|Retirement Fund Tapped to Avoid National Debt Limit
By Stephen Barr
Wednesday, March 8, 2006; D04
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
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 Treasury's use.
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."