US Daily Cash Deficit 3/20/2015

I’ve been away for a week, so lets take a look back for a recap. Friday 3/13 posted a $6.5B surplus, followed by a nearly $50B surplus on Monday on strong tax deposits. This wasn’t unexpected….last year Monday 3/17 posted a $44B surplus. Since Monday, inclusive of Friday 3/20, we ran $26B of deficit. So now we’re back up to speed….just one problem….the Debt Limit, which was set 3/15 at  $18.113B.

The basic methodology for calculating the cash deficit is to look at the change in cash and external debt. When Treasury employs “Extrordinary Measures”(EM) it is essentially taking certain types of debt owed off the balance sheet, and pretending like they no longer exist. In 2013, over a ~6 month period, they hid $328B in this fashion, allowing them to issue new debt in the meantime, before bringing it all back on the balance sheet once the debt limit was raised. This kind of nukes my basic calculation….for example, Tuesday 3/17…Treasury issued $1.120B of new debt, and redeemed $0.935B. Quick math tells us that external debt should rise about $185M. However, what actually happened was that public debt outstanding decreased by $10.6B….That’s “EM” in a nutshell. Take 10.6B…pretend it doesn’t exist, and replace it with new debt. In this case it happened to be replaced with Intragovernmental debt, which I tend to ignore anyway, but it could have just as easily been $10B of fresh new 30 year bonds.

Long story short, this nukes my calculations in the short run until EM is over, at which point I can figure out the true deficit over the affected period. But don’t fret….I won’t be on hiatus until then. What I will do is back into the EM, and from there calculate a deficit figure. It will have a larger margin of error, maybe $500M+/- per day, and maybe $5-10B over the month….I won’t know for sure until the debt limit is raised or dropped again(which could be next year!!) Sorry…no charts today…I have the additional fields ready to go, but have not reconfigured the charts….hopefully later this week if not tomorrow. I can say that the March 2015 Surplus through 20 days is sitting at $13B. EM is at ~$22B so far, and revenues are looking solid even after pulling out the FCC revenue. My initial forecast of a $5B surplus is still looking pretty solid.