May 04
0

5/02/2013 Daily US Cash Deficit

By | Daily Deficit

The US Daily Cash Surplus for 5/2/2013 was $1.8B on $9.9B in revenues and $8.1B of outlays leaving the May 2013 deficit through 2 days at $24B.

2013-05-02 USDD

So far nothing out of the ordinary, but it did occur to me that with 5/31 being on a Friday, we will probably see about $20B of payments due 6/1 instead go out 5/31, essentially increasing the May deficit, and decreasing the June deficit by the same.

As you know, I am keeping a very close eye on revenues to see if what happened last month was a fluke, or an actual shift in the curve. 2 days is way to soon to tell much of anything, but it is worth noting that tax deposits not withheld…which grew 40% in April….have absolutely fallen off a cliff from $6.2B 4/30 to $327M yesterday. A drop off was expected, but I figured it would glide down under $1B over a week or so….not just stop once May came around.

May 03
0

2013 Outlays Through April

By | Commentary

For the last three years now, 2010-2012, Federal cash outlays have more or less stayed the same at $3.8T per year. 2013, it turns out is shaping up to be more of the same…despite all of the talk of cutting spending, furlough’s and sequestration…outlays through 4 months are down by $9.5B compared to 2012 through 4 months…. a 0.76% reduction. Well…at least they technically aren’t lying when they say they cut spending…baby steps right?While entitlement programs, especially Social Security continues its exponential growth, this has been offset by cuts elsewhere…but where?

2013-05-02 April YTD Outlays

A few things jump out comparing 2012 to 2013. The big reductions came from defense vendors, education, unemployment, and a bit surprising…interest.(Hooray for ZIRP!!)On the other side…the usual suspects…Social Security, Medicare, Medicaid. Sooner or later…the delicate balance between entitlement gains being offset by cuts elsewhere is going to break….the exponential growth will overpower the linear cuts….throw in the gentle breeze of a mild recession and a mild rise in interest rates and down goes the house of cards

Comparing 2013 to 2010 yields similar results…huge gains from reduction in unemployment, defense vendors, and our good friend “Other”, offset primarily by social security Curiously, Medicaid and medicare are little changed…the Medicaid number appears to be legit…but the Medicare # looks to be skewed a bit by timing where May 2010 cost got pulled into April….a TTM analysis would probably scrub that out, but who has time for that.

So…through 4 complete months of 2013….outlays truly are down…at least for now. Say…is that a breeze I feel?

 

Oh…one more thing…The daily cash deficit for 5/1 was $26.1B….so we’re back in familiar territory…I haven’t done a detailed analysis yet, but probably looking at a deficit between 100B and 125B….roughly washing out the April Surplus 🙁

May 02
0

Treasury Stockpiling Cash in Preparation for Debt Limit Showdown Round X??

By | Debt Limit

I touched on this a bit back in January when the “No Budget No Pay” act was passed…effectively lifting the debt limit to infinity until 5/19/2013. Though I haven’t read the fine print (and have no plans too)…there seems to be a glaring loophole…What is stopping Obama from issuing enough debt 5/18 to make it through the rest of his term…say $4T or so.

The accounting is simple….debit cash $4T…credit liabilities $4T. Rather than hitting 5/19 with a $16.9T debt limit…it would be$20.9T…problem solved right? Well, honestly, I never expected them to be that brazen, and it wouldn’t surprise me if there isn’t some fine print in the law prohibiting such malarkey. However….surely there must be some wiggle room.

So I wasn’t so surprised when I glanced at the 4/30 DTS and saw that despite having a cash balance of $152B as of 4/29, and running a $117B Surplus throughout the month of April (the highest in 72 months)…Treasury issued an additional $60B of public debt on 4/30, bringing cash in hand to nearly $214B….the highest since February 2011.

As I discussed in the run up to the last debt limit battle…it’s not when you hit the debt limit that matters…it’s when you run out of cash. Obviously…the more cash in the bank come 5/19, the longer we will make it before hitting that point.

Now the timing of the January debt fight was precocious for all involved given its proximity to the tax refund season…tax refunds literally would not have gone out in February…along with a lot of other things…. revolution would have quickly ensued. No…if you are going to have a prolonged debt fight…summer is by far the best time to do it. While July and August are likely to post substantial deficits, June and September might very well post surpluses, so a $200B+ cash stash aided by “extraordinary measures” could very well get you into October before the coffers start to run dry.

Gentlemen…the game is afoot!! Stock up on popcorn.

May 02
0

April 2013 US Cash Deficit

By | Daily Deficit

Just a quick post to record the finals…more detailed analysis to come… The April 2013 Cash Surplus rings in at $117B compared to a $59B surplus in April 2012. The main story all month was revenues…up $87B…a 26% increase. Taxes withheld were up 10% as expected, but corporate tax receipts were up 27% and tax deposits not withheld were up a whopping 40%…or $56B. The revenue increases were somewhat offset by a $29B increase in outlays primarily related to timing.

2013-04-30 USDD

So what does it all mean? Are we saved? Should we stop worrying about the deficit? Absolutely not. While it shouldn’t be dismissed, in the big picture, this is one month, and one $58B improvement…compared to an annual deficit still likely to be north of $850B, and debt outstanding of $16.8B. Give me two straight years of 26% growth and I’ll be forced to re-evaluate my central thesis. For now, it’s time to appreciate an admittedly impressive month, then sit back and see how the rest of the quarter turns out.


May 01
0

WSJ: “Treasury to Pay Down Debt For First Time in Six Years”

By | Commentary
If you haven’t seen it yet, the WSJ put out:
WSJ: “Treasury to Pay Down Debt For First Time in Six Years”
“The Treasury Department said that it expects to retire a net $35 billion in bonds, notes and bills from April to the end of June.”
Yawn…. It is technically true though. Strong April surpluses will likely be large enough to pull the quarter positive deficit wise, and with $152B cash… in the short run, Treasury can play whatever games they want with the debt. They could pay down the debt $152B today…then re-issue the $152 tomorrow….would it make a difference in anything? No!! All I am saying is that for anyone who understands the deficit and the monthly fluctuations,this is really a nonevent.
We get our final April 2013 DTS today, and when all is said and done, April 2013 will no doubt go down as one hell of a month with YOY revenues surging 20-25%…handily beating my forecast of about 12% growth. However…it is yet to be seen whether this blowout is a turning point, or a last hurrah. I’ll be keeping a very close eye on May-June revenues…if we fall back under 10% YOY growth, it will be a pretty clear indicator that April was just a blip. If, on the other hand we see sustained growth in the 15% range, it very well could be a sign that the trend really is shifting.