US Daily Cash Deficit 2/10/2014

The US Daily Cash Deficit for Monday 2/10/2014 was $12.8B pushing the February 2014 cash deficit to $37B through 10 days.

2014-02-10 USDD

Of note…Treasury seems to have remembered how to pay tax refunds…pushing out nearly $19B, and bringing the YOY shortfall down to only $4B.

Also interesting…we can clearly see “extraordinary measures” at work on the DTS. New public debt issues of $885M, offset by public debt redemptions of $926. So…simple math, one would probably expect public debt outstanding to decrease about $41M right???

Nope…somehow, magically, public debt outstanding plunged $3.73B….from $12.280T to $12.276T. Where did it go?? Essentially…it was taken off of the balance sheet and put in a jar with the rest of the off balance sheet IOU’s…so Treasury could pretend it didn’t exist….and therefore not go over the debt limit when they booked the also fake IOU’s to the SS trust fund (intragovernmental debt rose $3.7B). Of course, when the debt limit is raised… these liabilities come out of the jar, and back on the balance sheet.

Summary: In one fell swoop refunds are more or less back in line with last year and net revenues are looking flat, but with a lot of time left to reach that +10% mark…. Outlays look weak at -$45B, but should make up a lot of this by month end as timing is the key driver here. All eyes on revenue and refunds for the rest of the month.


US Daily Cash Deficit 2/7/2014

The US Daily Cash Deficit for Friday 2/7/2014 was $1.5B bringing the February 2014 deficit through 1 week to $24B.

2014-02-07 USDD

Refunds continue to be extremely low. Last year,  on Friday 2/8/2013 $8.8B of tax refund payments were made to individuals. Friday 2/7/2014… only $270M. Through 1 week, $18B less refunds have gone out vs last year….that can’t be good for retailers..

Cash ended at $34B on the day the debt limit was put back into force at $17.212T. So in theory, we can run a deficit of $34B….plus whatever Lew can squeeze out of “Extraordinary Measures…over the next 17 days. Last year, the deficit over that period was $144B, but given the sporadic refund payments we’ve seen, I don’t know whether to expect a surge as they catch up, or a permanent deficiency. Stay tuned…

Fun with Math: Electric Bill Minimum Usage Fees

I don’t know how this works in the rest of the country…or world for that matter, but in Texas, we have the ability to get our electricity from dozens of providers offering hundreds of different plans. Your price will generally vary depending on the term of your contract, how much renewable energy you want ect…. Although prices are always changing…primarily drivem by the price of natural gas, I have seen prices from ~12.5 cents per kwh fixed for 5 years down to as low as 5 cents for a 3 month contract…or even lower for teaser month to month rates.

Last April, with my contract coming due, I started looking around, ultimately signing a one year contract at 8.5c per kwh….but with a $20 charge for anything under 1000kwh. This was a rather new development….I had seen minimum usage fees before, but they had been set much lower…at 500kwh and only $10.

Living in Houston, the AC generally runs from April to November….pretty much ensuring that I never have to “worry” about going under 1000kwh during those periods. However, looking at my historical usage for Dec-March it varies from 500 to 900kwh, the average usage is about 750kwh. Who cares right….my marginal cost for a kwh is still 8.5c right?

Well, penciling it out, the cost for 765 kwh adds up to about $85….including the $20 fee….the same as using 1000 kwh. so…if in a given month, it looks like I am going to hit 765, essentially I can get my next 235 kwh for free….if only I have a way to use them….and I can ensure that I can actually get to 1000. 1000 kwh may cost $85, but 999 kwh costs about $105.

So…what to do? My heating system uses natural gas, which generally speaking is cheaper than electric heat…but it’s not cheaper than free. Luckily, I have a couple of portable fan heaters rated at 1500 watts….so at full blast for 24 hours, they can “burn” 36kwh in a day each. They aren’t enough to keep the house warm when a polar vortex dips into south Texas, but they certainly reduce the load…and thus the amount of natural gas you need to use.

Now, clearly I lack the expertise to compare the efficiency of electric to natural gas. However, while it’s pretty much a slam dunk to bridge the gap between 765 and 1000 by using what is essentially free electricity (to me)…it occurs to me, it may even make sense at say…500kwh. Penciling it out…say I was going to use only 500kwh for a cost of  $62.50. My marginal cost to get from 500 to 1000 is only $22.50, or 4.5cents per kwh. At 600 kwh, that marginal cost is only 3.5cents per kwh. Is that cheaper than heating with natural gas?? Natural gas at $5 per mcf is pretty cheap, but it’s probably closer to $10 delivered. According to the intertubes, one kwh has about 3400 of btu’s…one mcf has about 1 million….giving me a ratio of about 300/1…and using that $10 per mcf….I hit break even at 3.3cents per kwh….of course assuming 100% efficiency from my gas heating. If that is true, then it makes sense to replace gas heat with electric heat starting right around a baseline usage of 600kwh.

This is all just food for thought. At the end of the day, odds are….it’s not worth the potential $20 savings when you factor in what a pain in the ass and risk space heaters can be….not to mention the time of penciling out your own numbers. Then…monitoring everything and making sure you don’t go over 1000 by too much….or under….in which case instead of screwing over the man….he’ll have pulled one over on you.

I guess the point of all this is that minimum usage fees encourage the use of electricity in certain usage bands… and perhaps the wasting of electricity. Since the electric grid in Texas is pushed to the brink of failure every time it gets below freezing in Houston…maybe they ought to think about prohibiting fee structures that incentivize people to crank up their space heaters at exactly the time the grid is least able to handle it.



US Daily Cash Deficit 2/6/2014

The US Daily Cash Deficit for Thursday 2/6/2014 was $14.9B as refund checks finally started being paid….just a few days later than last year.

2014-02-06 USDD

You may be wondering….how do you book -$7B of revenue??? Well…I net out refunds from revenues rather than counting them as outlays (which would double count). So we had about $5B of regular revenues, and almost $12B of refunds….bringing us to about -$7B for the day. This does help to catch us up YOY…the gap was at $16B yesterday, but has narrowed to $10B.

Perhaps of note….cash plummeted $42B on the deficit and a~$26B net pay down of debt, ending up at $36B with just one day to go before the debt limit is frozen. Of course…if we hit the debt limit with $2T in cash….we wouldn’t have a problem for perhaps a few years…..generally speaking the more cash in hand  2/7…the longer they will be able to make it before “default day”. However, as I noted yesterday, I actually think it is in Obama’s best interest to minimize the number of days before we hit the D-DAY….forcing the republicans rather weak hand sooner, and getting this game over rather than letting it be drawn out. In the big picture, I suppose it really doesn’t matter:)


**Looks like Lew has penciled in Thursday 2/27 as D-Day….which makes sense since 2/28 will likely have a large ($30B-$40B) deficit as once again payments due Saturday 3/1 will get pulled forward into February since 3/1 is not a business day.

US Daily Cash Deficit 2/5/2014

The US Daily Cash Surplus for Wednesday 2/5/2014 was $5.1B bringing the February 2014 Deficit through 5 days down to $8B.

2014-02-05 USDD

Curiously….still no material increase in tax refunds showing up on the DTS yet…. This seems a bit odd given the debt limit going back into effect tomorrow. You see, until tomorrow, there is no debt limit. They could issue $200B of debt to pay for $200B of tax refunds by tomorrow afternoon and it would be all good. However…after tomorrow….the ability to borrow is pretty much locked down and limited to “extraordinary” measures.

So…just to look back at last year….Filing began Wednesday 1/30/2013….and two days later on Friday 2/1, ~$4B per day of refunds started flowing out per day. This year, filing starts Friday 1/31…and by 5 days later…nada.

Obviously I have no proof….but If I were Obama….this is what I’d be doing as well. Why risk drawing this silly little game out for months? By delaying payments until after the debt ceiling goes into effect, perhaps they are ensuring this round is over and done by the end of February. Also…it’s likely that any day they will start talking about how tax refunds won’t be paid unless the debt ceiling is raised….which will become technically true before too long. That’s going to make it extremely difficult for Republicans to gain any leverage or put up much of a fight….not that they would have anyway.

So as it stands, we have the illusion of a very good month….already with a deficit $58B lower than last year. This one could get crazy quick, so for now all we can do is sit back and watch.