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 ...
Of course, Republicans will be blamed.
Not to worry. They’ll put in IOUs to replace the funds.
All is well in Lala Land.
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.
I like it. Government got us into this “Spending” problem, and they should be the FIRST to pay up.
All of that pension money is cash that will be physically withdrawn from the bank vault where it is sitting at the present time ...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!
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?
use the cash, replace with IOUs, and ‘by law’ return the cash...ponzi is jumpin sharks again...
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.
That's okay, government will replace the pension fund with a promise that THEY will take care of everyones retirement. /s
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
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.
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.
There are no real funds in the government pensions.
Just like there are no real funds in Social Security and MediCare.
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.
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?
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...
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.