Obama Administration Taps Into Federal Retirement Funds

Obama is playing a game of chicken with Congressional Republicans over the debt ceiling.

Last Monday, the U.S. government lost its ability to borrow more money because we maxed our debt limit. The Obama administration and the Dems want to raise that limit. House Republicans say “no way” — cut spending and reduce our $14+ trillion national debt first!

So tax cheat Treasury Secretary Timothy Geithner is dipping into federal retirement funds to keep funding government operations.

While this dipping is a temporary measure and, presumably, the borrowed money will be returned to the retirement programs, this may also be the Obama administration’s first move toward its plan to convert our 401(k)s and IRAs into annuities. That plan was floated as a trial balloon in January 2010. See my post “Obama, Hands Off My Retirement $.”

That is not far-fetched. Like hungry lions prowling for prey, the governments of five European countries — Hungary, Poland, Bulgaria, Ireland and France – have taken over their citizens’ private pension money to make up deficits and budget shortfalls. See my post on this here.

Most recently on May 10, 2011, the Irish government announced its plan for a 0.6% tax on private pensions to drive jobs growth. (H/t beloved fellow Joseph)

~Eowyn

Zachary A. Goldfarb reports for the Washington Post, May 16, 2011:

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.

Read the rest of the WaPo article here.

7 responses to “Obama Administration Taps Into Federal Retirement Funds

  1. lowtechgrannie

    Are the Public Unions okay with that? Will Michael Moore be giving another Madison-style speech to an angry AFSCME mob in D.C.?

  2. Thomas Morato

    Cut (err… slash) the budget and start an all out campaign for selling US Savings Bonds with a reasonable interest rate to raise cash instead of going to China for it.

    Remember savings bonds anyone?

  3. Could we please go back to issuing money in accordance with the Constitution? That is, without the Federal Reserve. We could get all the funds we need, interest free, from using the Constitutional formula. That system made the US the rich nation we were in the 19th Century. Only when we have had “national banks” operated by private bankers have we gone broke due to interest.

    Bonds could be a good idea, except for the fact that the Fed apparently wants to sell our treasure to the Chinese treasury.

  4. Eventually you run out of other people’s money….fools!

  5. Dennis Kolb Sr.

    Our Constitutional “Representative Republic” has been replaced by a ” Pure Democorcy” where 51% can Steal from the other 49%!……A by product of this Democracy has Allowed Our President to have the powers of a “Monarch” !.Powers That “Congress” Seems Unwilling to Address; Either by The House or The Senate?
    We No Longer Have Separtion Of Powers That Was Written Into “The Constitution”!
    WHAT HAPPEN TO “OUR REPRESENATIVE REPUBLIC” THAT IT WAS REPLACED OVER THE YEARS?………..
    POLITICAL PARTY INVOLVMENT INTO A “REPRESENTATIVE REPUBLIC” HAS LEAD TO THE GOVERNMENT THAT WE KNOW LOVE TO HATE!..BUT DON’T TAKE MY WORD ON THIS, PLEASE READ GEORGE WASHINGTON’S WARNINGS IN HIS FAREWELL ADDRESS TO THE NATION!…(Paragraphs= 20- 25)….HE GOES INTO GREAT DETAIL WHAT WOULD HAPPEN TO “OUR NATION” IF WE DIDN’T RESIST “POLITICAL PARTIES” AND THE “SPIRIT OF A PARTY” THAT COMES WITH THEM!…AND WHAT WOULD HAPPEN TO US IF THEY DID GAIN CONTROL IN GOVERNMENT!…..AND WHERE THAT “CONTROLING POWER” WOULD LEAD TO!…
    GOVERNMENT KEEPS GETTING MORE, AND MORE POWERFUL!….
    OUR ONLY HOPE TO SOPT IT IN IT’S TRACKS IS TO STOP VOTING FOR “ALL” POLITICAL PARTY CANDIDATES!……
    ONLY “NON-PARTISAN” ELECTED REPRESENTATIVES WILL TURN AROUND THE MESS THAT “POLITICAL PARTIES” HAVE CREATED FOR US!
    THEY WOULD BE LOYAL TO “ONLY” THOSE THAT SENT THEM TO CONGRESS, AND NO ONE ELSE!….NO BRIBES…NO LOYBYIST…..NO PRESSURE FROM PARTY LEADERS….NO BIG LABOR…NO BIG BUSINESS…NO MORE BIG “CONSPIRING GOVERNMENT” AGAINST US………
    THINK ABOUT IT!
    IT CAN ALL BE ATRIBUTED TO “ONE” MAIN THING!

  6. This is not anything new, the US government rob the account years ago. I put in 35 years with the US government, I earned my retirement by putting up with BS from all the people that felt the government OWED them.

  7. Pingback: Obama’s Treasury loots federal retirement accounts |

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