Treasury to tap pensions to help fund government

Washington Post ^ | 5/15/2011 | Zachary A. Goldfarb

[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.

[itsahoot]

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.

[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

Damn hypocrites

[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

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.

[TruthConquers]

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

BUMPS!!!!!

[Gritty]

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?

[Popman]

Darn good question

[Terry Mross]

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

[SoftballMominVA]

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?

[chalkfarmer]

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!

[MSF BU]

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