US DAILY DEFICIT

The US Daily Cash Deficit for 10/16/2013 was $7.1B increasing the October 2013 Deficit through 16 days to $57B with 11 business days remaining in the month.

Revenues have managed to pull back into line with 2012….we need another +$21B between now and Halloween to get us to +10%. We’ve seen it happen before, so it is certainly possible, but it seems like a bit of a stretch.

Outlays also outpaced 2012, primarily due to the $12B SS payments that went out. It will be very interesting to see if outlays come in strong and remain elevated for the next few weeks as back pay, slow paid invoices, and tax refunds start going out and the backlog is caught up.

For the rest of the month we should see the deficit continue to creep up, with moderate daily deficits and an occasional surplus here or there. My initial estimate was a $91B deficit, which still looks reasonable, though it will depend on how strong second half revenues are and how long it takes outlays to catch back up.

Cash in hand ended at $32B. I’m not sure if Lew’s $30B estimate was for end of business today or tomorrow, but close enough I suppose. I have not seen any official announcement, but it is possible that tomorrow’s report will show us the extent of EM and the lifting of the debt limit. I suppose it may take them an additional day or two though….in which case we would see it early next week.

The US Daily Cash Surplus for 10/15/2013 was $8.8B pulling the October 2013 cash deficit through 15 days down to $50B. Contributing to the surplus, $7.4B of corporate taxes were received, a 6% improvement over last year’s 10/15 haul of $6.9B.

With the Columbus Day timing behind us, we are more or less back in sync, with 2013 back to trailing 2012 on revenue by about $5B. Offsetting this…Outlays are down by $34B as the shutdown has apparently slowed a lot of payments down and completely shut off others. Add it all up, and at first glance, we are showing some a fairly impressive spurt of deficit reduction….a $29B improvement over October 2012 through the same period.

However…with a shutdown/debt limit deal rumored as of Wednesday afternoon, it is looking like the government will be back to work in a few days and the debt limit will be raised. It may take more than a few weeks to catch up on all of the delayed payments and tax refunds, but when they do, all of these apparent reductions in outlays should more or less wash out.

Cash in hand is $39B with a $5-10B deficit on deck for 10/16 as $12B of round 3 SS payments will go out. If the rumored deal goes through, this will all be a moot point, but it does look like Treasuries $30B estimate for 10/17 will be right on the mark. What I am most interested in seeing is how much the debt increases on day one as Treasury brings all of those hidden “Extraordinary Measures” debts back onto the balance sheet. Last time we had this debate, $238B of debt showed back up on 8/2/2011. That sounds about right to me, so I’ll go ahead and guess $250B and keep my fingers crossed….it will probably be next week before we find out though.

The US Daily Cash Deficit for Friday 10/11/2013 was $1.5B pushing the October 2013 deficit through 11 days to $59B. For the third day in a row, no tax refunds went out. We aren’t talking big $, but I’d guess at least $2-3B of refunds are now pending, growing by~$0.5B per day.

No real changes to see here…revenues slowly creeping up and costs continuing to look suspiciously low. Tomorrow’s report should get us more or less back into sync with last year with Columbus day behind us and a nice slug of corporate taxes on deck.

Cash in hand fell to $35B with just a few more days to go until the 10/17 non-event date, so that $30B estimate still looks reasonable to me, and like just about enough to squeak by until the end of the month…especially if the government is still shut down. So circle 11/1….that’s the day things start really getting messy.  Cash in hand will be pretty close to zero, and while revenue will be about ~$20B…there are about $70B of payments due, including about $40B of SS and Medicare along with a lot of other government pensions and military active duty pay. Somebody’s check is going to bounce….

If there isn’t a deal by then, I have to think things could get real bad real fast. I still don’t expect that to happen, but you never know….I mean who thought a month ago the government shutdown would happen….much less still be going on mid month?

The US Daily Cash Deficit for Wednesday 10/9/2013 was $8.5B bringing the October Deficit through 9 days to $56B.

Revenues look to have caught up with last year….it will be interesting if they hold onto that lead through Columbus Day, but we won’t know until next Wednesday. Outlays continue to look suspiciously slow, including one category….tax refunds which slowed to a trickle this month before apparently stopping altogether today… Now, it isn’t unusual for tax refunds to be low….they averaged about $800M a day last October….but zero….this more or less indicates that the IRS is not processing refunds, which jives with an article I read earlier in the week.

I don’t know if this is a one off….maybe they are processing refunds only on certain days….or if there will be no more refunds until the government is re-opened. For the full month, last October had $18B of refunds. So far this month, we are at $2.8B. I account for refunds as reductions to revenue and outlays(this eliminates double counting)…so if they just stop sending them out….it will give October revenues a nice bump….until they catch up on refunds….when it will get flushed back out. If it ends up crossing periods…it screws up the trends:(

Cash was down to $23B with five business days to go before 10/17 “deadline”. I’d expect moderate deficit 10/10, followed by a moderate surplus 10/11. 11/14 is a holiday, but 11/15 should post a pretty solid surplus on corporate tax payments coupled with the long weekend worth of deposits sitting in the mailbox. Then Wednesday 11/16 will look a lot like today with round 3 of Social Security payments, and another small deficit on 11/17. Lew hasn’t amended his $30B estimate, but that looks reasonable enough to me.

It may not even be an issue….rumor has it a short term debt deal is in the works…I’m curious how that would play out. Will they keep all of the “extraordinary measures” games off the books, and just increase it by $150B or so….or would it be enough to bring all the EM back…say $250B, plus another $150B to get through the next six weeks…..and starting the EM games back up again?  I suppose it really doesn’t matter anymore. Right now, outstanding debt as of 10/9/2013 stands at $16.7T. There is a very high probability that on 10/9/2014…debt outstanding is going to be knocking on $17.7T…..any takers on that?

The US Daily Cash Deficit for 10/8/2013 was $2.5B pushing the October deficit up to $47B and the cash balance down to $32B…pretty close to where Lew has stated he expects it to land next Thursday.

Revenues continue to gain ground on 2012 despite the slow start. Outlays continue to be very light. I can only assume that bills are being slow paid and some things just aren’t getting paid at all. Since this is the cash deficit…no accruals here…. this will create the illusion of a lower deficit now….and a higher deficit later…when all of the bills are caught up and people get their back pay….after the debt limit is raised and the government is re-opened.

Tomorrow should post a bit larger deficit driven by a $12B Social Security payment, partially offset by higher revenues….$5-10B seems most likely, followed by a moderate Thursday deficit, and probably a small surplus on Friday.

I do want to point out that 10/17 is being talked about like it is doomsday in the press. However, from what I have read, Lew isn’t saying that it’s Doomsday…just that he will be out of extraordinary measures, and left with $30B of cash. It looks to me like a $30B cash cushion ought to be just about enough to get to 11/1 before an actual cash flow problem hits….but it’ll be a big one. It’s hard to estimate with precision, but using Friday 3/1/2013 as a go by (the last month to start on a Friday) there were $75B of outlays and $21B of revenues good for a $54B cash deficit. So without a deal….$54B of something doesn’t get paid 11/1….which is exactly why I suspect there will be a deal, but you never know….I didn’t expect the government to actually shut down, yet here we are, 9 days into it, with very little apparent progress being made. Stay tuned…the show is about to begin.