The Treasury Department on Tuesday used a financial maneuver involving the Thrift Savings Plan to free up money to keep the government operating pending an increase in the federal debt ceiling.
In a letter to Congress, Treasury Secretary Timothy F. Geithner said that his department has stopped issuing the special securities that make up the Thrift Savings Plan’s government securities fund, or G Fund. The Treasury earlier had said it might use the maneuver, as it has done numerous times in similar situations.
“The statute governing G Fund investments expressly authorized the Secretary of the Treasury to suspend investment of the G Fund to avoid breaching the statutory debt limit,” Geithner wrote. “Both my predecessors and I have taken this action during previous debt limit impasses.”
“By law, the G Fund will be made whole once the debt limit is increased. Federal retirees and employees will be unaffected by this action,” he wrote.
Last week, the 401(k)-style program for federal employees and military personnel made similar points in a message to participants as it prepared for the so-called “disinvestment” to occur. TSP spokeswoman Kim Weaver said that the message will be updated in light of Tuesday’s action but that its essence will remain unchanged.
The G Fund, available only through the TSP program, held about $142 billion of the $330 billion on investment with the TSP as of last month.
The other TSP funds, consisting of stock index funds, a bond index fund and target-date funds that mix investments in those other funds, are not affected.
The Treasury earlier used a separate maneuver involving the civil service retirement fund which it similarly said would have no impact on employees or retirees.