No, your pensions are not being “Raided”

Once again we are at that time of year when the US govt points a gun to its own head and says “cut the spending we just agreed to or we will shoot”.  

It’s frustrating that Congress passes a budget which one would assume means they agreed to pay for it too.  But, no.  Let’s use an old rule to hold ourselves hostage and make the US govt look stupid to the rest of the world.

One of the games the Treasury plays is they tell Congress how long they can hold out if they use “extraordinary shenanigans”.  And then Congress uses all that time to do nothing until the end game of chicken plays out.

One of those shenanigans is to stop paying interest on YOUR TSP funds.  They do not take your funds.  They stay yours.  They just do not add interest to your account until the game of chicken is over and then pay all the interest you were owed.

How does this help the budget extension?  Since they are not paying interest anymore they declare it is no longer US government debt and on paper remove it from the debt column allowing more time before hitting the debt ceiling.

It is dumber than dirt, but everyone goes along with it. Since it is still your money, the US govt still owes it back to you.  They do not stop annuities or withdrawals for retirees, but okay.  Now there is this other big pot of money they are paying interest on called the Social Security Trust fund and that is not allocated money to anyone like the TSP G fund.  But do we ever hear of them messing with it?  Nah.  

And with this precedent of stupidity, why not stop paying interest on all USG debt and call it good until the debt ceiling is raised.  Then pay back interest.  I mean if you want to play chicken, that would end the game quick.

So the bottom line is do not worry about headlines saying the government is “raiding your pension fund”.  It is simply the media being the media and Congress being Congress.

Cheers,

Michael Bond
TSPsmart.com


Categories: Perspectives