Quantifying The Treasury's Plunder Of Retirement Accounts: $80 Billion Between The G- And CSRD Funds Since Debt Ceiling Breach

Tyler Durden's picture

Last Thursday we attempted a rough estimation of how much the Treasury has been dipping, or as it is also known "disinvesting", into the G-fund and the Civil Service Retirement and Disability Fund (CSRDF). Courtesy of Stone Mountain, we now have a definitive number. Even we did not realize how bad it is: in a nutshell, since the debt ceiling breach in mid May, Tim Geithner has replaced one IOU (that of the Fed) with another (that of the Treasury) in the G Fund to the tune of $57 billion, and in the CSRDF of about $22 billion. In other words, retirement funds have seen a "disinvestment" of nearly $80 billion in the past 3 weeks just to make space for further funding of bloated government, defense spending, and healthcare benefits. But don't worry: Tim promises it shall all be well.

From Stone McCarthy:

Treasury's release this afternoon of its Monthly Statement of Public Debt provides more insight into how much of those options Treasury has tapped so far. The following chart shows non-marketable securities held by the CSRDF each month since April of last year.

In May, those holdings declined $21.8 billion. Non-marketable holdings by the CSDRF are volatile on a monthly basis, but that decline is larger than average. In reality, there isn't that much mystery about the room created by redeeming securities held by the CSDRF. Treasury Secretary Geithner made it pretty clear when he announced on May 16 that he was declaring a Debt Issuance Suspension Period (DISP) for about 2 1/2 months -- from May 16 to August 2. The amount of room created by redeeming securities held by the CSDRF depends on the length of the DISP. In a nutshell, Treasury can create -- upfront -- about $6 billion per month of the DISP, plus a little bit more related to the suspension of new investments by the CSDRF.

The change in the balance of securities held by the Thrift Savings Fund was more telling. This fund is also known as the "G-Fund;" it's one investment fund available to federal employees who participate in the Thrift Savings Plan (TSP), which is a defined contribution retirement plan available to federal employees.

The balance in the G-fund was $73.3 billion as of May 31, down $56.0 billion from the end of April. As our next chart shows, the pattern is for the balance in the G-fund to drift higher. Over the last year, the G-fund balance increased by about $1.1 billion each month. If we assume that would have occurred in absence of debt ceiling actions, then we can assume that Treasury suspended investing about $57.0 billion of G-fund securities in order to create room under the debt limit.

And people were angry when they seized Irish pensions...


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IdioTsincracY's picture

Who needs retirement anyhow!?!

Rainman's picture

..retirement is transitory.

Perseid.Rocks's picture

Tell that to Geitner when you take his all his personal accounts away from him. I wonder if he squeals like all the other piggies ?

three chord sloth's picture

Here is the point: They can't.

They cannot take away earned pensions from government employees. This is well established law, already ruled on by the Supreme Court decades ago.

In short, we the taxpayers are legally required make good on these pensions. If we already paid for them, and congress/the fed/the treasury/the frickin' moonies spend all the money on other things, well... too bad. We pay for it again. Period. No choice in the matter.

This is just a backdoor way to extract more money from the taxpayers... and congress can claim "our hands are tied".

Bend over, suckers. Government pensions outrank taxpayer's wishes. They can steal it and make you pay for it again, and there's nothing you can do about it. Hell, they can steal it again next year and every year... and make you refill it again and again. Over and over and over...

Rainman's picture

Written right into the Constitution of the People's Republik of Kalifornia too...the other Greece .

Yen Cross's picture

  I'm soo far ahead of ya ?

FEDbuster's picture

They will always pay, but will what they receive be worthless?  If I were a retired govt. worker, I'd ask for mine in $50. gold eagles at face value.

Monedas's picture

Take it all !!! Piss it away on reconstruction in Haiti !!!............Monedas is pleased to announce that John Maynard Keynes was never knighted ! Thank you King George !.............Monedas' History Primer : #1 Nobel = TNT. #2 Hitler = Meth. #3 Leary = LSD. #4 Keynes = Fiat. #5 Monedas = http://trololololololololololo.com/

spinone's picture

Just like now we have a social security crisis, because they spent the money already, in 10 years we will have a Federal Pension Crisis, cause they are spending the money now.

three chord sloth's picture

Of course, SS is different. It is not legally considered a pension, so it is not defined as earned (but deferred) income.

If memory serves, SS is legally treated as a transfer program like welfare. And that means unlike pensions, you and I have absolutely NO property rights to a single dime of it. In the legal heirarchy, SS sits somewhere down at the bottom, with the red-headed stepchildren and rented mules.

Id fight Gandhi's picture

Law or not. They could write a last hour pass like tarp to dissolve it. But I think USA will be at a world war long before that.

Do really think we will have revolutions here in the USA? Or will they have ww3 to rally the union.

blindfaith's picture

"Do really think we will have revolutions here in the USA? Or will they have ww3 to rally the union.".

No to the first question, as long as there are new phone apps, video games, netflix, and factory bio-Vat brewed meat for fast food shops.

Yes to the second,  Americans love a spectacle or ruckus and don't hesitate to send their first born to bring home honorable mention.


And, a note on the main article...if Timmy is going it, so is every state, county and municipal.  When the money is gone, what do you do call ghostbusters?

ebworthen's picture

The thing about laws is they can be ignored or re-written at will.

Rainman's picture

"The illegal we do right away. The unconstitutional takes a little longer."

Henry Kissinger

blindfaith's picture

..... he was (for those born in the 60's or later) referring to President Nixon...nod and wink.  Watergate, Vietnam and Cambodia, and ho, a few other things.

Ford pardoned all crimes against the Nation and Constitution that Nixon may or did do.  And, so set the stage for executive privilege to do as seen convenient with no fear of repercussion (unless it has to do with sex). 

Funny how things can follow on when they are not properly made examples of for all to learn from.

nmewn's picture


There is nothing mystical about any man-made written law. Without mutual consent to abide by it, there can be none.

Not a pretty picture either IMO.

Should be interesting when Timmah pulls out the "Hey!...this is your retirement we're talkin about here as well, Congress!!!" card ;-)

Pegasus Muse's picture

"They cannot take away earned pensions from government employees. This is well established law, already ruled on by the Supreme Court decades ago.

In short, we the taxpayers are legally required make good on these pensions."

It is good to recall, when those who might imply it is somehow unfair that government workers be paid the retirement they contributed to their entire working lives, and in stark contrast to corporations like GE, Boeing, and Wall St fat cats (like Mayor Bloomberg who off-shored much of his personal wealth to avoid paying taxes), these government workers actually paid taxes during their working years and will continue paying taxes on their pension income, assuming the government does not renege on its obligations in some form or fashion.

QuantumCat's picture

These are contribution accounts, much like 401(k)s, but they are called Thrift Savings Plan.  People have actually contributed portion of their paychecks to the G fund, without any matching.  The treasury is looting money from responsible folks who wish to save for their own retirement.  

blindfaith's picture

Using another's money or property without expressed knowledge or permission is called...Conversion.

Conversion is a form of statuary fraud. 

Raymond Reason's picture

Black market.  The only way to beat 'em. 

rufusbird's picture

Property tax revenues are dropping and budget cuts are announced almost weekly. Public employees are retiring ASAP...

AAPL_Short's picture

Obama: My fellow Americans, we must erect systemts to quantitatively ease those that are too big to fail.

Butt-head: Huh huh huh huh. He said, "erect ... ease ... too big. "
Beavis: Oh, yeah. He said it.


natty light's picture

Ummm isn't Geithner beavis in this pic?

SilverRhino's picture

If they will rob federal employees, they will rob private citizens with even LESS reservations.


Anonymouse's picture

Has anyone seen a legal argument on this issue?  Of course "sovereign immunity" covers-up a host of sins.  I assume ERISA is silent on this matter, but don't know in the case of the federal government.

But how is this not "debt"?  Clearly the beneficiaries of these pension funds have a legal claim on the assets of the fund.  Even if de-funding the funds is allowable (if immoral), how is this not debt.

The government  taxpayers will have to pay it back.

Presumably they will have to pay it back with interest.

How is this different from any other debt issued by the government?

Debt to the Social Security "Trust" Fund, i.e., the entire balance of the "trust" fund, is counted as debt, even if the unfunded liability is not.  Why is this not similarly treated?

Has anyone seen a discussion of this?


Anonymouse's picture

Also, for clarification, is this tapping of the funds,

1. literally grabbing existing fund assets, or

2. not making contributions to the fund as scheduled

Obviously the effect is the same, but I am unclear on the mechanism

knowless's picture

from my limited understanding the federal employees pay into the fund in cash which is (largely)invested in treasuries.

so the government is redeeming the treasuries for cash. I think it might be one of those "full faith and credit" deals.


main point: there are no existing funds, because of the intertwined nature of cash and treasuries, they get payed unless the government can't pay. catch 22, none of it actually exists.

edit: rainman said it below me in the time it took me to type this.

Mazarin's picture

Wonder what interest rate these forced borrowings are netting the retirees. If the Treasury borrowed these funds from Goldman, you bet they'd be "extracting" some serious yield - like 1,000bp. The employees are probably not even being paid an extra 100bp. 

knowless's picture

FSS, "investing" for sure. how's that negative yield after inflation treatin' ya? surreal that the system can be so convoluted that people don't even realise they are losing money.

Anonymouse's picture

+275000.  Might want to hang on to that one Mr Samsonite.

Rainman's picture

Cali has been working the same scam for years and look how good it's working out for them. Their pension contributions are deferred but counted as money good in the pension fund. Money good...I made a funny. 

Yen Cross's picture

 Step out and ellaborate R/M.

Rainman's picture

Municipality deferred funding of pension funds. There are 58 counties in CA. Just one, Riverside County in SoCa ( Palm Springs, LaQuinta, Rancho Mirage) owes over $800M . That's just one.

State of New York is more clever......borrowed $5 billion from the pension fund to repay the $5 billion they owe the pension fund. Keeps everybody thinking all gubmint promises are good...HAHAHAHAHA !!!!!!  

Yen Cross's picture

Are you a police officer with a thought?  No you an ordinance officer.  I am all ears   I am all ears  You are a good person and part of a dysfunction that needs to be corrected.

nmewn's picture

A shell game without the pea ;-)

nmewn's picture

Seems so yen...now if we could get the other 10% needed to wake up ;-)

Yen Cross's picture

 I'm half Jewish and half  Christian! Need I say more?

nmewn's picture


Now, if you were Caucasian and born in Alabama, you'd have it all wrapped up!...it would all be completely your fault no matter what the issue were...LOL!

Anonymouse's picture

State of New York is more clever......borrowed $5 billion from the pension fund to repay the $5 billion they owe the pension fund. Keeps everybody thinking all gubmint promises are good...HAHAHAHAHA !!!!!!

That's what we call lifting yourself up by your own bootstraps.

RKDS's picture

Same situation in PA.  Democrat governor Rendell stopped all state-side contributions back around 2003.  I don't have the act in front of me, but there was some time limit to this deferment, something like 8 years.  So, basically, he and the Republican legislature wasted that money (and more) on other stuff for the next 6 or 7 budgets.  Yeah, you heard me, the budget GREW even though it wasn't paying into the pension plans.

So come about 2008/2009 when all these national economic problems started really hitting, all you heard on talk radio was this "sudden" pension spike for evil overpaid state employees who were the sole cause for every deficit ever.  Seriously, "conservatives" were blaming taxpayers whose pensions weren't even being paid for budgets other "conservatives" kept helping to inflate.  It's not letting liberals off the hook, their people stuffed the budget with crap too and made it late every single year.

My point is, they both screwed state employees and then, somehow, got the public at large to blame them for their own raping.  It's so difficult to give a damn about your fellow citizens when they're either too stupid so see this broad daylight robbery or too mean to put aside their jealousy and stop this before it gets to their retirement money too.

serotonindumptruck's picture

"Has anyone seen a legal argument on this issue?"

It seems unlikely (to me) that a licensed, practicing attorney would seek to challenge this decision by the Treasury. They would have way too much to lose by filing any kind of complaint. Licensed attorneys are compelled to tow the political line if they wish to continue practicing law. If they bite the hand that feeds them, they stand to lose everything, as they would no doubt have trumped-up ethics charges filed against them through their respective state bar associations. Most attorneys would likely look the other way and choose not to touch this issue with a ten-foot pole.

BTW, I'm definitely not an attorney, but I did stay at a holiday inn express one time.

SilverRhino's picture

If they will rob federal employees, they will rob private citizens with even LESS reservations.


ursus.peracto's picture

The Empire is built on paper and promises.


The bullets and bombs on credit.



CompassionateFascist's picture

I Like it: big apparatchik screwing little apparatchiks. This needs to continue.

Forward History's picture

There's one thing going on here, and it's very simple: leverage. Take money from the pension accounts, and when the pensioners start really noticing and come complaining, point at the "holdup in the congress", and attack the Repubs for "compromising America's ability to respond to the real pressing problems it faces".

Bring voting bloc to the polls in 2012 on the theme that the evil GOP is out to stop all forward progress even if it means offering up pensions on the sacrificial altar.

Disclaimer: I can't stand either of the big two, so don't call me a partisan.

drink or die's picture

Doesn't this only become an "issue" if the debt ceiling isn't raised and this money is never heard from again?