5/21/2013 Daily US Cash Deficit

The US Cash Deficit for 5/21/2013 was $5.2B bringing the May 2013 deficit through 21 days to $103B. Once again, 2012 and 2013 are more or less aligned, with each having 15 business days M-F. Just as last week…nothing very impressive here. Revenue up 1%, cost up 2%. All this is a far cry from what we saw last month with revenues spiking 26%. We do see tax deposits withheld up 10%, consistent with what we have been seeing all year, but this has been offset by decreases elsewhere, notably unemployment deposits from the states, federal reserve earning, and TARP. With 7 business days remaining, May is looking like a rather unimpressive follow up to a spectacular April.

05-21-2013 USDD

On the Debt limit, cash was down $6B to $31B. No sign of “extraordinary measures” yet…just a dwindling cash balance and a lot of payments due by May 31.

5/20/2013 Daily US Cash Deficit

The US Cash Surplus for 5/20/2013 was $3.6B on typically strong Monday revenues, pushing the may 2013 deficit through 20 days to $97B. Net revenues are now showing a $10B improvement over 2012, but this is likely to come down a bit after the Tuesday report is released this afternoon and the months more or less synchronize again.

05-20-2013 USDD

It does now appear that the official debt limit is locked in at $16.699T, with a cash balance of $38B. Between now, and June 3 when the first round of June social security payments goes out ($25B), I am expecting a cash deficit of $75-$90B. There was no movement yesterday, but what I expect to happen is “intragovernmental” debt, currently at $4.869T to decrease, and then for treasury to sell external debt for cash. …this is the signature of “extraordinary measures”. So…if I have this right, treasury will magically make $50B of “intragovernmental” debt just disappear over the next two weeks. If there was ever any doubt over whether or not “Intragovernmental” debt was real or just a figment of our imagination….this should pretty much clear it up.

5/17/2013 Daily US Cash Deficit

The US Cash deficit for 5/17/2013 was $2.0B bringing the May 2013 deficit through 17 days to $101B. Nothing particularly interesting to see…revenue and cost are more or less inline with last year.

05-17-2013 USDD

Now…on to the fun stuff. As we discussed last week, heading into the expiration of the debt limit deal, cash was looking pretty low….that is still the case, ending down a bit at $34B. Debt subject to the limit as of 5/17 stands at $16.699T….which I presume is now the new debt limit. From here on out, the only was to get cash is to receive it from taxpayers, or, via “extraordinary measures” move certain parts of “intragovernmental” off of the balance sheet…freeing up room to issue external debt.

At first, I thought this was simply going to be impossible, but I penciled it out, and while it still seems like a stretch, I can see a scenario in which we make it to September…heavily dependent on strong revenues, $60B from Fannie Mae, and about $150B from “extraordinary measures”.

I’ll do some more analysis soon…short on time right now, but basically the timeline is greatly extended by expected June and September surpluses. It looks to me like the most difficult part is the next 2-3 weeks….making that $34B last until the Fannie Mae and June quarterly revenue starts to flow in in the second half of June. Stay tuned!!

5/16/2013 Daily US Cash Deficit

The US Cash Surplus for 5/16/2013 was $0.3B leaving the May deficit essentially unchanged at $99B.

05-16-2013 USDD

Curiously…Treasury chose to pay down the public debt by $34B today…further pushing down cash from $69B yesterday to $36B today…with one day left before the debt limit is frozen in place. All this is very interesting…it was just a few weeks ago in the middle of surging April revenues and thus cash…that Treasury was issuing debt pushing the cash balance up over $200B. Now…with the debt limit expiration a day away…they appear to have done a 180…trying to hit the limit with just a few days cash in hand??

So for review… the problems don’t start when you hit the debt limit…they start when you run out of cash. So if your goal was to make it as long as possible after the debt limit expires without defaulting or delaying payments, you would want a huge cash stockpile…pretty simple stuff. On the other hand if you wanted to just get it over with…you would go in with almost zero cash, and threaten to stop mailing out social security payments and military pay next week. The more I think about it….this sounds like a better strategy for Obama. What could they possibly gain by drawing this out for four months?

But then…why all the stories about making it to October? Why have the CBO come out with the new deficit forecast…setting expectations so high… Maybe it is my expectations that are too high?

Maybe I’m getting ahead of myself….we’ll get the Friday finals Monday at 3…maybe they will issue a lot of debt. But if they don’t, and we end up with cash in the $30B range, we have about a 4 week “red zone” between 5/18 and the middle of June when we should see some heavy cash inflows. Using last year as a go by, the deficit over that period could be around $100B, but we would probably expect it to be a bit lower. That leaves say a $50B gap that would need to be filled by extraordinary measures, or perhaps a “special” cash infusion from Fannie Mae?? Guess we’ll have to wait and see

5/15/2013 Daily US Cash Deficit

The US Cash Deficit for 5/15/2013 was $34.7B bringing the May 2013 deficit through 15 days to $99B.

05-15-2013 USDD

As expected, a large interest payment went out for $30.4B…about $1B more than last years payment on the same day. So not earthshaking, but a small nudge in the direction we would expect given the ~$1T increase in debt since last year. Also of note, corporate taxes of $5.8B were received today…a shade lower than last year, but month to date is up 6%, though that’s only $0.4B, so immaterial in the big picture.

We are back to having timing differences, so comparing revenues and outlays isn’t especially useful, but more or less everything is in sync…no material moves up or down. Cash fell an additional $22B, bringing the balance to $69B with 2 more days before the debt limit kicks back in. This is a complete 180 from the path it looked like they would take just a few weeks ago where it looked like they were going to load up on cash and debt in anticipation of the 5/19 debt limit expiration. Hmmm…. I give up. I don’t see how they make it to October if they start with under $100B of cash, but you never know.