It's not the first time, but still.
From AP (1/15/2013):
US taps pension fund to avoid passing debt limit
Geithner says gov't will borrow from federal employee pension fund to avoid passing debt limit
WASHINGTON (AP) -- Treasury Secretary Timothy Geithner says the government has begun borrowing from the federal employee pension fund to keep operating without surpassing its debt limit.
Geithner says in a letter to congressional leaders that the move will free up $156 billion in borrowing authority while Congress debates increasing the $16.4 trillion debt limit.
The government reached its borrowing limit on Dec. 31, but began using bookkeeping maneuvers to keep from surpassing it. Geithner has told congressional leaders that Treasury expects to exhaust those measures by mid-February to early March.
The latest action has been taken by other Treasury secretaries and will not put in jeopardy any monthly pension payments. Geithner said he will replace the funds removed from the pension account after the borrowing limit is raised.
Banana Republic. Or Banana Empire/Kingdom. The mighty administration simply sends letters to the representatives of the citizens, informing them of what the administration has already done, after the fact.
Timmy "Turbo-tax" Geithner will be out by the end of January anyway.
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6 comments:
I'm not sure what's more amazing – that what is stated in that article actually took place, or that anybody could read or write that with a straight face. To not point out the evil and insanity of it all, is it rubber stamp it.
Am I mistaken or some thing similar happened with GM, whereby workers pensions were used to resurrect the company?
Beppe
@ beppe
a number of companies actually did survive, beeing taken over by their own workers. Although it never made a strong money-making corporation, of course.
Otherwise, I do not know. No reliable crystal ball around. Another good trick - or the decay of tha American Empire, I could not guess.
@7:48 when a company goes bankrupt its employees are among the first creditors being paid when disposing of the remaining assests (after the tax office and the lawyer handling the bankruptcy). Suppliers, clients, bondholders and stockholders come last.
However, if you split GM into bad GM and good GM, leave the the workers pension obligations with the bakrupt old GM and attach the valuable assets to good GM you can have pensioneers paying for the bankruptcy, rather than creditor banks (bondholders), and Guzzling Motors can go back to yield profit for the shareholders in a year or two.
At least, this is my understanding of what happened (and the same goes for other cases, JAL for example). Banana Empire rules the waves.
So it looks like "Fiscal Cliff II" and the looming "Debt Ceiling" will coalesce into a perfect financial storm around the same time. How far off is total collapse can the house of cards take two more card the size of phonebooks? I hate to say it but the government probably welcomed the recent school shooting as a great diversion from talking about the coming recession/depression. Now they can argue over something "less divisive" like gun control. The most they can do is kick the can down the road there is no way to cut/tax our way out of the situation in the short term. If they decide it's time to pay the piper then a good portion of the world will feel the effects. With the current financial condition of most of the planet I just can't see how we won't have a major monetary meltdown.
@Beppe
GM used its own stock to prop up their underfunded pension plan back in the mid 90's but they had to get permission from the Labor Dept. in the form of a waiver.
http://www.highbeam.com/doc/1P2-825072.html
GM recently offered a lump sum buyout to some of its pensioners and intends to buy a group annuity to offset some of the remaining underfunded pension liability. I don't know if this is because it was raided to resurrect the company or they used creative accounting practices that finally caught up with them.
http://www.businessweek.com/ap/2012-06/D9V6HESO0.htm
If I remember correctly, it was GMAC money-for-all credit division that sunk the GM ship and banksters wanted their money back and got it with the bailout.
Here with the pension fund raid, is the same thing as leaving IOUs i.e. a US bond note, inside the SS fund lock box.
Any money collected is considered general fund money.
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