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Washington, D.C.—The leader of the nation’s largest independent union of federal workers said she is “greatly disappointed” by today’s action to effectively borrow billions of dollars from federal employees and retirees to prevent the government from spending beyond the national debt limit.

“There is no justification for playing political games with the money of federal workers and retirees,” President Colleen M. Kelley of the National Treasury Employees Union (NTEU) said about Treasury Department action to suspend, for two weeks beginning on April 4, Treasury investments in the Government Securities Investment Fund. Known as the “G-Fund,” it is one of five investment options open to participants in the federal employees’ Thrift Savings Plan (TSP).

“Both Congress and the administration are at fault,” Kelley said, “by refusing to agree on legislation to raise the statutory debt limit” of $5.95 trillion. Treasury said it is using the G-Fund money as a cash management tool “to bridge us until the tax receipts of April 15,” the tax-filing deadline.

The NTEU leader again was sharply critical of the continuing failure of the administration to communicate with federal workers about this issue, repeating her criticism voiced in a letter to Office of Personnel Management (OPM) Director Kay Coles James that in this instance, "silence is unacceptable,” particularly since “this money belongs to federal employees and retirees.”

President Kelley had urged Director James to ensure that workers and their representatives were fully briefed on any plans to tap into their retirement funds, and that they be updated on actions when steps are taken.

Even though by law, the “borrowed” funds will have to be repaid with interest as soon as there is room under the debt ceiling to do so, Kelley said, she was critical of political leaders for sending the wrong message to present and potential federal workers about the safety of their retirement savings. “This is not the way to generate confidence in the government as an attractive employer,” the NTEU leader said.

In announcing suspension of G-Fund investments until “on or about April 18,” a Treasury spokesperson said that even the April 15 influx of funds from tax payments “will only postpone our breaching the debt ceiling for a few months.” At some point “this summer,” this spokesperson said, “our projected borrowing needs will exceed the limited flexibility that G-Fund suspension and similar strategies provide.”

President Kelley called this “an argument directly on point against taking these kinds of steps, and in favor of prompt legislative action to raise the debt ceiling so the country can function effectively without this sort of stopgap activity.”

NTEU is the largest independent federal union, representing some 150,000 employees in 25 agencies and departments.

President Kelley’s letter to Director James is attached.

March 27, 2002

The Honorable Kay Coles James

Director

Office of Personnel Management

1900 E Street,

NW

Washington, D.C. 20415

Dear Director James:

As you know, Congress has recessed until April 9th without passing legislation raising the debt ceiling. It is expected that the current debt ceiling will be reached within a matter of a few days. Thus, it appears exceedingly likely that the Administration will “borrow” money from the Thrift Savings Plan, to tide it over until additional revenue comes in around April 15th. NTEU strongly objects to this action and we have expressed our outrage that the Congress took a two-week break without dealing with this critically important issue.

While the fault for this dilemma lies with Congress, if the Administration is going to tap federal employees’ and retirees’ retirement savings to cover other expenses, NTEU would like to be briefed on the precise action the Administration plans to take, its likely duration and what impact it will have on the Thrift Savings Plan. Those whose retirement savings are in the Thrift Savings Plan deserve to know that they will be held harmless by any action contemplated that will use their retirement funds for unrelated purposes.

Working Americans who play by the rules and save for their retirement have had their confidence rocked by the Enron scandal. Federal employees and retirees deserve to know what plans the Administration has to “borrow” their hard-earned money without their permission. Communication between this Administration’s top leaders and front line workers has been minimal at best. With regard to action to dip into retirement funds to cover impending shortfalls, silence is unacceptable.

As the person with the most direct authority for federal employee and retiree issues in this Administration, I am urging you to ensure that federal employees and retirees and their representatives are briefed on any plans to tap retirement funds and updated on any actions taken that affect those funds. This money belongs to federal employees and retirees. They deserve to know the circumstances and consequences of the Administration’s intentions in this regard.

Since the latest projection I have heard of hitting the debt ceiling and needing to tap into the Thrift Savings Plan is April 1st, I look forward to your earliest possible response.

Sincerely,

Colleen M. Kelley

National President