Lew Building Massive Cash Hoard For Next President-Costs Taxpayers $8B Per Year

I’ve been watching this develop for a while for a while…Here’s the deal…As of last Friday, Treasury had built up a cash balance of $428B. Now, that might not sound like a lot……Hah!!…just kidding… It’s huge and enormous and completely unnecessary. To put it in perspective, Treasury could stop borrowing today, and not borrow another penny for the next 8-10 months.

Here is the historical chart:

uscashbalance For the 10 years heading up to the “Great Recession” Treasury maintained an average balance of about $36B. They used this balance, and daily cash inflows to pay for daily expenditures and issued new debt as necessary to fund the deficit. Then, in the second half of 2008, borrowing soared, ending 10/2008 with over $600B cash in the bank as they prepared to…well, we all know what they did with the cash…no need to bring that up again here 🙂 Balances were kept high for a few years before leveling off at about 100B, but have been headed back up lately.

So…who cares you may wonder? Well, think of it as a this way. Our good stewards at treasury could take say $400B of “excess” cash, and pay down the debt by that much, assuming an average rate of 2%, and save a cool $8B a year…just by not having a really stupid cash management policy. I know…I know…chump change right?

Debt Limit Avoidance?

This is the most likely answer. After the last debt limit battle ended last November, the debt limit was suspended until 3/15/2017…meaning that they could issue as much debt as they wanted in the meantime. Now I haven’t waded through the specifics of the law, but my thought all along has been…ok…If I were in charge, and I didn’t want to deal with that nonsense again, on 3/14/2017, I would just issue maybe $3-$4T of debt, park the cash in my Federal Reserve bank account, and use that to squeak by the next 4 years.  Clearly they don’t think they can pull that off without consequences, but they do seem intent to make sure the next president (I am guessing they are pulling for Clinton) hits the ground running. Back of the envelope, if we hit the debt limit 3/15/2017 with $400B of cash in the bank, the government will likely be able to go a full year without raising the debt limit just by burning down the cash balance and re-deploying “Extraordinary Measures”

I’ll just leave it at that for now….I’ll leave the conspiracy theories to the experts!!


2015 Debt Limit Day After…. Debt Outstanding Increases $339B

So the numbers are in  and Treasury has officially brought all of the last 8 months of “Extraordinary Measures” IOU’s they’ve been hiding and pushed them back onto the balance sheet…

2015 End of (EM) 11-2-2015

+$339B in a single day…unfortunately not too surprising…last time around (October 2013) it was $328B. Yawn…. The new deal suspends the debt limit until 3/15/2017…so we’ll get to do this all over again in about 16 months. Booooo!!! This is getting boring….can’t they find a new stupid game to play?

Introducing My-Climate-Data.com Beta

I’d like to take a minute to introduce another project of mine I’ve been working on for about a year now My-Climate-Data.com. About a year ago, a simple question popped into my mind….how is my  climate changing in Houston Texas? After an extensive search turned up absolutely nothing, I stumbled across the NOAA site here, where mountains of data are available for anyone with time to wait in a near infinite queue, or the patience to figure out how to convert thousands of tar.gz files to text and consolidate them into a useful database. It was a maddeningly complex process, but here I am a year later with the preliminary results….a functioning web site where you can find a site close to you, and with a few clicks be viewing the observed climate data in a pretty excel chart. At this point, I have temperature data for about 26,000 global sites loaded up and ready to go.

I encourage you to check it out, provide feedback, and tell everyone you know about it. This is just the beginning…I am currently working on adding precipitation, and about a dozen other metrics into the file to give you a complete picture of the climate history of over 80,000 global sites.

Screenshot below….do follow the instructions. It takes a while to load the Google Map with all of the sites….hopefully the redesign I am working on will improve this.:


May 2015 Cash Deficit

The US Daily Cash Surplus for Friday 5/29/2015 was $2.4B bringing the May 2015 Cash Deficit to $104B for the month.

2015-05-29 USDD



Revenues were up nearly $10B good for a 4.5% YOY improvement. May 2015 had one less business day, so adding that in and we would have been between 6-7%…not as impressive as April’s +13.5%, but good enough.


Outlays were down $31B, but all of that is related to timing as in 2014 $30-40B of payments due 6/1 went out in May since 6/1 fell on a weekend. May’s gain will be June’s pain, expect it to start with a big hole

Deficit: On increased revenues and decreased outlays, the deficit was down $40B vs May 2014. Pulling out timing events, I’d guess we were more or less flat

YTD: We are now 5 months in, and revenue is up 9%. Outlays show flat, but adjusted for timing I’d put them at +3%. That leaves us with the deficit itself with a $103B YOY improvement.

June Outlook: My initial May deficit forecast was $100B, not far off from the $104B actual. June is a quarter close month, which means it should have fairly strong tax revenues. Last June posted a $78B surplus, but due to the timing discussed above, I am putting my initial June 2015 forecast at a $50B surplus. In this number is 8% YOY baseline revenue increase based on what we saw in May, plus an extra business day in 2015 over 2014. Offsetting that, I expect Fannie/Freddie dividends to continue their plunge, maybe coming in at $2-3B vs $10B a year ago. Outlays will be up big….including a 3% baseline plus normalized timing picking up in June the outlays that went out in late May in 2014.

D-Day:  We ended the month of May with $199B of cash, down from $275B to end April. I’d guess they also burned through another $30B of “Extrordinary Measures” (EM), bringing the total to $130B since they started in March out of an estimated $350B at their disposal. Last month I estimated the cash available for deficit spending was at $525B…as of the end of May I would lower that to $199B cash+$220B EM, so $419B. This puts default day in mid February-2016…unless of course the debt limit is raised, which we all know it will be.



Fun With Math: Reliant Free Weekends 24 Plan

First off…the disclaimers…this is my analysis, based on my understanding of my scenario, after discussing with two door to door salesmen…and reading about the plan on Reliant’s site here: I’m not a Lawyer, but in my opinion, the whole thing is intentionally hard to understand. That said…here goes.

So, I get home from work, and just as soon as I sit down for dinner….doorbell rings, and 2 door to door salesmen from Reliant/NRG show up. First off…seriously? Everybody in the whole world hates door to door salesmen…come on Reliant….stop going out of your way to make people hate you….. But the guys were nice enough…. so I humored them for a few minutes.

They were trying to sell me a 24 month electric plan….and give me a free NEST thermostat. It would save me a ton of money they said….and…Weekends are free….from 8PM Friday to Midnight Sunday…. They went on for a while, before I ultimately send them packing….and decided to figure out whether or not this was really a good deal or not.

Spoiler alert!!!…it’s not.  Here’s how it works….Weekends aren’t actually free, you still have to pay the delivery charge, which is 4.1 cents per kwh. In exchange for the “Free” weekends…you pay a much higher rate(roughly double the going rate) during the week…the 4.1 cent delivery charge, plus an 11.6 cent energy charge, for a total of 15.7 cents per kwh. The advertised blended rate is 12.4 cents….which I suppose looks about right.

Now, obviously energy usage varies quite a bit depending on the month and the time of day….I could do a lot more detailed analysis, but I doubt it would come up with much different of an answer, so I’ll keep it simple.

I use about 20,000 kwh per year, or 40,000 over a 2 year contract. Using straight average usage, about 31% of that would be at 4.1 cent per kwh…or 12,381 at a total cost of $508. The remaining KWH, 27,619 would be charged at 15.7 cents per kwh, for a total of $4336. My total charges over the 2 year contract would be $4844, which works out to $202 per month and 12.1 cents per kwh.

There’s just one big huge friggin problem. If I go over to www.powertochoose.com …. in about 30 seconds I find a 2 year fixed price plan for 8.4 cents per kwh, meaning the Reliant “Free Weekends” plan is 44% more expensive. (but you do get a free nest…) This option pencils out to $3360 over 2 years, or $140 per month. The reliant plan would cost me $62 a month more….$1,484 over 2 years. If I read it right…there could be about $10 additional fees in the Reliant plan that I wouldn’t pay with the other plan…but I’m not 100% sure on that…so just ignore it or go read the fine print…. maybe you will have better luck than me.

Now….the door to door salesman would probably say…yeah, but the NEST will save you a ton of energy off the bat, and if you do all of your laundry on weekends….you can shift power from high price weekdays to cheap weekends. I call BS on that the savings…my old school programmable thermostat works just fine, and I doubt I could shift that much usage without it becoming way more hassle than it’s worth.

So for me….this plan doesn’t even come close to penciling out for anyone except Reliant/NRG and my friendly, but extremely annoying and time wasting salesmen, who I assume get a decent sized commission for the task of trying to convince you to make a nearly $1500 mistake (in my case…your mileage may vary)

So the lesson is….don’t be stupid people….It looks to me like Reliant/NRG has gone out of their way to make an overly complicated electric plan to make a huge profit margin from people who aren’t so good at math. Just get a regular old fixed price contract…save money, and run your dishwasher whenever the damn thing gets full 🙂