Ask The Experts: Money Matters

By Mike Miles

Treasury borrowing from pension funds

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Q: According to two articles in the Federal Times, the U.S. Treasury is now borrowing tens of billions of dollars from the CSRS and TSP to cover government obligations until the debt ceiling is raised.  The article indicated that retirees would have nothing to worry about If the debt ceiling is raised. I’m planning to retire at the end of this month. After reading these two articles, I am concerned that if the debt ceiling is not raised (and according to many political pundits, this may be a real possibility given the political climate in Washington), there would be no funds available to replenish the CSRS and I would not receive my annuity on time or at all. If the debt ceiling is not raised or the financial world decides that U.S. Government securities are a bad risk and pull their money out and the value drops drastically, causing a financial crisis in the U.S., whom do you think the government will decide not to pay first, retirees or the federal workforce? Right now, based on other information I’ve read, I’m thinking that the government would decide that it would be more disruptive to the economy to not pay the federal workforce than not to pay retirees.  Therefore, if I retire now, I may not have an income in August or September, whereas if I stay in the workforce I may have better odds.  I know this seems like radical stuff, but I believe as many pundits do that we are in unprecedented times.

A: Your question is bait and I’m not going to bite. I have one for you: Do you really believe that if the debt ceiling isn’t raised, you won’t receive a retirement check as the result? I don’t think that’s the inevitable, or even a likely consequence.

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Comments

  1. Kathleen M. Says:
    July 17th, 2011 at 4:14 am

    The fact that the federal government is borrowing billions of dollars from these pension funds IS a cause of concern, especially to the pensioners. To think otherwise is ludicrous given the fact the federal government is spending money they don’t have!

  2. Kathleen M. Says:
    July 25th, 2011 at 5:54 am

    Why would his question be bait? I think it is a perfectly plausible scenario he has presented.