Treasury Confirms Debt Ceiling To Be Breached Today; Will Tap Pension Funds | zero hedge

It's official: the US credit card has officially been maxed out, just as we predicted on Wednesday, and throughout Q1 and Q2. The United States is expected to reach the legal limit on its debt later on Monday and will start dipping into federal retirement funds to give the country more room to borrow, a Treasury official said. As Reuters reports further, The U.S. Treasury will settle $72 billion in maturing bonds on Monday, which will push the country right up against its $14.294 trillion borrowing cap, the official said. To all those who thought only the insolvent government of Ireland will plunder pension funds, our condolences.

Full release (no pun intended):

As US Reaches Debt Limit, Geithner Implements Additional Extraordinary Measures to Allow Continued Funding of Government Obligations

Today, the United States has reached the statutory debt limit. Secretary Geithner sent the following letter to Congress this morning alerting them to actions that have be taken to create additional headroom under the debt limit so that Treasury can continue funding obligations made by Congresses past and present. The Secretary declared a "debt issuance suspension period" for the Civil Service Retirement and Disability Fund, permitting Treasury to redeem a portion of existing Treasury securities held by that fund as investments and suspend issuance of new Treasury securities to that fund as investments. He also suspended the daily reinvestment of Treasury securities held as investments by the Government Securities Investment Fund of the Federal Employees’ Retirement System Thrift Savings Plan. For more information on these measures, please read this FAQ.

Read more: Treasury Confirms Debt Ceiling To Be Breached Today; Will Tap Pension Funds | zero hedge

Social Security to start cashing Uncle Sam's IOUs

PARKERSBURG, W.Va. – The retirement nest egg of an entire generation is stashed away in this small town along the Ohio River: $2.5 trillion in IOUs from the federal government, payable to the Social Security Administration.
It's time to start cashing them in.

For more than two decades, Social Security collected more money in payroll taxes than it paid out in benefits — billions more each year.

Not anymore. This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more.

Sounds like a good time to start tapping the nest egg. Too bad the federal government already spent that money over the years on other programs, preferring to borrow from Social Security rather than foreign creditors. In return, the Treasury Department issued a stack of IOUs — in the form of Treasury bonds — which are kept in a nondescript office building just down the street from Parkersburg's municipal offices.

http://news.yahoo.com/s/ap/20100314/ap_on_bi_ge/us_social_security_ious

Maybe Its Time Congress Just Says NO!!!

The Federal Government is like a junkie, it doesn't know how to say no. The Government loves spending our money. It needs to spend our money. If it doesn't spend money our money then it ceases to exist, which at this point may not be such a bad idea.

And just like the junkie the Government promises that it will repay the money it borrows, but it never does. Last Friday, Tim Geithner sent a letter to Congress requesting that it approve an increase to the $12.1 Trillion debt limit. Geithner states that we need to increase our debt ceiling so that our debt holders, i.e. China, will remain confident that we will repay them.(By the way Geithner hasn't specified how many more Trillions he needs to keep China happy. He happily left that decision to Congress, so the Obama administration can't be blamed when its increased.)

Geithner is new to Washington but he is extremely confident that Congress will approve his request and reminds us that "Congress has never failed to raise the debt limit when necessary."

But should Congress approve raising the debt limit? I mean lets think about it logically. If the junkie never repays his debts he never learns his lesson and keeps on borrowing to feed his habit. But if you cease giving him money pretty soon he can't feed that habit and he goes into withdrawal. Sure the sweats and hallucinations can be down right frightful but you don't generally die you simply stop being dependent on your drug of choice. Call it tough love but maybe its something we as taxpayers need to teach our junkie, I mean Government.

http://online.wsj.com/article_email/SB124970470294516541-lMyQjAxMDI5NDE5MDcxMDA0Wj.html