As US Hits Debt Limit, Treasury Taps Fed Pensions
Move staves off default until Aug. 2
By Matt Cantor, Newser User
Posted May 16, 2011 3:41 PM CDT
Treasury Secretary Timothy Geithner is shown Monday, May 9, 2011 at the Treasury Department in Washington.   (AP Photo/Jacquelyn Martin)

(Newser) – Washington hit the debt ceiling today, barring the Treasury Department from borrowing from the public, so it will begin borrowing from federal workers’ pensions to keep the government afloat. Treasury is legally bound to reimburse the pensions, so retirees won't be affected, notes the Washington Post, but if the debt ceiling isn’t raised by Aug. 2, secretary Timothy Geithner warned again today that the US will hit default.

Republicans, however, aren't buying Dems' dire predictions, and the Wall Street Journal notes that a deal is likely far off, though both sides appear to want to avoid coming down to the wire. “There will be no debt-limit increase without serious budget reforms and significant spending cuts that are greater than any increase in the debt limit,” John Boehner said today, Politico reports. Consensus on where cuts might focus remains vague, but federal pension reform is said to be among items on the chopping block. Since 1985, the government has borrowed from special programs six times to prevent default—but this time, it needs much more money.

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Showing 3 of 8 comments
Veritas
May 17, 2011 8:24 AM CDT
The American Dream is now an American Nightmare..States like Illinois do n't fund their pensioms while the workers do..the state cuts future pensions even though the State Constitution says they can't..the fed's take from the pensions and say they'll replace the $$$..just the beginning..The FEDS bail out banks..wall st..farmers..but attack the middle class sad this country
boxcar
May 16, 2011 9:26 PM CDT
GOV'T DEBT bubble POPs this Fall 2011 when 1st post war baby boomers born Fall 1946 reach 65 & Medicare is hit with MultiBillion$ claims for HIP and KNEE Replacements now waiting in wings to do. Double HIP surgery = $50,000 back in 2005, now its 25% more. Its the straw that will tip the scale into major Government DEBT DEFAULT as Congress stalls on reforming this overhanging cliff of DEBT OBLIGATIONS- Congress & American Voters don't even have a CLUE how to deal with this ISSUE
billcrawford
May 16, 2011 7:16 PM CDT
"Washington hit the debt ceiling today, barring the Treasury Department from borrowing from the public, so it will begin borrowing from federal workers’ pensions to keep the government afloat." Excellent move and for the next one cut the salaries of federal workers for those that make over $100K by 25% and those that make under $100K by 15% as they are getting paid for doing nothing or very little any way. (include the Senate, Congress and the Administration in on this, yes I know the also are federal workers to some extend and I use the term "workers" loosely, very loosely.