Retirement Fund Tapped to Avoid National Debt Limit
Wednesday, March 8, 2006
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.
The civil service trust fund will provide the Treasury with
several billion dollars for extra borrowing. The fund had
an estimated balance of about $655 billion at the start of
the year, but only a small portion of that is available to
the Treasury because of the statutes restricting the fund's
use during "debt issuance suspension" periods. The G Fund
has assets of about $65.3 billion, and all are available for
The Treasury has leaned on federal employee retirement funds
in past years when officials worried about a possible
default on the national debt, and most federal employees
take it in stride. Still, many employees object to the
financial maneuvers, arguing that they amount to a raid on
their personal accounts.
Colleen M. Kelley
, president of the National Treasury Employees Union, said
last month that federal employees should not have their
pension accounts "used as a rainy day fund. . . . No
private-sector employer would ever be allowed to do this."
Snow wrote to Congress that his maneuvers will buy time
until mid-March and urged lawmakers "to pass a debt limit
increase immediately." He said the Treasury "has now taken
all prudent and legal actions to avoid reaching the
statutory debt limit."
Stephen Barr's e-mail address firstname.lastname@example.org.