Retirement Fund Plunder Update: $206 Billion So Far, $62 Billion Left

Tyler Durden's picture

As of today, since the debt ceiling breach on May 16, the Treasury has plundered about $206 billion from the two primary retirement accounts: the G-Fund and the Civil Service Retirement and Disability Fund, according to calculations performed by Stone McCarthy. The full breakdown for sticklers is provided below, however what is more important is that with just 4 weeks left until the D-Day, there is about $62 billion in available debt ceiling stretching options. In other words, Tim Geithner has burned through 75% of his dry powder just 50 days into the debt ceiling breach. What happens in the next few days - Stone McCarthy gives the full breakdown "Based on our projections for marketable borrowing and trust fund flows, we think Treasury would need to use about $37 billion of that $62 billion in July, and would exhaust the rest with the settlement of auctions on August 1. If things go down to the wire, Geithner could create a little more room by declaring that the Debt Issuance Suspension Period will last longer than the original May 16-August 2 timeframe, which would be reasonable if Congress hasn't acted by August 1 or August 2." Said otherwise, with the market still completely ignoring the debt ceiling situation, if nothing has changed by the last week of July, it will once again, very much retroactively, panic.

SMRA reminds us that QE is now over, which means Primary Dealers will now be used as a monetization buffer. "Based on our current cash flow projections, we think Treasury could pay its obligations for the first couple of weeks of August, and probably manage to pay the August 15 coupon interest payment. That assumes that Treasury would be able to roll over maturing debt at auctions in the first half of August, even in the absence of a debt limit increase. We imagine under such a scenario that there would be stepped-up pressure on primary dealers to participate in Treasury auctions."

As for government retirees, here is how the funding backing your retirement accounts if being used:

A tabular summar of sources and uses to date:

As for what the current status of (non) negotiations is, here is the summary of SMRA's Nancy Vanden Houten:

Over the last few days, we've learned that the President has had some high-level budget talks -- notably with House Speaker Boehner The President met with Congressional leaders today, and will do so again on Sunday. If we can believe what we're hearing, the President and the Speaker at least appear to be aiming higher in their negotiations on a deficit reduction deal. Previously, the talks had been focused on deficit reduction of about $2.5 trillion, or a little more than any voted-upon increase in the debt ceiling. In the last few days, a deficit reduction package totaling about $4.0 trillion appears to be back on the table.

Certainly, a deficit reduction deal totaling $4.0 trillion would be a huge step toward addressing our long-term fiscal crisis. But we think an agreement of that magnitude is still a long shot. A deficit reduction deal of $4.0 trillion would have to have a fairly significant revenue component; otherwise, the necessary amount of spending cuts wouldn't get much support from Democrats in Congress. On the other side, a large block of Republicans still opposes a deficit reduction deal that raises any revenue all. Surely the President and the Speaker know this. Do they think they can persuade their parties to come around and sign on to a "grand bargain?" Or are they posturing in front of an agreement on a smaller deal that gets us through the next election? We could see how the President in particular might benefit from that outcome: "I was willing to meet them more than accept less in revenues that I'd like and support more cuts in programs that are most important to Democrats, but they wouldn't take yes for an answer."

And for the latest update here is the NYT confirming that Republicans and Democrats were still "far apart" on said "grand bargain". Perhaps that article is best summarized with the following phrase:

“The big question everyone is asking is, ‘What are we getting?’ ” said Representative Edward J. Markey, Democrat of Massachusetts.

Alas, gone are the days of idealistic monologues by JFK that would have provided a witty rejoinder to the above. Instead, we get the days of US insolvency and pillaging of retirement accounts of former government workers.

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JW n FL's picture


“It’s not just an exaggeration that Social Security is headed for bankruptcy, it’s an outright lie,” Reid said.

Reid and other Democrats at Monday’s event note that Social Security has a $2.6 trillion surplus and is projected to pay out 100 percent of benefits until 2037. After that point it is projected to pay out about 80 percent of owed benefits unless changes are made to the program.

cranky-old-geezer's picture

Cash balance in the (alledged) trust fund is ZERO.

IOUs are not cash.

bobert's picture

Here's what we could do.....


Sell the SS IOU's (making what is "non marketable" marketable). Use the $2.6 T in proceeds

to fund our budget deficit. This gains us 1.73 years prox., and allows congress and the

commander to do nothing for awhile. When we have depleted this "Trust Fund" we can

.then start marketing the Medicare "Trust Fund" and finish with the CSR "Trust Fund."


By my guesstimate we have three years to stall using this technique


Then in 2014 we go to pass through accounting! Expenditures = Revenue plus what you

can finance if there is still an annual deficit.


Funding in the US will then cost about what it does today in Greece and Portugal.


It will be entertaining to say the least to watch the lobbiest lobby at that time!


Or maybe congress gets responsible and we avoid the above scenario?


Doubt it.

RockyRacoon's picture

Those IOUs would be backed by the full faith and credit of a bunch of old broken down fat Boomers?   Good luck with that sale.

bobert's picture

That's correct Rocky!

I'm thinking the price for debt will be going up pretty soon.

FEDbuster's picture

"That's as good as money.  Those are IOUs."  Classic Ponzispeak!

Urban Redneck's picture

They are non-marketable treasury securities.  However, What prevents Timmy G from entering into a $1T 90-day Repo with the FED with the non-marketable treasury securities?  The Fed has certainly accepted more worthless collateral to justify its money printing.  Treasury is openly exploring options with the FED to maintain the ponzeconomy in the event they don't get Congressional permission to continue business as usual.  Given that the Treasury has by it own action demonstrated that pension obligations may be freely plundered to feed the beast, why not plunder the big lock box of pension obligations?  As worthless as most government employees are the government pension obligation to them is actually more binding than Social Security which is subject to annual adjustment by Congress. 

Mad Marv's picture

I am constantly amazed at the number of people who believe that Social Security is ‘Fully Funded’.  And when they hear a dissenting opinion, rather than exhibit any curiosity into the matter, they just repeat the same mantra that all politicians give; Social Security is Safe.  WTF?!?  Why are these politicians allowed to lie like this?!?   I’m guessing at some point these Ivy League Jackasses must have taken an econ course or two – They must know what utter Bullshit this is. 


It’s damn hard to be compassionate with the aging population when you can easily discern the true state of these ponzi schemes.  I don’t want people to suffer, but some need a dose of reality to wake them the fuck up.      

ThirdCoastSurfer's picture

If Social Security wasn't alright, how could we afford to enact a 2% reduction in FICA for 2011?  For a couple making the max contribution, that's more than $350 a month and I think the total for all is like $30 billion that SS will never see. I never heard a peep out of AARP over this, how is this not a cut? 

JW n FL's picture

Doesn't bother anyone that Grand Ma and Grand Pa were Robbed for their Contributions that Exceeded the Needs of the Program?

sun tzu's picture

The effects won't be felt until 20 years later

Doyle Hargraves's picture

Fuck it give them bitchez MREs and section 8 housing. EBT cards and gubmint Cheese. Let it be a reminder to the rest of us what happens when you let the gubmint plan for your future so we can plan accordingly!

realitybiter's picture

Maybe so.  I suspect they will someday soon get paid in GE's.....gubmint equivalents.


soylent green, anyone?

Freddie's picture

The Repubs are no prize but hussein and his dems are real a*s *uckers.

Michael's picture

How do you get blood out of a stone, the stone being the bankrupt Federal Government and virtually the whole of the American people at large?

That being said, I don't give a shit about the 25% of the US population eligible to receive a pension. Let them eat cake or go pound sand, makes no difference to me.


I just thank God I won the war against the eco-fascist global governance people who wanted so bad a global carbon tax. That was to be their trillion dollar a year market and the third leg of the global governance stool. Those people can go pound sand too.

HA Ha!



Watauga's picture

And I suppose you include the hundreds of thousands of retired military personnel who, over 20-35 years each, defended your right to "life, liberty, and the pursuit of happiness"?  And the thousands of families who have lost soldiers, sailors, airmen, and Marines in that defense and who receive some form of benefit from government? 

Why are there so many angry men on ZH who promote open generational and socio-economic warfare?  Is it that, because you are young, you are selfish and cannot grasp that you stand on the shoulders of giants?  Is it that you suffer from a Napoleonic complex of some kind, and feel small and unappreciated?  Is it because you a psychopathic or sociopathic?  Narcissistic? 

The answer here is not generational or socio-economic warfare.  Honestly, all that would do is result in many deaths, agony, and the perpetuation of evil.  The answer lies in youth rediscovering respect for their elders, committing to taking care of their families, dedicating themselves to self-sacrifice and hard work, and taking lawful action to restore liberty, private property, and free enterprise.  The easy way out is to point fingers at and shout down those you want to blame for your circumstances.  The high road, which demands courage and sacrifice, is to work within the law to find solutions that benefit all.

So, stop pissing and moaning about how grandpa ruined your life.  Get off your ass, get to work, get invovled in local political campaigns, start a business, write a blog promoting liberty, and generally be positive and productive rather than whiny and worthless.

Whizbang's picture

Good point. Spoken like a true asshole.

XPolemic's picture

Oh ... you want the long version? I thought ZH didn't have attention span for it.

The answer lies in youth rediscovering respect for their elders,

I don't respect people who steal from me and my children. Do something respectable and I will respect you.

committing to taking care of their families,

Oh I am committed, you better fucking believe it. Come at me mofo to take my last can of beans and you will see my commitment to protecting my family from you theiving shits.

dedicating themselves to self-sacrifice and hard work,

Been working hard and sacrificing my whole life to pay for your fucking luxurious retirement, I'm done now.

and taking lawful action to restore liberty, private property, and free enterprise.

Not possible, because the laws have changed to prevent the restoration of those things. Guess who by?

The high road, which demands courage and sacrifice, is to work within the law to find solutions that benefit all.

If such a solution were found, the law would be changed.

Get off your ass,

Get off yours.

get to work,

Follow the jobs to India where you sent them?

get invovled in local political campaigns,

To what end?

start a business,

With what capital?

write a blog promoting liberty,

Now you are just taking the piss.

and generally be positive and productive rather than whiny and worthless.

Sorry, whiny and worthless is your generation's specialty, not mine.


realitybiter's picture

Largely, we are where we are do to the leadership of folks that are now 60 to 80 years old.  Should we kick them to the curb?  No.  Should we cut them back hard?  We must.  Everyone needs to suck it up, and the old need to admit they squandered their paycheck and yours, to keep their bad habits going.  Sorry.  My folks are welcome to stay at my home

FEDbuster's picture

This was the same attitude of most of the "Teapartiers" I saw and meet.  Most over 60 years old, most want to save the Country "for our grandchildren", no cuts to SS or Medicare (we paid it, we deserve it) and cut Medicaid, unemployment, food stamps, etc...  No willingness to share the sacrifice, just a "take care of me, fuck everyone else" attitude.  I quit going to the rallies, now I just wait and prepare for the collapse.

MGHJFHD's picture

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km4's picture

Great to see...welcome to the real world gubmint retirees ;)


CrashisOptimistic's picture

AARP will not allow touching SS or Medicare.  

It has become possible in the past 6 hours or so, that there can be no deal.

That would downshift to 90 day or 180 day ceiling increases, at 150 billion in cuts per increment.  

They're in trouble.

It's important to understand that any tax increase or spending cut in FY 2012 would be fiscal contraction and would raise unemployment.  Obama can't go this route.  The Tea Party may demand nothing less.

darkstar7646's picture

It's too late for those who ask for austerity not to also ask for a fundamental demographic change to the nation -- by force.

I'm shocked the Karl-bots haven't already started going down to the local welfare houses to scope out targets.

101 years and counting's picture

So, in August, Timmay! will need to sell about $400 billion to fund those accounts and for the standard monthly deficit of $150 billion? Good luck to him without money printing 3.0 up and running yet.

Freddie's picture

No wonder Timmy is trying to quit.  Hope and Change.  Nice job by the scum who voted for the kenyan.

rufusbird's picture

at the "top of his game"...

FEDbuster's picture

When the going gets tough....

I suppose they are all fully vested in govt. retirement once they make it to the 6 month mark.  "Turbo Tax" Timmy should go hide under the same rock as "Stammerin" Hank Paulson.

zorba THE GREEK's picture

 Social Security has a $2.6 trillion surplus? Of Gov. IOU's. If SS had a real surplus, Timmy would be

 raiding it to keep the Ponzi going.

bob_dabolina's picture

There are people who check Tims math on this situation right? I mean this guy couldn't even figure out how to pay his taxes.

Urban Redneck's picture

There are a bunch of guys from GS & JPM who are probably concerned about their next monthly TBTF transfer payment and are checking his math. 

krispkritter's picture

Cut him some slack. I hear he just upgraded to Timmy, er, TurboTax 3.0, the Fed edition. It promises the 'Biggest Refund. Free' so he's gonna run with that awhile. Bonus is that his 'Get Out of Jail Free. Get a Job with GS' card is included.

Zero Govt's picture

it's a bloody disgrace not only robbing pensions but the financial 'planning' that got us here ...the fact nobodies resigned pinpoints the lack of integrity and professionalism of this bunch of big spendng, inept, irresponsible debt-junkies

gall batter's picture

the disgrace is that they haven't been arrested.  no accountability.  

zorba THE GREEK's picture

 'Stepped up pressure on primary dealers'  is an understatement. They will buy, only they won't

 be able to roll it back on the Fed until QE3, which will tie up capital in banks. We probably won't

 see QE3 until stock market crashes and who knows how long that will take. It reminds me of the 

 old movies when I was a kid. The villain would have the girl tied up in the cabin with a keg of 

 dynamite with a lit fuse and the hero would be riding on his white horse to save her. The fuse

 would just keep on burning for the longest time while everyone was on the edge of their seats

 biting their nails. Except this time, there are giant kegs of dynamite with lit fuses burning 

 everywhere you look and we are all expecting the blast any minute but the fuses just keep

 burning and the tension keeps mounting. It doesn't look like most people are taking cover, but

 as for me, I surrounding myself and family with heavy metals to shield us from the blast.






Dr. Richard Head's picture

The fuse has been lit and burning for so long that I have started to wonder if this accounting really means anything in the end. Numbers on paper is the basis for life and death in the world. Fucking amazing reality. You would think humanity would have advanced further than this. Sigh....

HungrySeagull's picture

They lit the fucking fuse back in the Carter Administration.

Watauga's picture

You might say the fuse was lit in by LBJ, or JFK, with their bizarre notions of "new frontiers" and "great societies" and horrific immigration reform.  You might say it was lit by FDR, with his perverted and twisted Statism.  Or by Woodrow Wilson's grand design of American Empire and the Idea of Progress.  Or even earlier, when Lincoln and a bunch of Northeaster Moneyed Interests chose to burn the Consitution and invade the sovereign C.S.A.  Or, possibly even earlier, when Alexander Hamilton won out in the battle over banks, money, and finance.  Or even when the Founding Fathers decided to settle a dispute by declaring a slave 3/5 of a human.  Or maybe it goes back even further, when the Radicals in France decided to slaughter their anyone they wanted in the name of equality and fraternity.  Or perhaps it was during the "Enlightenment," when Sisyphean intellectuals introduced the notion that Man not only could, but should, kill God.  Or maybe it was Julius Caesar who lit the fuse, when he destroyed the Republic.  

The fuse has been lit since Man found fire to light it.  Why?  Because men, in Original Sin, act solely in what they perceive to be their self-interest.  Money is merely a means.  The root of all evil is Self.  And men always try to lie, cheat, steal, or otherwise to promote themselves.  It is greed, pride, and selfishness all rolled into one.  Self.  And evil-mongers like LBJ, FDR, Lincoln, Hamilton, and so forth will always seek and achieve power in order to promote themselves and what they think are their interests.


buzzsaw99's picture

Too bad the CONgreff pissed away their sworn duty to issue money themselves to the private kleptocrats back in 1913.

bobert's picture

You are ugly and you are correct!

tarsubil's picture

Prohibition, income taxes, and popularly elected Senators, all around the same time. The seeds were sown a long time ago.

casey13's picture

So what happens to the pension funds now if they don't raise the debt ceiling?

bobert's picture

See my comment above. I believe they go from "non-marketable" to marketable.

In other words the Treasury shall convert "inter governmental debt" (non-public) to public debt.

Within three years the entire $14.3 T plus three years of additional deficit funding of $4.5 T

(because the lackey's in congress will not solve anything) = $$18.8 will be entirely public.

This won't happen if any of the three "Trust Funds" have annual operating profits, and or congress

and the commander reduce the deficit. Do you think this will happen?


What do you think the market will price US debt issues at then? I think 15-18% for the ten year.


Another related thought is: How much of the above debt will be held by our central bank and

it's prmary dealer's?


Just my idle thoughts on the matter.

FischerBlack's picture


Under "Risks" we see only one risk they are willing to acknowledge:

The G Fund is subject to inflation risk, or the possibility that your G Fund investment will not grow enough to offset the reduction in purchasing power that results from inflation.

Nowhere do they mention the risk that those non-marketable securities issued to the G fund may actually be un-issued at any time, effectively borrowing the same money a second time. The risk being, obviously, that you have to be paid back twice. As if getting paid back once wasn't looking ever more tricky.


bobert's picture

I think your onto something here Fischer!

JW n FL's picture

Doesn't bother anyone that Grand Ma and Grand Pa were Robbed for their Contributions that Exceeded the Needs of the Program?

random shots's picture

Serious question...

If a default is coming then why has the market not priced this in? And where are rates going? Noone has been able to answer this question in a serious manner. Is the 10 year going to jump overnight to 10%? What is the haircut bondholders will have to take? Why haven't US CDS gone parabolic like Greece