IOUs for retirement funds don't solve budget deficits
The federal government is borrowing money from retirement funds to avoid exceeding the $8.2 trillion ceiling on the national debt.
Treasury Secretary John Snow told Congress he would dip into the Civil Service Retirement and Disability Fund but would "restore all due interest and principal" as soon as possible. He hopes that will be the middle of this month.
But before he can pay back the money, Congress must increase the debt ceiling — something Mr. Snow can expect to happen because such increases have been routine for years.
Last month, the Treasury Department suspended investments in a retirement savings plan and offered a similar IOU.
The Washington Post reports that "most federal employees take it in stride" when their retirement funds get tapped this way, but Colleen M. Kelley, president of the National Treasury Employees Union, said last month that "no private-sector employer" would permit using pension accounts "as a rainy day fund."
Official predictions call for a federal budget deficit of at least $371 billion for the current fiscal year. Yet several situations make it unpredictable: Iraq, Afghanistan, continuing relief from Hurricane Katrina, and possible new disasters such as hurricanes and bird flu.
Ms. Kelley is right. The federal government plays fast and reckless with our money in ways that private individuals and companies, and even state governments, can't get away with. The biggest concern should not be retirement funds, but the virtually unrestrained growth of the national debt.