can learn more about the practice of using personal pension money to fund the overdrawn governmentÂ HERE.
Federal employees have seen their investments plunderedÂ 6 times over the past 20 years. This precedent should not set their minds at ease, as the debt ceiling has been raised numerous times since then, so that the amount in the red is ever increasing.
Will this be the time that the money is not replaced?
Delivered by The Daily Sheeple
Contributed by Kimberly Paxton of www.TheDailySheeple.com.
Kimberly Paxton, a staff writer for The Daily Sheeple, is based out of upstate New York. You can follow Kimberly on Facebook and Twitter.
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