Judge Refuses To Bar Treasury From Redeeming Securities With AM-Budget-Debt
Undated (AP) _ WASHINGTON (AP) - A federal judge refused Thursday night to bar the Treasury Department from redeeming some Social Security trust-fund securities, a move that opponents have said may cost the fund millions of dollars.
U.S. District Judge Thomas F. Hogan, however, did not dismiss the lawsuit brought at by the American Association of Retired Persons and others, saying that it could be pursued if Congress does not resolve the debt ceiling problem on Friday.
Treasury Department officials have warned that if the debt limit, which allows the government to borrow to pay its bills, is not increased by then, they will have to redeem billions of dollars held by the Social Security trust fund and other trust funds to keep the government solvent.
In denying the request for a temporary restraining order, Hogan said: ″It seems clear to the court that events may overtake any action I may take tonight. The court has some concern that the injury (perceived by the plaintiffs) is certain and not theoretical.″
The AARP, the Save our Security Coalition, five congressmen and two former government officials filed suit after Acting Assistant Treasury Secretary John Niehenke testified Wednesday his department, prompted by the congressional impase over raising the government’s debt ceiling, had redeemed some Social Security trust-fund securities.
Niehenke told the House Ways and Means subcommittee that the redemptions, made this month, involved high-interest, long-term Treasury securities held by the various Social Security trust funds.
Former attorney general Elliot Richardson, representing the plaintiffs, said he was asking the court to order the Treasury Secretary to draw on the receipts the government will receive to pay the Social Security benefits and then redeem the securities to make up the difference. He said he did not want the administration to sell off the securities for the general fund.
Dennis Linder, a Justice Department attorney representing Treasury, said the Treasury Secretary has not used the Social Security trust funds for the general government debts but only to pay for the fund’s obligations.
He said the money is being used to ″cover the checks that are out there.″
Linder said the lawsuit was ″an attempt to put the court in the middle of a political controversy. It is better addressed up in Congress.″
The five congressmen who joined in the suit are Democrat Reps. James Jones of Oklahoma, J.J. Pickle of Texas, Marty Russo of Illinois, Claude D. Pepper of Florida and Mary Rose Oaker of Ohio.
William Cohen and Arthur Flemming, the officials who joined in the suit, are former heads of the Department of Health, Education and Welfare, now Health and Human Services.