Government taps pensions to fund its debt
May 17, 2011
Treasury secretary Geitner has found a way to fund the debt, now that the government has run out of money (as of May 16). Since they cannot legally borrow money in the normal way, they will simply "borrow" money from pension funds, taking the money and leaving an IOU in its place. The article says,
Geithner, who has already suspended a program that helps state and local government manage their finances, will begin to borrow from retirement funds for federal workers. The measure won’t have an impact on retirees because the Treasury is legally required to reimburse the program.
The government has already done this with the Social Security fund. There is no money set aside for Social Security. The government has already "borrowed" it and left an IOU in its place. So this new measure is just an expansion of its insatiable diet.
it reminds me of corporations who borrow from their own pension funds. When they run into financial trouble, they declare bankruptcy and try to release themselves from the obligations of repaying the pension funds.