Treasury Secretary May Shift Funds
Treasury Secretary Paul H. O’Neill is expected to buy time in a looming political dispute over the federal debt ceiling by maneuvering some funds the government manages for federal retirees, congressional officials and lobbyists said.
The move is legal and was used by Robert E. Rubin, President Clinton’s Treasury secretary, to avoid an unprecedented federal default during a 1995 budget fight with Congress.
If Congress fails to raise the debt ceiling, O’Neill can shift money in retirement funds the Treasury Department invests for federal retirees into non-interest-bearing accounts.
By shifting that money, it is no longer considered to count against the federal borrowing limit. That frees up room for the Treasury to borrow more money to keep the government running and paying its bills.
The money--along with all lost interest--eventually would be put back into interest-bearing instruments.
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