Fedweek

The Treasury has used a familiar financial maneuver involving the TSP’s government securities G fund now that a temporary suspension of the debt ceiling has expired. In essence, the Treasury stops issuing the special securities that make up the G fund, erasing the obligation to pay that debt. However, investor accounts maintain their value and continue to be credited with interest as usual; also, loans and withdrawals are not affected. Once the debt ceiling is raised, the securities are replicated. Although there is no cost to investors, many resent it and some say it has driven them to abandon the G fund—or to transfer their money out of the TSP after separation rather than leaving their accounts in place. The civil service retirement fund, too, has been used in a financial maneuver to free up operating money with no impact on benefits for employees or retirees. It’s estimated that those and certain other maneuvers will provide enough working cash until around October-November, when the ceiling would have to be raised in order to avoid potentially serious consequences to the economy of a default.