Worker savings fund keeps government running
By Eric Yoder,
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 department 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.”
He added, “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.”
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 “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 that it similarly said would not affect employees or retirees.