WASHINGTON?A flood of income tax payments has helped ease pressure on the national debt ceiling and allowed the Treasury Department to begin restoring money shifted out of government employee pension accounts to avert a government default, officials said Wednesday.
Treasury Secretary Paul O’Neill earlier this month moved federal retirement funds into a non-interest-bearing account to free room for more borrowing.
The money was moved back Tuesday and interest paid after income tax payments began flowing into Treasury coffers after Monday’s tax deadline.
Without the shifting of funds, the government would have been technically in default on the debt?which has never happened in the country’s history. That would cast a cloud over U.S. securities and also force the government to pay billions of dollars in higher interest payments on the national debt in future years.