Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Treasury to tap pensions to help fund government
Washington Post ^ | 5/15/2011 | Zachary A. Goldfarb

Posted on 05/16/2011 8:08:46 AM PDT by Qbert

The Obama administration will begin to tap federal retiree programs to help fund operations after the government loses its ability Monday to borrow more money from the public, adding urgency to efforts in Washington to fashion a compromise over the debt.

Treasury Secretary Timothy F. Geithner has warned for months that the government would soon hit the $14.3 trillion debt ceiling — a legal limit on how much it can borrow. With the government poised to reach that limit Monday, Geithner is undertaking special measures in an effort to postpone the day when he will no longer have enough funds to pay all of the government’s bills.

Geithner, who has already suspended a program that helps state and local government manage their finances, will begin to borrow from retirement funds for federal workers. The measure won’t have an impact on retirees because the Treasury is legally required to reimburse the program.

The maneuver buys Geithner only a few months of time. If Congress does not vote by Aug. 2 to raise the debt limit, Geithner says the government is likely to default on some of its obligations, which he says would cause enormous economic harm and the suspension of government services, including the disbursal of Social Security funds.

[Snip]

Administration officials have expressed interest in raising the amount that federal employees contribute to their pensions, sources told The Washington Post.

The Republicans have suggested that the civilian workforce contribute more to its retirement in the future, effectively trimming 5 percent from salaries. The administration has not been willing to go that far in talks being led by Vice President Biden.

(Excerpt) Read more at washingtonpost.com ...


TOPICS: Front Page News; Government; News/Current Events
KEYWORDS: 401k; biden; debt; debtceiling; debtlimit; geithner; pensions; spending

1 posted on 05/16/2011 8:08:52 AM PDT by Qbert
[ Post Reply | Private Reply | View Replies]

To: Qbert
Kind of like a Social Security dejavu.
2 posted on 05/16/2011 8:11:58 AM PDT by HollyB
[ Post Reply | Private Reply | To 1 | View Replies]

To: Qbert
This'll go over well in the press. /s

Of course, Republicans will be blamed.

3 posted on 05/16/2011 8:16:01 AM PDT by newzjunkey (When does Pawlenty get blitzed like Daniels?)
[ Post Reply | Private Reply | To 1 | View Replies]

To: HollyB

http://www.johnspeedie.com/healy/Uh_Yeah.mp3


4 posted on 05/16/2011 8:17:14 AM PDT by BenLurkin (This post is not a statement of fact. It is merely a personal opinion -- or humor -- or both)
[ Post Reply | Private Reply | To 2 | View Replies]

To: Qbert

Not to worry. They’ll put in IOUs to replace the funds.

All is well in Lala Land.


5 posted on 05/16/2011 8:17:38 AM PDT by TomGuy
[ Post Reply | Private Reply | To 1 | View Replies]

To: Qbert

For every low rent brain dead Obama bot he entices into his social justice moral equivalence hell hole, a federal worker will be flipping him the bird.


6 posted on 05/16/2011 8:17:48 AM PDT by Track9 (Make War!!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Qbert

I like it. Government got us into this “Spending” problem, and they should be the FIRST to pay up.


7 posted on 05/16/2011 8:19:29 AM PDT by 4Speed
[ Post Reply | Private Reply | To 1 | View Replies]

To: Qbert
Important announcement to all you idiots from TurboTax Tim

All of that pension money is cash that will be physically withdrawn from the bank vault where it is sitting at the present time ... which means the Fed won't have to print any more money ... and Congress will not authorize replenishment of the pension funds in the event a deal is not reached ... so my boys are not stepping over the legal debt limit ... and they are not creating more inflation ... and all of this is the honest and for real absolute truth ... or my name isn't Helicopter Ben!

8 posted on 05/16/2011 8:21:36 AM PDT by Zakeet (U.S. Navy SEAL cocktail - two shots and a splash of water)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Qbert

Well, they’ve been “tapping” Social Security for 75 years.

And just about every government, at every level—municipal, county, state, and federal, has been tapping pensions, or underfunding them.

But now I suppose Boehner will cave when they all scream that it’s his fault.

Hey, Boehner, how about just pointing out that they’ve been doing this for decades, and that the problem is that Democrats and their Republican accomplices keep spending money that they don’t have?


9 posted on 05/16/2011 8:27:36 AM PDT by Cicero
[ Post Reply | Private Reply | To 1 | View Replies]

To: sickoflibs

use the cash, replace with IOUs, and ‘by law’ return the cash...ponzi is jumpin sharks again...


10 posted on 05/16/2011 8:28:17 AM PDT by Gilbo_3 (Gov is not reason; not eloquent; its force.Like fire,a dangerous servant & master. George Washington)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Qbert
The Obama administration will begin to tap federal retiree programs to help fund operations after the government loses

poetic Justice! the first thing the usurper has done that I approve of. It really is our money, money the fed stole from us to bribe their flunkies.

11 posted on 05/16/2011 8:29:08 AM PDT by FreeMaine (I wonder if barry ever adopted the two girls?)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Qbert
Treasury to tap pensions to help fund government

That's okay, government will replace the pension fund with a promise that THEY will take care of everyones retirement. /s

12 posted on 05/16/2011 8:29:28 AM PDT by EGPWS (Trust in God, question everyone else)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Qbert
....of course this is one step away from justifying tapping our retirement 401 (K)

I can see it now..........

"The government worker is making a sacrifice, time for you clingers and whiners to step up too"

BFD "Plugs" Biden

13 posted on 05/16/2011 8:31:34 AM PDT by Popman (Obama. First Marxist to turn a five year Marxist plan into a 4 year administration.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Gilbo_3
RE :"use the cash, replace with IOUs, and ‘by law’ return the cash...ponzi is jumpin sharks again..."

Right now he is trying to make the lack of ability to borrow look transparent. Public opinion is solidly against extending the debt limit, that can change fast, but right now Republicans have the upper hand politically.

14 posted on 05/16/2011 8:34:50 AM PDT by sickoflibs ("It's not the taxes, the redistribution is the federal spending=tax delayed")
[ Post Reply | Private Reply | To 10 | View Replies]

To: Qbert

So now the taxpayers are going to owe the money twice?

(1) Federal pensions are invested in T-bills—government bonds—the governemtn is already on the hook to pay this money back with interest.

(2) Now the gov. is going to borrow money from the pensions—which means they are on the hook to pay this money back a second time (again with interest I assume).

So the gov. is going to borrow money against the T-bills, or they are going to borrow the T-bills? In any case, this is just borrowing money from your left pocket, putting it in your right pocket, and pretending both pockets have money in them.


15 posted on 05/16/2011 8:35:24 AM PDT by Brookhaven (Ron Paul supports CODE PINK; CODE PINK supports Ron Paul)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Qbert
"That's as good as money sir. Those are I.O.U.s" Photobucket
16 posted on 05/16/2011 8:40:55 AM PDT by Ronald_Magnus
[ Post Reply | Private Reply | To 1 | View Replies]

To: Qbert

There are no real funds in the government pensions.

Just like there are no real funds in Social Security and MediCare.


17 posted on 05/16/2011 8:42:32 AM PDT by Grampa Dave (ILLEGAL IMMIGRATION IS DESTROYING AMERICA-LOOK AT WHAT IT DID TO THE WHITE HOUSE!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Qbert

Gov Christie goes him one better. NJ ignores paying in the government’s share of pension costs so he doesn’t have to take it out.


18 posted on 05/16/2011 8:44:22 AM PDT by ex-snook ("Above all things, truth beareth away the victory")
[ Post Reply | Private Reply | To 1 | View Replies]

To: Qbert
From the linked article: "The measure won’t have an impact on retirees because the Treasury is legally required to reimburse the program."

So, the Treasury is evidently taking existing U.S. debt, which is held by the retirement funds, and will sell that debt in order to raise cash to run the government. And, the Treasury is "legally required" to reimburse that pension fund.

The result will be that the U.S. will have exactly the same debt total due to paper obligations of the U.S., but IN ADDITION will owe reimbursement to the pension fund.

Though there is a claim that there exists a law which permits this, it is hard for me to imagine how such a transaction can be considered anything other than an increase in debt.

The Federal Reserve has been buying U.S. debt. Imagine now that the Fed gives back the debt instruments so that the U.S. can sell them a second time. The government got the dollars the first time the debt was sold to the Fed. Then the government gets the money a second time when it "redeems" the debt, taking back the paper without paying back the cash, and then sells the paper to somebody else.

Am I missing something about how all this works?

19 posted on 05/16/2011 8:47:57 AM PDT by William Tell
[ Post Reply | Private Reply | To 1 | View Replies]

To: sickoflibs

would seem that any pol that wants to, could relate this to the loomin [cough] ‘insolvency of SS/medicare’ and why all the money pissed away, everyday , needs to be cut...NOT holdin my breath fer that, but awaiting the declaration that we need to go ahead and extend the debt, to cover all the promises...even to fence jumpers and terrorist countries...


20 posted on 05/16/2011 8:52:39 AM PDT by Gilbo_3 (Gov is not reason; not eloquent; its force.Like fire,a dangerous servant & master. George Washington)
[ Post Reply | Private Reply | To 14 | View Replies]

To: Qbert

Make this a permanent feature of our budgeting process.


21 posted on 05/16/2011 8:57:07 AM PDT by Brilliant
[ Post Reply | Private Reply | To 1 | View Replies]

To: Qbert

So the Treasury can overstep congress and do this?


22 posted on 05/16/2011 9:12:09 AM PDT by hedgetrimmer
[ Post Reply | Private Reply | To 1 | View Replies]

To: Gilbo_3
RE :"would seem that any pol that wants to, could relate this to the loomin [cough] ‘insolvency of SS/medicare’ and why all the money pissed away, everyday , needs to be cut...NOT holdin my breath fer that, but awaiting the declaration that we need to go ahead and extend the debt, to cover all the promises...even to fence jumpers and terrorist countries"

How about all the money 'I paid in' ?? It's not there? I just want the bad gubmnt to pay me my entitlements, not charge the taxpayers. I thought cutting PP and ACORN would save enough money for that, no ??? :)

They symbolically repealed Obama-care, then symbolically repealed medicare.

23 posted on 05/16/2011 9:13:05 AM PDT by sickoflibs ("It's not the taxes, the redistribution is the federal spending=tax delayed")
[ Post Reply | Private Reply | To 20 | View Replies]

To: Qbert

What about the pesions of Congressmen? Will they be touched?


24 posted on 05/16/2011 9:23:08 AM PDT by 353FMG (The M1911 is mightier than the sword.)
[ Post Reply | Private Reply | To 1 | View Replies]


We wish it grew there

25 posted on 05/16/2011 9:23:16 AM PDT by TheOldLady
[ Post Reply | Private Reply | View Replies]

To: William Tell

“The result will be that the U.S. will have exactly the same debt total due to paper obligations of the U.S., but IN ADDITION will owe reimbursement to the pension fund...Am I missing something about how all this works?”

It’s government accounting- they play by different rules. (This is older, but may still be relevant):

http://www.gao.gov/new.items/d04526.pdf


26 posted on 05/16/2011 9:27:36 AM PDT by Qbert ("The best defense against usurpatory government is an assertive citizenry" - William F. Buckley, Jr.)
[ Post Reply | Private Reply | To 19 | View Replies]

To: Qbert

This article is a hoot!

First it says “The measure won’t have an impact on retirees because the Treasury is legally required to reimburse the program.” AND then immediately after it says

IF IT defaults it won’t be able to meet it’s obligations!


27 posted on 05/16/2011 9:32:21 AM PDT by proudtobeanamerican1 (A house divided against itself cannot stand.” Abraham Lincoln)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Popman
....of course this is one step away from justifying tapping our retirement 401 (K)

I think that is exactly what it is.

28 posted on 05/16/2011 9:36:15 AM PDT by ClearCase_guy (The USSR spent itself into bankruptcy and collapsed -- and aren't we on the same path now?)
[ Post Reply | Private Reply | To 13 | View Replies]

To: Qbert; All

A friend in the Army Corp of Engineers told me a couple of weeks ago that the federal government tried to do this same thing back in ‘95 or ‘96 when we had the same government budget limit issue, and he said the courts slapped the fed’s attempt down and prevented them from doing this. If that’s the case, then a legal precedent was set that I would think should hold up again this time. Thoughts?


29 posted on 05/16/2011 9:41:53 AM PDT by OB1kNOb (The stench of dependency is a sickening smell. Strive to become an asset, not a liability.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Qbert
Let's connect the dots, shall we?

First they came for the Social Security Funds and no one complained.

Then they came for the Federal Retirement Funds and no one complained.

Then they will come for the private retirement funds and no one complained because there was no one left.

Welcome to the Dark Ages people when everyone and everything belonged to either the local Laird of monastery.
take a close look at all the “privileges’ the local Laird had up to an including to the first night in the new wife's wedding bed.

It has happened before and will happen again.

30 posted on 05/16/2011 9:48:13 AM PDT by Nip (TANSTAAFL)
[ Post Reply | Private Reply | To 1 | View Replies]

To: ClearCase_guy
I think that is exactly what it is.

I have no doubt they would if they could. But I'm trying to wrap my head around the idea of how they would do it without outright rebellion

Most 401 (k) are employer run and I can't see the US government mandating them to transfer the value of the stocks, bonds to the treasury

I could see them asking companies to let the government borrow against the value, but again it would be political suicide

31 posted on 05/16/2011 9:56:51 AM PDT by Popman (Obama. First Marxist to turn a five year Marxist plan into a 4 year administration.)
[ Post Reply | Private Reply | To 28 | View Replies]

To: Popman

“Most 401 (k) are employer run and I can’t see the US government mandating them to transfer the value of the stocks, bonds to the treasury
I could see them asking companies to let the government borrow against the value, but again it would be political suicide”

I wonder if there’s anything lurking around in the FinReg law that they would attempt to use. (Nobody ever seems to talk about that monstrosity anymore).


32 posted on 05/16/2011 10:10:49 AM PDT by Qbert ("The best defense against usurpatory government is an assertive citizenry" - William F. Buckley, Jr.)
[ Post Reply | Private Reply | To 31 | View Replies]

To: Qbert

I have seen this Obama government do a lot of things I never thought I would see. Maybe it’s time to pull our money out of the 401K


33 posted on 05/16/2011 10:26:53 AM PDT by sportutegrl
[ Post Reply | Private Reply | To 32 | View Replies]

To: Popman
But I'm trying to wrap my head around the idea of how they would do it without outright rebellion

In my darkest moments, I think that is precisely what Obama will do in the end:

He won't do it to re-shape society.
He won't do it cut the deficit.
He won't do it to increase spending.
He won't do it as part of some political or electoral strategy.

On my darkest days, I think Obama will do something like that because he wants this country utterly destroyed by a revolution. We would be shoved off the world stage for years and all of the anti-Western Civilization forces which Obama loves so much would move up in the world. All he has to do is try to seize our retirement assets and then this country all falls apart.

He doesn't have to successfully grab the assets.
He doesn't have to win the war.
He doesn't have to hold on to political power.

But he would win if he destroyed us, and this is one of the ways he could do that.

34 posted on 05/16/2011 10:39:45 AM PDT by ClearCase_guy (The USSR spent itself into bankruptcy and collapsed -- and aren't we on the same path now?)
[ Post Reply | Private Reply | To 31 | View Replies]

To: OB1kNOb

read this discussion (dating from 2006) and you will be wiser than your friend

http://www.tsptalk.com/mb/showthread.php?t=2664

However, what happened in the past, under a different Congress and a different presdient....is not guaranteed to happen again under the lawless arrogant contemptuous fobs now running the USA into the ground. These effete foreign- raised snobs like obama and geither would love to remake America because they currently hate Americans


35 posted on 05/16/2011 10:54:06 AM PDT by silverleaf (All that is necessary for evil to succeed, is that good men do nothing)
[ Post Reply | Private Reply | To 29 | View Replies]

To: Qbert

The bailout was temporary, now this.....delay tactics until the real planned pillage of Vampire-Care begins.


36 posted on 05/16/2011 10:55:12 AM PDT by Varsity Flight
[ Post Reply | Private Reply | To 1 | View Replies]

To: Qbert

So now the Feds own base can feel the pain, of having Obama and his inept Cabal of Czars taking the money from them.
Maybe the Dems will begin to see the Implosion coming, from Obama’s Mismanagement of the US economy.


37 posted on 05/16/2011 11:39:07 AM PDT by OPS4 (Ops4 God Bless America!Jesus is Lord!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Track9
For every low rent brain dead Obama bot he entices into his social justice moral equivalence hell hole, a federal worker will be flipping him the bird.

This is assuming the federal worker is smart enough to know who to blame...

More than likely "the rich" will be blamed...

38 posted on 05/16/2011 1:12:51 PM PDT by CommieCutter (Promote Liberal Extinction: Support gay marriage and abortion!)
[ Post Reply | Private Reply | To 6 | View Replies]

To: Popman
I have no doubt they would if they could. But I'm trying to wrap my head around the idea of how they would do it without outright rebellion Most 401 (k) are employer run and I can't see the US government mandating them to transfer the value of the stocks, bonds to the treasury

It will be really simple and people will laud them for it. They will "protect" private retirement by requiring all qualified plans to be invested (say 25% or 50%) in "safe" treasuries. Nobody will ever have to worry about losing their retirement to "evil" financial institutions.

39 posted on 05/16/2011 1:26:04 PM PDT by Tucsonican
[ Post Reply | Private Reply | To 31 | View Replies]

To: TomGuy

IOU’s to replace the IOU’s that are in those retirement funds instead of the cash they already stole.


40 posted on 05/16/2011 1:43:36 PM PDT by itsahoot (We make jokes, they make progress. Dimmitude, get used to it.)
[ Post Reply | Private Reply | To 5 | View Replies]

To: hedgetrimmer

Yes they can ignore Congress, who do you see standing in their way?

Just wait 401k’s are next, if he can find any that still have money in them.


41 posted on 05/16/2011 1:49:46 PM PDT by itsahoot (We make jokes, they make progress. Dimmitude, get used to it.)
[ Post Reply | Private Reply | To 22 | View Replies]

To: Tucsonican
When Bush wanted to let young people put part of their SS into the market liberals went ape-chit

Now I'm sure dems would jump at the chance to rob our 401 K out from under our noses

Damn hypocrites

42 posted on 05/16/2011 2:07:27 PM PDT by Popman (Obama. First Marxist to turn a five year Marxist plan into a 4 year administration.)
[ Post Reply | Private Reply | To 39 | View Replies]

To: Popman
When Bush wanted to let young people put part of their SS into the market liberals went ape-chit Now I'm sure dems would jump at the chance to rob our 401 K out from under our noses

That's exactly right...and the crash in early 2009 scared a whole bunch of folks right into this trap. I have no problem with people investing in treasuries if that's what they want to do but when they are forced to do so we're at a whole different place.

43 posted on 05/16/2011 2:18:12 PM PDT by Tucsonican
[ Post Reply | Private Reply | To 42 | View Replies]

To: Qbert

I can’t believe how little this thread has gotten notice.

BUMPS!!!!!


44 posted on 05/16/2011 2:30:48 PM PDT by TruthConquers (.Delendae sunt publicae scholae)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Qbert
Not to worry. The money will be "paid back with interest" and the entire transaction is as "sound as a Dollar!"...

What could possibly go wrong?

45 posted on 05/16/2011 3:52:47 PM PDT by Gritty (Obama offers a Latin-American future; a corrupt governing class ruling a dysfunctional morass-MSteyn)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Qbert

Darn good question


46 posted on 05/16/2011 6:06:44 PM PDT by Popman (Obama. First Marxist to turn a five year Marxist plan into a 4 year administration.)
[ Post Reply | Private Reply | To 32 | View Replies]

To: Qbert

I think it’s funny that mostly liberal government employees’ “wealth” is be redistributed.


47 posted on 05/16/2011 8:17:54 PM PDT by Terry Mross (Only a SECOND party will get my vote.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Qbert
Question to anyone with financial knowledge....

My husband is 52, 7 and 1/2 years away from withdrawing his money from his plan without penalty. (and yes, this is his money, contributed by him with no federal matching).

Do we bite the bullet and take the 33% penalty? Do we leave it there and trust that it will be there in 7 years?

Or go see a financial advisor and figure it out with them?

48 posted on 05/17/2011 11:20:52 AM PDT by SoftballMominVA
[ Post Reply | Private Reply | To 1 | View Replies]

To: SoftballMominVA

I’m thinking about going ahead and taking my Virginia retirement....at a reduced benefit just so I actually see some of the money. I miss you guys at MMS, but I’m so very happy in WVa....no CM!


49 posted on 05/18/2011 6:11:03 PM PDT by chalkfarmer
[ Post Reply | Private Reply | To 48 | View Replies]

To: SoftballMominVA

This is just one opinion, but if you’re worried that the federal government will default, don’t. The federal government will always print the money, though it may be depreciated. I can’t say the same for state and local pensions. I suspect withing the next decade you’ll see many state/local pensioners take mild to significant haircuts in payouts


50 posted on 06/04/2011 6:04:02 AM PDT by MSF BU (YR'S Please Support our troops: JOIN THEM!)
[ Post Reply | Private Reply | To 48 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson