Readers Denounce Federal Raid on Thrift Savings Plan -- and Lack of Prompt Information

By Stephen Bar

Monday, April 8, 2002; Page B02

Mark Twain observed in 1887 that "the departmental interpreters of the laws in Washington . . . can always be depended on to take any reasonably good law and interpret the common sense all out of it."

Several readers expressed similar feelings last week after the Treasury Department decided to reach into the G Fund of the Thrift Savings Plan to avoid defaulting on the national debt. A few scoffed at assurances that the $40 billion invested by federal employees in the G Fund was safe just because a 1987 law says account balances must be restored, with interest, when a debt crisis ends.

The doubters contended that Washington has a bad habit of changing laws or ignoring laws when convenient. In the past, they said, laws were changed to end the lump-sum distribution of civil service retirement contributions and to postpone cost-of-living adjustments. Several employees pointed out that the government has never lived up to the requirements in a 1990 federal pay law.

One wag wrote: "Let's see, it is a law that the G Fund is safe. . . . Isn't the Federal Employees Pay Comparability Act also a law? How do we know if the G Fund protection will be 'fully implemented'?"

Michael Allard, a federal employee, made this observation: "The notion of establishing a savings account and then having literally no say as to who will borrow or when is metaphorically akin to parents taking money from their child's college trust fund."

Allard added, "Returning the principal with interest to the thrift fund is not the core matter. It's establishing accounting practices that are held up as being tacitly pristine and as an acceptable paradigm to any other entity in similar financial straits."

A Navy employee with 25 years of federal service wrote, "I really don't care what the government calls our TSP; it is still a personal savings plan. . . . Our government feels free to reach in just to help save face so that the rest of the country believes that the administration is doing a good job. Isn't this just another Enron, only on a much larger scale? What if I didn't have the money to pay my personal bills? Would I be allowed by law to go to your bank and withdraw money from your account to pay them?"

Colleen M. Kelley, president of the National Treasury Employees Union, put the blame on Congress, which left town on spring break without approving legislation to raise the debt ceiling.

But she also faulted the Bush administration for failing to brief unions and employees promptly on the G Fund, the amount of securities moved out of the fund, the dates for repayments and what officials plan if Congress keeps stalling on legislation.

When the Clinton administration confronted a similar crisis in 1995 and 1996, Kelley said, officials set up meetings and telephone briefings for employee groups to explain the bookkeeping maneuvers affecting the G Fund and the civil service retirement trust fund.

"Communication between the 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," Kelley wrote in a March 27 letter to Kay Coles James, director of the Office of Personnel Management.

In a letter Thursday to Kelley, James said, "[N]o funds have ever been lost, nor has any federal employee or retiree suffered financial harm from the [Treasury] secretary's use of the authority" to suspend investments in the G Fund.

In 1995 and 1996, the Treasury restored $995 million in interest to the fund, making it whole, after that debt crisis ended, James said.

James and Kelley plan to meet in the next week or so to discuss the G Fund and other issues. Kelley said she probably also would contact Treasury Secretary Paul H. O'Neill and Roger W. Mehle, who oversees the TSP, to discuss the administration's handling of the G Fund.

"The administration could have avoided a lot of employee concerns," Kelley said. "Would there still be people who questioned whether it would be paid back? Sure. But with any issue, you can allay those fears with facts up front."

Retirement

Edward C. Sullivan, assistant chief of the laboratory for astronomy and solar physics at the Goddard Space Flight Center, will retire May 3 after 42 years of federal service.

Stephen Barr's e-mail address is barrs@washpost.com.