U.S. Treasury Secretary Timothy Geithner told Congress he would start tapping into federal pension funds on Monday to free up borrowing capacity as the nation hits the $14.294 trillion legal limit on its debt.
The U.S. Treasury will issue $72 billion in bonds and notes on Monday, pushing the nation right up against its borrowing cap at some point during the day, according to a Treasury official.
Geithner said he would suspend investments in two government retirement funds, which will give the U.S. Treasury $147 billion in additional borrowing capacity.
"I will be unable to invest fully" in the civil service retirement and disability fund and the government securities investment fund, he said in a letter to congressional leaders
Why does this surprise anyone? Up to this point, government workers have enjoyed a special privilege. All other Americans have had their retirement accounts in the Social Security system raided and replaced with IOU's, such that $0 actually still exists in these accounts. All this does is subject government worker's pensions to the same treatment. It is in fact telling that government employees have been a protected class on this dimension for so long.
I am sure these funds will be quickly replaced. No such luck for folks counting on Social Security for their retirement.