Back in May, the CBO released an updated forecast of FY2013 that was a $200B improvement over the forecast they had released in February…basically on a $100B decrease in outlays and a $100B increase in revenues.
In my review here, the reduction in outlays was quite puzzling For a few years now, we have been running more or less flat costs as increases in Social Security and Medicare quickly gobbled up whatever tiny cuts were actually made. So…I thought it was very odd that with only 5 months remaining, they would predict…all of a sudden a $100B reduction, or $20B per month remaining in the FY.
After comparing the Monthly Treasury Statement (MTS) with the Daily Treasury Statement (DTS) for June… I have a much better understanding now. It seems that rather than categorizing the Fannie Mae special dividend as revenue…like I have, they instead classified it as a reduction in outlays. From a deficit perspective…it really makes no difference. From an accounting perspective, well, I can see it going either way, so I don’t think there is anything shady afoot…. well, there is a lot shady about the payment, but I don’t have any vehement objections to this classification of outlay reduction instead of revenues 🙂
At the time, I suspected that the revenue increase was primarily the Fannie Mae payment and the cost reductions were somehow related to extraordinary measures pushing cost out of FY 2013 and into early FY 2014, so maybe I got that part all wrong….maybe:)
So, lets look at revenue…which I had just assumed was Fannie Mae. Since it wasn’t, they must have expected a bona fide $+100B in revenue. With 9 months of MTS data in the bank, we are $726B under the CBO’s may outlook of $2.813T. Looking at year ago numbers, we see that July to Sep netted $625B in revenues…so a 16% YOY improvement should get them there. But…with July currently at 7%….and looking to end ~%10 without any surprises…we are going to need a very solid September to pick up the slack. unfortunately, we seem to be seeing a slowdown in revenue growth that could make this difficult. The Jan-April period saw 15.5% YOY increases….the May-July period looks to have slowed to right around 10%…more or less as predicted.
Now…a final note on the MTS…I don’t like it and I don’t trust it. You may be tempted to assume that the MTS is just a summary of the DTS…it’s not, in fact several attempts by me to reconcile the two reports have failed miserably. Treasury informed me a while ago that in fact, they are pulled from completely different source data. Furthermore. The MTS data is presented using a “modified cash basis…vs. the DTS, which is cash…period. Personally, I don’t really know what “modified cash basis” means, but I trust it just about as far as I can throw Chris Christie :). All that said…the MTS deficit numbers are the ones you are going to hear any time someone refers to the official deficit. keep that in mind in a few months when they start braying about how great a job the government has done at cutting cost….Once you back out the “cost reduction” associated with the Fannie Mae payday loan, it’s unlikely to be nearly as impressive.