Working Paper

Explaining Fluctuations in the Thrift Savings Fund Daily Balance at U.S. Treasury

Mark Skidmore, Camila Alvayay Torrejón, David Pare
CESifo, Munich, 2021

CESifo Working Paper No. 9084

In this paper we document and examine unusual fluctuations in the G-Fund, which is one of five funds available in a voluntary federal government employee retirement savings vehicle called the Thrift Savings Plan. The G-Fund is managed as “internally” held debt by the United States Department of Treasury. Our examination highlights two obscure facts about the G-Fund: 1) The fund is exclusively composed of one-day notes that Treasury redeems and reissues every business day. The daily turnover of the G-Fund results in about $55 trillion in debt reissuance annually; and 2) whenever the federal government is constrained by a debt ceiling, the G-Fund balance drops dramatically and typically does not return to pre-constraint balance levels until the debt ceiling is either expanded or suspended. We document these patterns and ask whether the G-Fund is managed in a way the represents the best interests of the fund contributors.

CESifo Category
Public Finance
Keywords: thrift saving fund, public debt, debt ceiling, extraordinary measures, debt issuance, debt redemption
JEL Classification: G230, H230, H550