U.S. Treasury Secretary Timothy Geithner said Tuesday that the government has begun pulling money from the federal employee pension fund in order to keep the government operating, the Associated Press reported.
The government reached its borrowing limit on the final day of 2012, and has been using bookkeeping methods and maneuvers to keep from surpassing it. Borrowing the funds from the retirement funds of federal employees takes those initiatives a step further, redirecting cash from one purpose for the use of another.
Geithner announced this move in a letter sent to elected officials in Congress, stating that it will free up $156 billion in borrowing power. This move is expected to postpone the date that the U.S. would hit the debt ceiling, allowing Congress more time to gnash teeth and debate raising the debt limit, which is already set at a historic high of $16.4 trillion.
Geithner projects that the Treasury will run out of legal accounting loopholes and measures as soon as mid-February, and no later than early March.
This is not the first time this tactic has been utilized by the Treasury or by other Treasury secretaries. Geithner has offered assurances this this will not impact any monthly pension payments and that all funds borrowed from the pension account will be replaced once the borrowing limit is raised.
However, it is not entirely clear that the Republican-controlled House of Representatives will allow an increase in the debt ceiling to pass.
While encouraging Republican resistance to raising the debt ceiling, Senator Tom Coburn (R-OK) told American Family Association’s Sandy Rios that a U.S. economy-crashing government default may be a “wonderful experiment”. He said it would teach the nation not to spend money on “stupid things”.
Coburn argued “our freedoms are going to be put at risk” under President Obama's administration while speaking to Rios on her conservative radio program broadcast on Wednesday.
The price per ounce of gold has been climbing up, in part driven by the tensions and uncertainty of the U.S. debt ceiling debate, which economists say may through the country into another recession.