Several days ago, as an introduction to a new survey, FedSmith.com published an article on the use of the TSP’s G fund as one way to get around the debt limit until Congress raised the debt ceiling.
As we noted in the article, “[T]his same event has occurred before and for the same reasons–the federal government’s authority to borrow money was expiring. Most employees will never know the difference since, as Secretary Snow indicated, the people giving up the money for a short time will be made whole including any interest that may be due.”
At about the same time, the Thrift Savings Plan published a note on its website that said, in effect, “Don’t worry about your TSP investment in the G fund. It is still safe, the action being taken is legal and any money due will be restored.” (Click on “Federal debt limit does not affect the TSP” from the TSP website page)
The notice provided reassurance for federal employees and reiterated what the Treasury Secretary stated previously: Your money is safe with us.
No doubt, that is true. No one will lose money because of this action. And, contrary to the statements by some readers, this action is not a newly-hatched Republican plot to steal money from loyal federal employees. The same action has been taken under the auspices of other Treasury secretaries and under Republican and Democratic administrations.
Another statement made by several readers is also incorrect. The action taken by the Treasury Department is not illegal. As you can see from the notice on the TSP website, the action is legal. A similar action was taken during the government shutdown in the mid-1990’s and has been reviewed by the GAO.
Having said that, one might think that if anyone would be swayed by this line of argument, it would be federal employees: “We’re the federal government. You can trust your money with us.”
After all, most of our readers, are the federal government. They make the government run. Why would government employees not trust Uncle Sam, the benefactor that issues a regular paycheck, provides good benefits and pretty secure, long-term employment for its employees?
But, from having read many thousands of comments from federal employees on a wide range of issues, we were skeptical that the federal workforce would like the idea of Uncle Sam using their G fund investments to shore up the public debt.
The skepticism was apparently justified. Despite the mollifying statements by federal officials, a number of readers don’t trust their own government. It doesn’t mean that federal employees are going to man the barricades and join extreme government-hating groups by any means. But the message from over a thousand readers came through loud and clear: “leave our money alone.”
Here was the question and here are the results:
Should Congress enact a law to prevent the federal government from using money in the G-fund to avoid hitting the federal debt ceiling?
In other words, 84% of those responding think the federal governmennt should not use money in the G-fund to eliminate short-term problems with the debt ceiling.
As usual, the comments from readers were even more revealing as to what people were thinking. There was some difference in opinion among readers but much less difference than in most of our surveys.
Here is a very small sample of comments sent in over the past several days to give you a flavor of what people are thinking on this issue.
A business manager from the Forest Service in Mammoth Lakes, CA wrote: “How will the money be paid back? They are “robbing Peter to pay Paul” by using our social security fund. Now they are going after our retirement fund? If a private company did this, they would be investigated. Our government needs to be more fiscally responsible and start taking care of our own people. We can’t save the world.”
A Treasury Department employee from Lanham, MD commented: “The Federal Government should leave the G-fund money alone. That money belongs to the investors.”
A lead purchasing agent from the Navy in San Diego had this to say: “I have been a civil servant for almost 30 years. I worked hard and deserve my retirement. I scrimped to put all I could in my TSP. I shouldn’t have to even think the gov’t will use my money. The gov’t needs a class in budgeting-BIG TIME. They should have taken that class so Social Security would have still had the money that was put in it.”
An accounting technician from DFAS in Columbus, OH said: “I don’t think any organization be it private or public should be able to utilize retirement funds for the organizations own benefit. These funds should be treated as if they did not belong to the organization and for which they are only the executor.”
An IRS agent from Huntsville, AL is very unhappy with the action to shore up the national debt: “..Congress should enact a law requiring balanced budgets with provisions to aggressively pay down the national debt. Then the whole issue of debt ceiling goes away….Balancing the budget and paying down debt will require some tough choices that will negatively impact all of us, but, in my opinion, the continued path is to destruction.”
An analyst with the FAA in Washington, DC opined: “TSP funds are not government property. Using TSP funds for any purpose other than investment for and distribution to their individual owners should be punishable as a criminal act.”
A consumer safety inspector with the USDA in Harrisonburg, VA commented: “That’s money I put away every pay so I won’t be dependent on a possibly non-existent Social Security. Leave it alone! Why should federal employees have to pay for debt we didn’t necessarily okay! Its a good thing I don’t run my own budget and expenses like ‘Uncle Sam’.”
A postmaster from Randolph, KS is threatening to take action: “I will move all of my funds out of the G fund, if they start using the funds for ANY reason.”
For some reason, we received more comments from employees in the Social Security Administration on this issue than from any other agency. Here is one comment from an SSA employee in Jamaica, NY: “The Bush Administration and, to be honest, many of its predecessors, have used all sorts of financial gimmicks to avoid the hard economic facts of runaway budget deficits. Anything that will make the problem clearer to the nation is important and prohibiting using the G Fund as such a gimmick would be a step in the right direction.”
An FAA safety inspector in Jamaica, NY wants to trust the government: “One of the reasons I have my money in the G fund is because I don’t trust the stock market or their corporations. I want to trust this government.”
A number of readers cited Enron as an example of what they feared. This reader is from the Dept. of Transportation in Washington, DC: “All I hear from this administration is that we need to run our government like a business. Too bad they chose Enron as the model.”
A claims representative from SSA in Mobile, AL shouted this response: “LEAVE MY MONEY ALONE! I EARNED IT AND I WANT IT!”
An industrial relations specialist with the Corps of Engineers in Ft. Worth has this to say: “This G Fund is equal to individual IRA’s. It is not a fund that the U.S. Government to tap anytime it feels the need to. This is fund that people have invested their savings and should not to be touched by anyone else.”
A retired SSA employee from Paso Robles, CA sees a dire future: “Part of the Administration’s argument for private retirement accounts (based on the TSP model) is that it will insure that the money is there when needed, unlike the phantom Trust Funds that merely contain IOU’s. If the government can now use TSP money (private retirement account type money) then what have we gained? G Fund investors unite! The fox is in your henhouse. ”
An administrative officer from Veterans Affairs in California said: “Even IF the money will be paid back the Government should NOT be allowed to dip into the retirement funds of its employees to cover debt. The government is supposed to protect people from these kinds of activities! Would this be allowed for private sector employers??”
An accountant from DFAS in Columbus, OH sees ethics as an issue: “If a private organization did this it would be considered unethitical, and it is!”
An attorney from the Dept. of Veterans Affairs wrote: “The money in the G fund comes from employee salary to fund retirement. It should be off limits as should be the Social Security Trust Fund. Congress needs to protect both funds and get our public financial life in order.”
But not everyone was concerned about the action.
We received several comments (out of hundreds that were submitted) that were along these lines. This one is from a senior special agent with the Dept. of Homeland Security: “As long as they don’t steal (keep) the money, there’s nothing wrong with a loan. It keeps the cost of borrowing down. Otherwise, we’ll need even more loans (via bonds) from abroad!”
And a special agent from Maryland thinks it is not that important: “I don’t have a problem with it because if the Government can repay the funds it borrowed then we have bigger problems to worry about!”
Thanks to all of our readers who took the time to vote in this recent survey and a special thanks to those who took the time to send in your written comments.