And that is where we are right now….running approximately a $1.1T annual deficit. Going forward, assuming the status quo, we can probably expect costs to continue creeping up, driven by entitlements and interest payments. We can also probably expect revenue to continue to increase at a roughly similar rate, leaving us with a structural deficit of somewhere around $0.9-1.1T. On the table with the fiscal cliff is roughly $100B in spending cuts and $400B in tax increases…though I don’t think anyone expects much of this to actually stand…but even if it did, it wouldn’t come close to closing the gap. In short, the situation looks pretty hopeless, which is why I am nearly certain, one way or another, the US will default on much, if not all of it’s debt and other obligations/promises some time in the future. When?? It is impossible to predict. Probably not in the next 6 months….though with the debt ceiling just a month or so off, it is possible…. On the other hand, at this rate, in 18 years (2030), we are at $36T…a fairly preposterous number. So anywhere between now and then is my guess.
The Daily Deficit for 12/7 was $3.9B bringing the deficit through 7 days to $29.5B….still trailing 2011 and 2010 by over $30B (That’s a good thing!!). Unfortunately, at this point it seems to primarily be a timing issue related to December cost getting pulled into November rather than any real improvement. Revenue shows marginal improvement, but nothing to get excited about yet.
The Daily Deficit for 12/6 was $4.3B bringing the deficit through 6 days to $25.6B…$37B under last year’s deficit at this point. There are still a lot of days left, but just looking at the timing of payments this year and last, I’m going to guess at least some of this “improvement” sticks. Last year’s December deficit was $59B..I’ll throw my dart and say a 30B deficit for 12/2012. I will be paying special attention to Revenue, which was down a bit last month, to see if it could have been a timing issue, or the start of a trend?