G Fund Could Be Tapped Again

As has happened frequently in recent years, the government is about to hit its debt ceiling with no agreement in place regarding raising it. Once again, the Treasury Department has said it will use various financial maneuversto extend the deadline, steps that include not issuing the daily securities that make up that fund—in essence, taking that money owed to TSP investors off the government’s books. That maneuver angers many TSP investors, although it has been used numerous times over many years and there is no direct impact on their accounts. The Treasury has warned that congressional action must be taken by around the end of the month to avoid a default. Unlike the lapse of spending authority that occurred last October, a default would not necessarily result in a partial government shutdown; analyses done for Congress have suggested that employees would be kept at work, although likely unpaid for the meantime. However, the potential economic damage of a default is a far greater consideration for political leaders.