Daily Deficit

The US Cash Surplus for 5/16/2013 was $0.3B leaving the May deficit essentially unchanged at $99B.

Curiously…Treasury chose to pay down the public debt by $34B today…further pushing down cash from $69B yesterday to $36B today…with one day left before the debt limit is frozen in place. All this is very interesting…it was just a few weeks ago in the middle of surging April revenues and thus cash…that Treasury was issuing debt pushing the cash balance up over $200B. Now…with the debt limit expiration a day away…they appear to have done a 180…trying to hit the limit with just a few days cash in hand??

So for review… the problems don’t start when you hit the debt limit…they start when you run out of cash. So if your goal was to make it as long as possible after the debt limit expires without defaulting or delaying payments, you would want a huge cash stockpile…pretty simple stuff. On the other hand if you wanted to just get it over with…you would go in with almost zero cash, and threaten to stop mailing out social security payments and military pay next week. The more I think about it….this sounds like a better strategy for Obama. What could they possibly gain by drawing this out for four months?

But then…why all the stories about making it to October? Why have the CBO come out with the new deficit forecast…setting expectations so high… Maybe it is my expectations that are too high?

Maybe I’m getting ahead of myself….we’ll get the Friday finals Monday at 3…maybe they will issue a lot of debt. But if they don’t, and we end up with cash in the $30B range, we have about a 4 week “red zone” between 5/18 and the middle of June when we should see some heavy cash inflows. Using last year as a go by, the deficit over that period could be around $100B, but we would probably expect it to be a bit lower. That leaves say a $50B gap that would need to be filled by extraordinary measures, or perhaps a “special” cash infusion from Fannie Mae?? Guess we’ll have to wait and see

The US Cash Deficit for 5/15/2013 was $34.7B bringing the May 2013 deficit through 15 days to $99B.

As expected, a large interest payment went out for $30.4B…about $1B more than last years payment on the same day. So not earthshaking, but a small nudge in the direction we would expect given the ~$1T increase in debt since last year. Also of note, corporate taxes of $5.8B were received today…a shade lower than last year, but month to date is up 6%, though that’s only $0.4B, so immaterial in the big picture.

We are back to having timing differences, so comparing revenues and outlays isn’t especially useful, but more or less everything is in sync…no material moves up or down. Cash fell an additional $22B, bringing the balance to $69B with 2 more days before the debt limit kicks back in. This is a complete 180 from the path it looked like they would take just a few weeks ago where it looked like they were going to load up on cash and debt in anticipation of the 5/19 debt limit expiration. Hmmm…. I give up. I don’t see how they make it to October if they start with under $100B of cash, but you never know.

The US Cash Surplus for Monday 5/13/2013 was $2.3B nudging the monthly deficit down a smidge to $61B.

May 2013 and May 2012 are still more or less lining up fairly well…I suspect a lot of the apparent $8B revenue increase will go away with tomorrows report. We should get some moderate inflows from excise taxes and corporate taxes over the next few days in addition to the large interest payment outlays….once all that flows through, say by next Wednesday, we should have a much better feel for where we end up.

On the debt front, total debt sits at $16.755T ($73B under the 4/30 ending balance) with 4 more business days to go before the debt limit deal expires, locking in the debt limit at wherever it stands. Cash in hand is now $95B….a little light if you ask me…at least if the goal is to make it all the way to October. On the other hand, I don’t understand the desire to push it out that far anyway…In the big scheme of things, a month or two is irrelevant, and moving debt off balance sheet for a few months via “extraordinary measures”only to bring it all back on when the next deal is reached just seems like a silly and pointless game. If it were me….I say get both parties into the ring…duke it out, and have it all wrapped up in time for summer vacation at the end of May.

I haven’t seen any additional headlines related to the $59B Fannie Mae phantom profits…that would definitely help the situation a bit…stay tuned!!