Retirement Fund Tapped to Avoid National Debt Limit

The Treasury Department has started drawing from the civil service pension fund to avoid hitting the $8.2 trillion national debt limit. The move to tap the pension fund follows last month's decision to suspend investments in a retirement savings plan held by government employees.

In a letter to Congress this week, Treasury Secretary John W. Snow said he would rely on the Civil Service Retirement and Disability Fund to avoid bumping up against the statutory debt limit. He said the Treasury is suspending investments and will redeem a portion of the money credited to the fund.

Once Congress raises the debt limit, the Treasury will "restore all due interest and principal" to the pension fund as soon as possible, Snow said. He made a similar promise when the Treasury announced that reinvestment of some assets in the Thrift Savings Plan's government securities fund, or G Fund, had been suspended.

Source: The Washington Post

 

Flashback: Here is a post from my blog in 2004

Wednesday, November 17, 2004
Senate OKs $800B Debt Limit Hike

A divided Senate approved an $800 billion increase in the federal debt limit Wednesday, a major boost in borrowing that Sen. John Kerry and other Democrats blamed on the fiscal policies of President Bush.

The mostly party line, 52-44 vote was expected to be followed by House passage Thursday. Enactment would raise the government's borrowing limit to $8.18 trillion - $2.23 trillion higher than when Bush became president in 2001, and more than eight times the debt President Reagan faced when he took office in 1981.

Souce: Associated Press

This means the government's borrowing limit is now $8,180,000,000,000.00!

That's allot of zeros!!

The interest expense on the National Debt is the third largest expense in the federal budget. Only Defense and income redistribution are higher. Just for the month of October the federal government has spent $13,735,391,456.62 of the taxpayers money just on the interest for the National Debt.

In FY03 the U. S. Government spent $318 Billion of your money on interest payments to the holders of the National Debt. In FY04 the amount was $322 Billion. Compare that to NASA at $15 Billion, Education at $61 Billion, and Department of Transportation at $56 Billion.

Source: National Debt Awareness Campaign

Link: http://jgrubbs.blogspot.com/2004/11/senate-oks-800b-debt-limit-hike.html

 

In Fiscal Year 2005, the U. S. Government spent $352 Billion of your money on interest payments* to the holders of the National Debt. Compare that to NASA at $15 Billion, Education at $61 Billion, and Department of Transportation at $56 Billion. For the current FY06, we've already spent $174 billion on interest payments!

Source: The National Debt Awareness Center

Treasury Secretary John Snow said in a recent letter to Congress, warning that unless the current $8.2 trillion debt ceiling is raised by mid-March, "we will be unable to continue to finance government operations."

<snip>

Snow said that while the debt limit "will be reached in mid-February 2006," he could delay default for a month using "available prudent and legal actions."

These actions, MacGuineas said, would include putting IOUs instead of cash into federal retirement accounts -- a tactic that Clinton administration Treasury Secretary Robert Rubin first employed in 1996, when Republican lawmakers balked at raising a debt ceiling then at $4.9 trillion.

Back then, some lawmakers in the Republican-controlled House of Representatives called for Rubin's impeachment, saying his action usurped the powers of Congress. But in 2002, when the Bush administration was about to hit the $5.95 trillion debt limit it inherited from President Bill Clinton, then-Treasury Secretary Paul O'Neill employed Rubin's tactic to buy time until Congress raised the debt ceiling to $6.4 trillion in June.

Alas, that limit lasted just 11 months. In May 2003, Congress authorized borrowing of $7.4 trillion. In November 2004, lawmakers upped the credit ante to $8.184 trillion. Now, Snow says the limit must be raised yet again to protect "the 'full faith and credit' of the United States."

Source: San Francisco Chronicle

 

Snow warns Congress: US government's cash running out

Treasury Secretary John Snow urged Congress to set aside partisan bickering and raise the US national debt ceiling this week, or face a disastrous cash crunch for the federal government.

In a speech here to a conference of regional bankers, Snow said it would be inconceivable for Congress not to pass legislation on the debt limit before it heads into a recess at the end of this week.

"I am urging members of Congress in the strongest possible terms to resist coupling an increase in the debt ceiling with other issues," Snow said.

"Rather, they should vote to raise the ceiling this week. It would be unthinkable for them not to take action," he said, warning that the "full faith and credit" of the US government was too precious to be compromised.

Snow has issued increasingly urgent warnings to Congress that the statutory debt limit of 8.184 trillion dollars will be hit this week, and that the government will then lose its borrowing power.

Once the US government reaches the ceiling, it comes under threat of defaulting on its debts and can lose the ability to raise future credit on the capital markets.

Source: Breitbart.com