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Odysseus
05-17-2011, 12:05 PM
By Zachary A. Goldfarb, Published: May 15 | Updated: Monday, May 16, 12:56 PM
http://www.washingtonpost.com/business/economy/treasury-to-tap-pensions-to-help-fund-government/2011/05/15/AF2fqK4G_story.html?hpid=z1

The Obama administration will begin to tap federal retiree programs to help fund operations after the government lost 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 that limit reached 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.

Many congressional Republicans, however, have been skeptical that breaching the Aug. 2 deadline would be as catastrophic as Geithner suggests. What’s more, Republican leaders are insisting that Congress cut spending by as much as the Obama administration wants to raise the debt limit, without any new taxes. Obama is proposing spending cuts and tax increases to rein in the debt.

“Everything should be on the table, except raising taxes,” House Speaker John Boehner (R-Ohio) said on CBS’s “Face the Nation.” “Because raising taxes will hurt our economy and hurt our ability to create jobs in our country.”

The Obama administration has warned that it is dangerous to make a vote on raising the debt limit contingent on other proposals. But Boehner is demanding that Congress use the debt vote as a way to bring down government spending.

“I’m ready to cut the deal today,” Boehner said. “We don’t have to wait until the 11th hour. But I am not going to walk away from this moment. We have a moment, a window of opportunity to act, because if we don’t act, the markets are going to act for us.”

Geithner’s plan to tap federal retiree programs as a temporary means to avoid a government default comes as the Obama administration has shown growing interest in altering those programs to curb the debt in the long run.

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.

Treasury secretaries have tapped special programs to avoid default six times since 1985. The most protracted delay in raising the debt limit came in 1995 after congressional Republicans swept to power during the Clinton administration.

But today, the government needs far more money to cover its obligations than in the past, making the special measures less effective than they used to be. The government needs about $125 billion more a month than it takes in each month.

In a letter released last week to Sen. Michael Bennet (D-Colo.), Geithner wrote that a default would risk a “double-dip” recession.

“Default would not only increase borrowing costs for the federal government, but also for families, businesses and local governments — reducing investment and job creation throughout the economy,” Geithner wrote.

But several prominent congressional Republicans have dismissed the Obama administration’s assertion that the country would face dire consequences if Congress does not vote to raise the federal limit on government borrowing by August. Many of the skeptics are affiliated with the tea party.

In the Senate, freshman Sen. Pat Toomey (R-Pa.) has said the Obama administration has been exaggerating the effects of hitting the default mark. He says breaching the limit would cause only a partial government shutdown.

Other freshman Republicans have said that Geithner could raise money to avoid defaulting by selling investments in private companies. The Republican Study Committee, which represents more than 150 lawmakers, sent a letter to Geithner last week pressing for more details about the Aug. 2 deadline.
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In the private sector, CEOs go to jail for using pension funds for operating expenses. Federal law also bars using funds appropriated for one purpose, such as pensions, for another purpose, such as general operating expenses. The term for this is misappropriation of funds, and it's a felony. Congress needs to put the brakes on this immediately and inform Obama that his Treasury Secretary is embarking on an impeachable offense.

fettpett
05-17-2011, 06:46 PM
taking a note from the Irish...

Rockntractor
05-17-2011, 07:12 PM
The law is merely a speed bump.

pyackog
05-17-2011, 07:59 PM
And we still haven't slowed spending. :rolleyes:

noonwitch
05-18-2011, 12:54 PM
Denny McClain served time for raiding the pension funds at a company he owned. But he profited personally from his actions, which is why he served time and didn't pay a fine.


He got convicted again of a similar crime, and may still be serving time. Incidentally, he was Nixon's favorite pitcher, a Tiger on the 1968 championship team.

lacarnut
05-18-2011, 01:01 PM
This is an absolutely incredible story.

I think it's highly illustrative of the mentality of so many people. Consider, if you will, the premise we've all heard that "tax cuts cost the government money."

If we follow this premise, is it unreasonable to say that everything you net also costs the government money?

So if we follow this to its logical conclusion, can we say that everything in your bank account is simply on-loan from the government? So when the government comes after your retirement, they're really just "borrowing" their own money back?

All I can say to this is that if they can do it in the public sector, they can do it in the private. Everyone will be bemoaning the unfairness of average workers being forced to do their part to get us out of debt while the million-dollar retirement accounts of "the rich" don't get touched.

Raping and pillaging private retirement accounts has already been floated by liberal politicians. There are trillions in those accounts and the government want to take (force) you to take a portion and invest it in gov. securities. The gov. is broke so those securities will not be a good investment in comparison to the interest you are getting now.

Odysseus
05-18-2011, 01:53 PM
Raping and pillaging private retirement accounts has already been floated by liberal politicians. There are trillions in those accounts and the government want to take (force) you to take a portion and invest it in gov. securities. The gov. is broke so those securities will not be a good investment in comparison to the interest you are getting now.

And people wonder why there's a Second Amendment. :rolleyes:

enslaved1
05-18-2011, 04:27 PM
How about they start by tapping Congress and Obama's pension?

Odysseus
05-19-2011, 10:49 AM
How about they start by tapping Congress and Obama's pension?

They might do that, but it wouldn't matter. Congressional and presidential pensions are such a small part of the budget that they would have no problem fulfilling those commitments, even after the rest of the pension funds are empty. It's just like Obama kicking the creditors out of line during the GM restructuring. The unions had no business getting preference over the bondholders, but that was a sop to politics. Somewhere down the line, they'll announce that the various federal pension funds are in default, except for the congressional and presidential funds, which they will suddenly find funding for.

CueSi
05-19-2011, 06:03 PM
So I'm assuming this is your pension they're taking.

~QC

Odysseus
05-19-2011, 08:37 PM
So I'm assuming this is your pension they're taking.

~QC

Possibly. I suspect that they will start with the civilian system, as taking military pensions would be asking for a massive outcry, but then again, this is the administration that floated the idea of having us pay for our own medical treatments for combat injuries, so nothing that they do would surprise me. I guess I'll find out the hard way.

NJCardFan
05-19-2011, 08:42 PM
Denny McClain served time for raiding the pension funds at a company he owned. But he profited personally from his actions, which is why he served time and didn't pay a fine.


He got convicted again of a similar crime, and may still be serving time. Incidentally, he was Nixon's favorite pitcher, a Tiger on the 1968 championship team.

And he was the last pitcher to win 30 games in a season.

CueSi
05-19-2011, 09:46 PM
Possibly. I suspect that they will start with the civilian system, as taking military pensions would be asking for a massive outcry, but then again, this is the administration that floated the idea of having us pay for our own medical treatments for combat injuries, so nothing that they do would surprise me. I guess I'll find out the hard way.

And that's why we play the game?

~QC