US Daily Cash Deficit 12/30/2013

The US Daily Cash Surplus for Monday 12/30/2013 was $14.8B. bringing the December cash surplus through 30 days to $33B.

12-30-2013 USDD

Looking at the chart remember we have synced up 2013 and 2012 on days of the week….we are comparing December 2013 through Monday 12/30 to all of December 2012…which ended on a Monday and has one fewer business day than 2013. The timing scrambles things up a bit, but expect large outlays 12/31 and even larger revenues…pushing both over 2012 levels and pushing the surplus north of $50B. Then…it’s on to 2014!!

US Daily Cash Deficit 12/27/2013

The US Daily Cash Surplus for Friday 11/27/2013 was $6.1B bringing the December 2013 surplus through 27 days to $18B and likely headed to $50B+ once Freddie Mac’s $30B New Year’s present is delivered tomorrow afternoon.

12-27-2013 USDD

Taxes withheld are up 2% YOY, taxes non withheld are up 4%, and corporate taxes are up 4%. Not terrible numbers, but not good enough if your expectation is +10%. Overall revenues are down 3%….a number that will no doubt reverse once the Freddie check clears….which is fine, but don’t expect a repeat next year…or the next…or the next. Between Fannie and Freddie, we are looking at about $75B of phantom 2013 revenues…and that’s just related to the write up of their faux tax assets.

It looks like 2013 cash revenues are likely to come in at around $3.150T…inclusive of the $75B from Fannie/Freddie write up of deferred tax assets. I’m assuming that wad is spent….and will not repeat in 2014. Now…just for revenue to get back to break even for 2014, you need 2.4% across the board growth….which is more or less what the economy is supposedly growing at.  Clearly…anything is possible, and I missed this by about $200B last year, but I’m quite skeptical we get anywhere close to 10% YOY revenue growth in 2014.


US Daily Cash Deficit 12/26/2013

The US Daily Cash Surplus for 12/26/2013 was $2.4B bringing the December 2013 surplus with 3 business days remaining to $12B.

12-26-2013 USDD

No real changes to note….revenues gain a bit of ground and outlays give a little back. This is about the cleanest true YOY comparison we are going to get with the upcoming Freddie Mac “dividend” tainting the true revenue stream. So as of today,with all the SS expenditures done and all of the holidays behind us, we are showing a surplus,  but there’s really nothing to like here with revenues down 3% and outlays down 1%.

Recall…we are starting in a huge hole…$17T+ of debt…and while the digging has slowed a bit from the ~1.6T per year pace in 2009 to the ~$700B we will likely end 2013….$700B is still a huge number. If we ever to balance the budget…..and I’m on record as highly doubtful….we are going to need to string together another 3-5 years of solid revenue gains….just to get to zero. Without a doubt 2013 has been an impressive year…with ~+13% YOY revenue gains and a ~1% decrease in outlays for a $400B+ YOY improvement.

But…if December through 26 days is a sneak peak of what’s to come in 2014 and 10%+ revenue growth is over…we’re  pretty much screwed (but we already knew that right). Now…maybe it’s not….maybe it’s an anomaly….we really won’t know until April-2014. If at that point, revenues are up another8-10% over 2013’s record showing…perhaps some sliver of hope will remain. But if instead we are in the low single digits, you can kiss….those rosy CBO estimates of a $382B 2015 deficit (and the 2023 $985B deficit) goodbye.

There are already signs that the fed is on the cusp of losing control of rates with the 10 year breaking 3%…nearly doubling from a year ago. and the 30 year inching up pretty close to 4%…up over 1% from just earlier this year. That, on top of SS, medicare, Medicaid, and whatever happens with Obamacare….there are huge cost pressures that are likely unstoppable…If we don’t get revenue gains to offset them the deficit blows up… debt continues skyrocketing, and sooner or later rates spike, or people just aren’t willing to lend the crackheads (that would be us) any more cash. And that’s when it gets really interesting. This is likely inevitable….but the unknown is when? Anybody who says they know is a liar…I could envision scenarios where it gets real ugly real fast…..I could also envision scenarios where this juggling act going on far longer than would seem mathematically possible. That’s what makes it interesting, and that’s why I’m still paying attention….

US Daily Cash Deficit 12/24/2013

The US Daily Cash Deficit for Tuesday 12/24/2013 was $16.1B driven by the final big payment of SS for the month at $12.7B. This brings the monthly total for SS to $62.6B…about $0.5B over last month’s $62.1B as at least some of the COLA for 2014 kicked in. I had expected about a $1B increase ($62*01.5%), so this is below my expectations….I wonder if it is timing, or just a beat? We’ll probably have to wait for Jan to find out. If it is a beat….just remember that this increases the baseline for the year by a full $6B, which may not sound like much, but in perpetuity…plus a growing base….it adds up quickly. Combined, SS is growing at about $58B per year annualized. Compare that to the latest budget deal, which supposedly saves $23B….over 10 years….hardly even a rounding error. Our TTM cash spend on SS is currently at $733B. At this pace…assuming moderate 5%-6% growth, we would hit $1T in less than 5 years…November 2018.

12-24-2013 USDD

To the charts…we have some Christmas related timing issues, but same old story…revenues are still down, though cost has come up a bit….it will be interesting to see if that is timing or if it actually sticks. We are still at a surplus for the month and are almost certain to stay there thanks to about $35-$40B of cash that should come in 12/31 thanks to our good buddies at Fannie/Freddie and their Enron accounting principles…hey it’s cash…we’ll take it right??

US Daily Cash Deficit 12/20/2013-Freddie Mac Payday Loan

The US Daily Cash Deficit for Friday 12/20/2013 was $3.6B bringing the December 2013 surplus through 20 days to $13B with 6 business days remaining.

12-20-2013 USDD

Revenues take a big hit today…$-7B vs last year…now down $11B YOY…almost 5%. While most of that can be attributed to a $6B TARP repayment received last year…that’s not really a surprise. Excluding TARP…tax deposits are just about flat at +1%…including corporate taxes which are up 3%.

So…while December is looking like a pretty miserable month on the revenue side…I just stumbled upon a nice little news story from back in November that looks like it will save the day. Over at The Street they reported that Freddie will be making a $30B payment to treasury. This is pretty much identical to what happened with Fannie Mae back in June as I documented here. Accountants at Freddie wrote back up previously written off tax assets…creating an accounting gain of $24B. Then…they go out and get a $24B loan….and use that to pay uncle Sam his due. Sounds great right??

Well…you see the thing is…Freddie is essentially a government owned entity….and since these fictitious “tax assets” only value is in reducing future taxes owed….the entire thing is essentially a huge circle j***. The US government is using Freddie and Fannie to get a payday loan….in this case cashing out $24B today….but reducing future revenues by the same…plus whatever interest Freddie has to pay…

At risk of putting some to sleep, I feel a need to proceed. Let’s just say in a given quarter Fannie and Freddie together post a $10B  before tax profit….which they are obligated to turn over to treasury per the bailout terms. Now…if they were a normal corporation….they would pay about 35% of income tax….$3.5B…then the remaining $6.5B would then be turned over to Treasury (as the owner). Net to treasury….$10B. Now….let’s let them use their pretend tax assets to reduce income tax to zero. They still have $10B but no income tax….so all $10B is handed over to treasury. So…Treasury gets $10B regardless of what kind of nonsense the accountants come up with. However…now Freddie has an additional $24B of completely unsecured debt on it’s books. The interest on that…though probably not much, will directly reduce future earnings handed over to the treasury….and of course…the debt itself will ultimately have to be repaid. Even if Treasury ever sells Freddie, or lets it go public again….the entities value to a suitor has been reduced directly by the $24B of cash pulled out….a haul old school corporate raider Mitt Romney could only ever dream about.

So…the net impact of all this is that the December Surplus will be $24B higher than it otherwise would have been….and future deficits will be $24B+ or so higher. To my knowledge…the Fannie/Freddie bag-o-tricks is now just about empty… after buying us a whole…maybe 2 weeks of time. Yep…we’re still doomed 🙂