All Posts By

copernicus

Mar 06
0

US February 2013 Cash Deficit Review: Part 2

By | Commentary
And now for the stunning conclusion part 2…part 1 is here if you missed it.

Outlays:

Outlays for 2/2013 ended up at $324B, down $5B from last February’s $329B of outlays…that’s 1.49% if you don’t have a calculator handy. Small, but lets give credit where credit is due. Yet…there’s nothing terribly surprising about this…for a couple of years now, we have seen relatively flat spending as increases driven by the ever growing entitlement programs are mostly offset by decreases in other areas. The spreadsheet below shows the 32 categories for outlays I track, with 2012 vs 2013 YOY and YOY% on the far right columns

022013 Outlays by Type

Right at the top we see that payments to defense vendors and the education department are down by a combined 6.5B…pre sequester, and “Other” is down an additional $4.5B. Social Security, Medicaid, and Medicare combine for a $6.8B increase, with unemployment payments down $2.7B…which is in line with the trend we have seen over the last year.
One quick note on the federal crop insurance line that went from zero to $1.9B… The DTS is not terribly consistant about reporting “Other” expenses unless there is a large outlay on a particular day. Because of this, I catch what I can, but some of it inevitably falls into my “other” category. In total, we get to the correct total outlays figure, but some of the smaller categories don’t necessarily have the most accurate data. In this case, it is likely that there were at least some outlays in February 2012, but none ended up being large enough to make it onto the DTS. Bottom line with Outlays…it’s great we saw a decrease, but this is nowhere near being a material shift…it will be interesting to see what, if any effect the sequester has over the next few months.
Daily Deficit for 3/4: Although I couldn’t help myself on the 3/1 charts, I’m going to wait another couple days before I resume the YOY charts. If you just have to know, 3/4/2013 ran a $5B surplus on strong Monday revenues. I will wrap up the February review tomorrow with a look at debt
Mar 06
0

Govt spends $80B on Sequestration Day 1

By | Daily Deficit
I know that I said yesterday I wasn’t going to publish the daily deficit for 3/1, but I changed my mind because I think it illustrates the absurdity of the deficit/debt debates we’ve been having for the last few years. The US Daily Cash Deficit for 3/1/2013 was $53.5B…in one friggin day!! The tax increases on the wealthy democrats have been wanting for a decade and finally passed last year bring in a meager $60B per year…as estimated by the CBO…which almost certainly means the numbers are bogus, and it will probably turn out to be $20-$30B in reality. The dreaded sequester…which will hollow out our economy, leave millions homeless and our borders suseptable to Viking Invaders…a mere $85B. So if we can blow through…in one single day almost the same amount we are discussing “cutting” or “taxing” in an entire year, maybe, just maybe, we are not quite grasping the reality of the situation.
I imagine a financial planner sitting down with a couple making $50k a year, but spending $200k. The planner says…you know, this isn’t sustainable, you guys need to cut back. So the wife…sipping a $200 bottle of wine says..you know…I guess we could cut back on the wine a bit. The planner looks at her incredulously…”Lady…I don’t think you understand. You are going to lose your house, your cars…you can forget about wine…you need to start applying for government housing because you are going to be living in a cardboard box in about a week.” That’s the reality of our situation. Uncle Sam is broke as hell and functionally bankrupt. Without the ability to print money and essentially sell ourselves our own debt via our buddies at the federal reserve and playing games with the “trust fund” we would have “for real” bankrupt years ago.
So here it is…On the first day of the sequester…$75B of spending ($80B if you include refunds) out the door. Raise your hand if you think this will end well.

2013-03-01 USDD

Mar 05
0

Must Read: Bitter Pill: Why Medical Bills Are Killing Us

By | Commentary
A new cover article from Time “Bitter Pill: Why Medical Bills Are Killing Us” is getting a lot of press. The author takes a step back and asks the obvious question everyone else has forgotten to ask for the last 30 years or so. Why the H#** is medical care so expensive? Why does 3 minutes with my kids Dr. cost $300? Why does an MRI on an 8 year old machine cost a few thousand bucks? The answer is…the medical industry as a whole has conspired to screw us all over…getting rich in exchange for the false promise of immortality. They use our ignorance, and their “expertise” to their advantage at every step of the way, and have fully used and abused our broken government to push through a myriad of laws that assist them in screwing us over.
I think this piece very important because it changes the direction of the conversation. For decades, insurance companies have been the bad guys…and the noble Doctors played the hero. But that’s BS. Do you think Dr Mc Dreamy wants to make $1000 for that hip replacement, or $200,000? He’s got a BMW to pay for, a couple mistresses, and a vacation home in Aspen to pay for so you know damn well what side of the fence he’s on.
And now it’s time for a personal story. A few years ago, I went to see a specialist about my hand…I had a tingling sensation in my pinky that wouldn’t go away, and Web MD convinced me that I was probably about to have a massive heart attack. It took this specialist about 1.5 minutes to correctly diagnose me with some kind of nerve irritation. Not to worry he said…He could do a surgery to fix me up…all he needed was $30k, and something about a shark with a laser on its head. Uhh…. really? For the record…for $30k, I would literally sell you my pinky, but that’s another conversation for another day.
The next step was an appointment with an electro shock therapist. For $2k, I sat in a chair while a university of phoenix grad stabbed me in my arm and hand and then shocked me. Like 20 times. The whole thing was recorded on a prehistoric looking machine that looked like it was pulled out of the hatch on Lost. Then…the real Dr. /specialist guy came in, turned up the juice on the shockinator 1.0, and gets me a few more times. Three minutes later, I’m paying my $30 copay and thinking that maybe waterboarding is torture after all.
Next up, a follow up with the specialist who sent me to get tortured tested in the first place. After a nice long wait, I get ushered into a lavish exam room. He takes a look at my hand, asks me how it feels, and promptly recommends that I get some electro shock therapy to confirm that his surgery will cure my pinky. I quickly reminded him that I just had that done and am only here to get my test results. (I am thinking I nailed it) After looking confused for a minute, he opens an envelope, flips to the back of the report, and gives me the good news…my  nerves are fine(except for that new facial twitch)…and I should just make an appointment….he’ll be happy to see me every  month indefinitely until electro shock therapy damages my nerves enough that the insurance company will pay for his surgery fees.
Three minutes later, I’m in my car thinking about what a friggin racket this guy is running. All in, I’m only out like $90 for three copay’s, but my insurance company gets billed like $500 for each visit and his buddy at the torture clinic got a few thousand for my “treatment” If he can talk me and another guy with a tingly pinky to swing by every month for a 3 minute checkup, he’s got enough to cover his BMW payment and a couple dates at Chili’s with his mistress.  Short story long…I never went back, and while still for sale, my pinky feels fine…I just needed to stop exposing it to electro shock therapy.
Back to the Time story..I recommend reading the whole thing…and it is long..if you want to understand some of the true problems with our medical system.  This topic has huge deficit implications with medicare/Medicaid outlays expected to grow exponentially over the coming decades as the Boomers all retire and get in line for their free hips, knees, and electroshock therapy….for which Dr. McDreamy would be more than happy to provide…for the right price.
Mar 05
0

US February 2013 Cash Deficit Review: Part 1

By | Daily Deficit
Another month has come and gone. We are all now 28 days closer to death….whenever that will be. We are 28 days closer to the day our star, the sun, runs out of hydrogen, begins it’s transition to a red giant, and ultimately cooks the earth into crunchy black char ball before destroying it altogether. And… perhaps even more ominously… we are 28 days closer to the day the US government begins defaulting on its on and off balance sheet liabilities. For all of these certain future events, we can’t predict  the exact date they will occur….but we do know with absolute precision that we are one month closer to the day of reckoning than we were a month ago.
DEFICIT:
But enough gloom and doom, let’s crunch the numbers and see what happened in February and what it means for the big picture. As we have discussed in prior posts, February is almost always the worst month of the year for deficits, even back in the good ol’ days like 2000 when we kinda sorta actually had an annual surplus…depending on what kind of accounting you used (shady vs. shadier??) So we came in at $229B…a bit under last year, but right in line with the last 5 years. Clearly what little improvement we have is immaterial…a mere 8% improvement, and there is a good chance most of that is related to delayed tax refunds.
022013 Deficit vs py
REVENUE:
The biggest deficit related news in the last few months may have been the President’s tax hikes…namely about $60B per year on the wealthy…and about $120B per year on those of us who pay payroll tax. So let’s take a look at revenues by category with this screenshot from excel. You may recall that 2/2013 revenue was $95B vs. $80B last year. I need to clarify that this is “net” revenues….We take all revenues from the sources listed below, then subtract tax refunds to get net revenues. Since February is especially heavy in refunds, the net is always much lower than other months, but we apply it consistently, and I am much more comfortable with this accounting approach.

022013 Revenues by Source

 In yellow I have highlighted some of the more interesting sources of revenue. Federal reserve earnings are down almost $3B…this is a bit odd and I will definitely be keeping an eye on this. Federal reserve “earnings” primarily consist of them printing money, and using it to lend money to the federal government by purchasing bonds. Then, the treasury sends the Federal reserve interest payments…and the federal reserve turns around and sends that…less their costs…back to the treasury? Sounds kind of shady huh? You bet your a** it is. Moving on “FTD’s” (nope..it’s not what you are thinking)…Federal Tax Deposits is the governments primary revenue stream….made up mostly of  taxes (income and payroll) withheld from your paycheck and sent in to Uncle Sam. They are up, but only $7.5B…we’re expecting ~$15B per year thanks to the recent tax hikes. It could just be the extra day in February 2012, but I’m not entirely convinced this is the case.
Next we see that “Other” deposits….are down $7B, but that deposits from TARP are up almost 500%. You may recall Tarp from years ago…where our government lent hundreds of billions of dollars of public money to all their donors, buddies ect… at below market rates. As those loans are repaid…and a good chunk of them were…the money comes back in as revenue. It’s not perfect, but as an Uncertified Public Accountant, it still gets my stamp of approval. For more information on this, take a look at “We Won’t Miss TARP, But Uncle Sam Will”. Finally, we get to the big number…Individual Tax refunds were down year over year by $15B, presumably because of the tax filing being pushed back a week or two and subsequent processing delays. If we back this out, then what we have for the month is a small increase in FTD’s offset by small decreases elsewhere for flat YOY revenue…despite tax increases….that’s not a good sign, but one month does not make a trend…lets see how March turns out before we turn on the recession alarms..ok maybe April.
Ok guys…this is getting long, so i’m going to split it in half and do the spending and debt analysis tomorrow. If you were wondering about the 3/1 daily deficit…it was a whopping $53.5B….I’m going to hold off a day or two for the charts because the timing is making the year on year charts go nuts so it doesn’t really make sense yet.
Mar 02
0

2/28/2013 Daily US Cash Deficit

By | Daily Deficit
The US Daily Cash Deficit for 2/28/2013 was $8.6B bringing the February 2013 deficit to $229B, a $20B improvement over February 2012. This was fairly close to my guestimate of $225B, so nothing really unexpected here, but I will note that total revenues unadjusted for refunds were flat after a 9% year on year (YOY) increase in January. There were increases in taxes withheld of about 5%, but this was offset by reductions elsewhere. Now part of this is likely due to the extra business day last year, which is also likely the cause in a slight reduction in YOY outlays, but it is still a surprise to me because I expected the tax increases to more than make up for the lost business day, but that clearly was not the case. Of the $15B revenue increase we see in the charts below, every cent of it can be attributed to a delay in refunds, which were down $15B from $129B last year to $114B in 2013. Now, it is entirely possible that tax refunds will just be less in 2013, that would not be unprecedented. But if not, we should see these in March and April. The cumulative difference through 2 months is about $23B, so we will continue to keep an eye on that.
I will do a larger recap over the weekend, but wanted to get this out today. Looking forward to March, last year we ran a $139B deficit, which sounds like a pretty good estimate to me. That assumes this month’s flat revenues were a fluke and that we will see revenue gains in the $15B range…offset by about $15B increase in tax refunds as the IRS catches up with the delays we have seen to date. Not expecting any sequester effect….is that still happening??…but I will keep an eye out for it.

2013-02-28 USDD