When we talk deficit here at the Daily Deficit….we are talking about cash. Simply…cash in less cash out. If I take in $5B in taxes, and spend $10B…my daily deficit was $5B. We make two notable adjustments to the DTS totals. We start with total cash in, then we subtract cash in from issuing debt. This makes sense. Issuing $100B in new bonds increases cash, and debt by $100B. It has no effect on the deficit…it’s a pure balance sheet transaction. We do the same on the other side of the equation by removing cash outflows used to pay down debt, or pay off expiring bonds. This gets us down to revenue in from taxes and other sources, less cash out from expenditures. We then make one final adjustment. The DTS shows tax refunds on the expenditure side. As an accountant, that makes me cringe a little bit. I believe that tax refunds should be accounted for as a reduction in revenue, not an expense, so we take daily tax refunds and reduce cost by that amount, as well as revenue. If we don’t do this, we would essentially overstate revenue and cost by about $400B per year.
So, lets take a look at 11/8 and pencil out a quick example. Per the DTS:
Total Deposits ($131.251B) – Debt Issues ($127.671B) – Tax Refunds ($0.131B) = $3.449B of Revenue
Total Withdrawals ($110.529B) – Debt Redemptions ($110.529B) – Tax Refunds ($0.131B) = $9.169B od Cost
Then, we do the math…$3.449B – 9.169B = $-5.720B
So our daily deficit is $5.72B. Yikes!! How much money did you lose 11/8?