Debt Limit Update 1/17/2013

According to The Hill

House Republican leaders on Friday announced a plan to condition a three-month increase in the debt limit on the Senate committing to pass a budget by the April 15 statutory deadline.

The bottom line seems to be this..the Republicans will increase the debt limit by enough to get through three months. No word on how much that is…I’m guessing somewhere between $300B and $500B depending on how good they are at math. Here is the kicker…. if congress…that is both the house and senate don’t pass a budget in that period…they will all cease to be paid, presumably until a budget is passed. No word yet on if the lobbyists will also cease paying them :)…this seems to be only taxpayer funds they will forfeit.
If nothing else this is at least interesting. I guess the Republicans don’t have the spine to shut down the government in the middle of tax season…Probably a wise move. So they avoid that battle, and will undoubtedly attempt to squeeze a few hundred billion out of the budget…of course over 10 years so we won’t even notice if it’s bogus because honestly, what % of us can even divide by 10? 40%? 60% maybe?
Of course, this is just a proposal…let’s see if they can even get it passed before we stop worrying about whether or not Uncle Sam goes bankrupt before, or after we cash our tax refund checks.

Daily US Deficit For 1/17/2013

The US Daily Deficit for 1/17/2013 was $3.8B, bringing the January total through 17 days to $39B, now pretty much even with 2012. The revenue gap has narrowed to $22B and the outlays have narrowed to $27B. As mentioned yesterday, 2013 is currently 2 business days ahead of 2012 so it’s not a stretch to assume we are pretty much in line with last year at this point in time. Still no progress being reported on increasing the debt ceiling with about 4 weeks to go. I give it two weeks and it should start to get a lot more interesting.
2013-01-17 USDD

Daily US Deficit For 1/16/2013

The US Daily Surplus for 1/16/2013 was $0.2B, bringing the deficit through 16 days to $35B, $16B under where we were this point in 2012. It is important to point out that through 16 days, 2013 is a full 2 business days ahead of 2012, which is really starting to make our revenue and outlay charts pop. 2013 Revenue is a full $47B ahead of 2012 and outlays are up $32B through our 16 calendar days. I expect this delta to be significantly reduced after the MLK holiday next week when 2012 and 2013 get more or less back in sync. Jan 2012 ended up with a $53B deficit…2013 is looking to end up less than that, but how much is difficult to forecast due to all of the moving pieces. I’ll just throw the dart at $25B, +/-20. We’ll see how that ends up.
I had mentioned yesterday that there was something screwy with the DTS. I still have not heard back with an explanation…not sure if that means it isn’t coming, or if I’m in the queue.

2013-01-16 USDD

Daily US Deficit For 1/15/2013

The US Daily Surplus for 1/15/2013 was $4.5B bringing the deficit through 15 days to $36B. Timing differences are still apparent in the data. Not only is 2013 1 business day ahead of 2012, but MLK holiday timing is throwing off the timing as well. I expect these timing issues to mostly resolve themself by next Tuesday, so by next Wednesday we should have a general idea of how January is going down.
The DTS for 1/15 has some oddities that I don’t quite understand at the moment, though I don’t think it affects my deficit numbers. I’m almost certain it us due to “extrordinary measures”, but I can’t quite wrap my mind around the accounting… Note to self…. never get into government accounting!! The gist of what they have done is somehow redeemed about $27B of Intragovernmental Debt …our pretend debt to ourselves and ended up with $27B in cash….while still staying under the debt limit. I sent an email to their usually very helpful staff…hopefully that yields some clarity. If not, i guess we’ll just have to take their word for it. In any case, this neat little switcharoo has pushed the cash balance, and debt limit cushion up to $77B over yesterday’s $50B. When coupled with the delay in tax refunds, this pushes the needle for impending default per my simple linear model to about 2/10 to 2/14. Remember that 2/15 there is a large interest payment due…~$35B from memory. If Bernanke can conjur up $27B in cash at will on a random Tuesday, it’s a pretty safe bet he can make that payment.
As a side note…regarding the debt limit, there has been a lot of talk about prioritizing payments, and all of the difficulty that would bring. I’m not reccomending this, and I fully expect a debt limit increase before we get there, but the answer is obvious…just delay tax refunds and prioritize all other spending above them until the debt ceiling is raised. Don’t get me wrong, delaying any payments is going to hurt the economy and piss people off, but delaying tax refunds seems a little bit less disruptive than not paying soldiers, social security, doctors ect… If Obama can frame the headlines that way…and blame Republicans for blocking tax refunds, I just don’t see the republicans having the spine to continue fighting. Or…it would just cause riots in the streets, but I guess that’s one of the risks of playing with fire like this. Without further ado…today’s charts.

2013-01-15 USDD

Daily US Deficit For 1/14/2013

The US Daily Surplus for 1/14/2013 was $7.3B bringing the total January 2013 deficit to $40B through 14 days. All in all, we are pretty much in line with last year when we ended up with a $53B January deficit, followed by a $249B February deficit. The “debt limit cushion” has grown to $50B, still pointing at 2/1 as the imminent default date using last year as a guide, which unfortunately isn’t particularly useful anymore due to the delay in tax filings. In any case, it looks like we have about a month, and the debt ceiling rhetoric is really heating up. Obama says he won’t even negotiate, and some are saying Republicans are willing to shut down the government. I’m pretty sure the Republicans will back down on this one, but you never know what a wounded animal will do. Default now, or default later? Does it really matter? In the long run, not so much, but in the short run, pulling out an annualized $1.2T of deficit spending out of the economy would pretty much send the economy into a “for real” great depression right here, right now. And that’s the scary part…like a drug addict, our economy has become addicted to all of this false demand created by deficit spending. Cutting spending kills the economy, but spending can’t continue forever anyway. It’s a lose-lose…my advice…just enjoy it while it lasts.2013-01-14 USDD