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The government could temporarily tap tens of billions of dollars from two federal employee retirement programs if Congress fails to raise the federal debt ceiling next month, Treasury Secretary Timothy Geithner told lawmakers.
The government expects to hit a $14.3 trillion debt ceiling on May 16 or before, Geithner said in a Monday letter.
Geither implored Congress to extend the debt ceiling by that deadline and said that if Congress does not, Treasury will be forced to borrow money from the Civil Service Retirement and Disability Fund, and the Thrift Savings Plan's Government Securities Investment Fund, or G Fund, both of which are invested in U.S. Treasury securities. Those two moves could free up $142 billion through early July.
The government has taken similar steps before with no effect upon federal retirees. If the debt ceiling is extended by Congress within a couple months of the deadline, retirees and TSP participants should have nothing to worry about, several experts said. By law, both funds have to be repaid with interest, said Susan Irving, director for federal budget analysis at the Government Accountability Office.
"I would anticipate no impact," echoed Dan Adcock, legislative director for the National Active and Retired Federal Employees Association.
Geithner said borrowing money from the federal retirement programs and other "extraordinary measures" available to the government would stave off the need to raise the debt ceiling until around July 8. Once those measures are exhausted, the government "will be limited in its ability to make payments across the government," Geithner said.
In that case, retirees' pensions could be affected. Adcock said that, if that were to happen, any impact on retirement payouts would be "the least of their problems because we'll face a worldwide economic collapse.
"I think people would understand what's at stake and cooler heads would prevail," Adcock added.
Hmm a Washington insider stating that the possibilty actually does exist, now thats a switch!
The government expects to hit a $14.3 trillion debt ceiling on May 16 or before, Geithner said in a Monday letter.
Geither implored Congress to extend the debt ceiling by that deadline and said that if Congress does not, Treasury will be forced to borrow money from the Civil Service Retirement and Disability Fund, and the Thrift Savings Plan's Government Securities Investment Fund, or G Fund, both of which are invested in U.S. Treasury securities. Those two moves could free up $142 billion through early July.
The government has taken similar steps before with no effect upon federal retirees. If the debt ceiling is extended by Congress within a couple months of the deadline, retirees and TSP participants should have nothing to worry about, several experts said. By law, both funds have to be repaid with interest, said Susan Irving, director for federal budget analysis at the Government Accountability Office.
"I would anticipate no impact," echoed Dan Adcock, legislative director for the National Active and Retired Federal Employees Association.
Geithner said borrowing money from the federal retirement programs and other "extraordinary measures" available to the government would stave off the need to raise the debt ceiling until around July 8. Once those measures are exhausted, the government "will be limited in its ability to make payments across the government," Geithner said.
In that case, retirees' pensions could be affected. Adcock said that, if that were to happen, any impact on retirement payouts would be "the least of their problems because we'll face a worldwide economic collapse.
"I think people would understand what's at stake and cooler heads would prevail," Adcock added.
Hmm a Washington insider stating that the possibilty actually does exist, now thats a switch!
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