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.

The US Daily Cash Deficit for Wednesday 3/11/2015 was $14.7B bringing the March 2015 deficit through 11 days to $11B.

Not a whole lot of change since the last report. Pulling out the $35B FCC cash revenue, we are running a little bit ahead of last year on revenues. Individual refunds continue to keep pace YOY, while business tax refunds are double…$5.1B compared to $2.5B last year.

And with that….time for Spring Break!! Next post will likely be 3/23

The US Daily Cash Surplus for Monday 3/9/2015 was $9.6B pushing the Surplus through 9 days to $11B. It’s funny…back when I started(and named) this blog near the end of 2012…I would actually put the word Surplus in bold and italics when it happened, which wasn’t a whole lot. At least things aren’t that bad right?

Since my last post, we’ve had another $3B in deposits from the FCC bringing the total for the month to $35B….Still curious that reports peg the haul from the spectrum auction at nearly $45B…maybe they are still awaiting payment on the remaining $10B and we’ll see it over the next few weeks? In any case, primarily due to the FCC deposits, cash revenues are at +$39B through 9 days, good for a 59% YOY improvement. Ignoring the FCC cash, we still see improvement with withheld taxes up about 4%, with immaterial declines so far in corporate taxes and taxes not withheld.

Outlays are up $8B, $6B of which is interest timing, laving adjusted outlays at +2%. Individual refunds are still fairly flat, down only $1B or 4%. Business tax refunds are noticably up, though much smaller at $2.9B in March 2015 vs $1.8B last March. For the Year, business tax refunds are up 60% from $8.6B in 2014 to $13.7 in 2015 through 69 days. It’s not a big number, and maybe it’s not a big deal, but generally, this would mean corporate profits are down….

And now for the biggest non story… the Debt Limit. You may recall that last year the debt limit was suspended until March 15 2015…which is Sunday. Nothing that i have read indicates a battle is forthcoming, but I wouldn’t expect a deal by Friday either. That’s ok though, because if you are going to pick a time to hit the debt limit, March 15th is a pretty darn good day to do it. The actual time to run out of cash is a function of your cash in hand on D Day, the amount you can squeeze from extraordinary measures(EM), and the projected cash deficits over the coming months. Now let’s say we end Friday with $50B of cash, and that Lew can squeeze $350B out of EM. First thing monday morning, we should get ~$20B of corporate taxes, and more or less run a small surplus for the rest of March. Then comes April, which should run just shy of a $200B surplus, lets put it at $175B. that puts cash in hand 4/30 at $225B, and you haven’t even really had to tap into EM yet, which means we have nearly a $575B “cushion” to play with. The official estimate is that this gets us to October/November, but my math puts it all the way into next February. There are a lot of wild ass guesses in there, but this doesn’t seem nearly as critical as it has in the past, often right before tax refund season.

That said…I still hate the prospect of EM because it does a number on my cash deficit calculations. Essentially, treasury pulls debt off the balance sheet and pretends like it doesn’t exist so they can issue more and still stay under the limit. I can more or less account for it, but it’s a pain, and I’d rather not. Furthermore, I can’t tie everything back to the penny until after EM is wrapped up, which could be months…or a year 🙁 . So here’s to hoping they wrap this nonsense up in March…

The US Daily Cash Deficit for Tuesday 3/3/2015 was $32.0B, following Monday’s surprise $41.7B surplus, bringing the March Surplus through 3 days to $10B.

We start the month off with a pleasant revenue surprise…$31.6B of cold hard cash from the FCC. A quick search brings a news story I missed…the FCC had an auction of wireless spectrum back in January, setting a record with 44.9B of sales. What happened to the balance (44.9-31.6=$13.3B)??…hell if I know, but we’ll take it and book it as revenue. I have to say…this is a really big number. To put it in perspective, the total YOY gain in revenues I reported just yesterday was about $15B for the first 2 months of the year. In a single day, we’ve doubled that, and now have the year looking at 11.5% YOY revenue gains instead of 3.7%. To be sure…absent real +10% gains….this % will wither away as the year goes on, but this is definitely a material one time event. The timing is actually quite nice….it should more than offset the apparently collapsing revenues from Fannie/Freddie, which could be just a few billion this quarter compared to nearly $18B in 1Q 2014.

Moving along, Outlays are at +7B, most of which can be explained by the $6.3B interest payment that slipped from  February into March, syncing up the YTD, but throwing off the monthly YOY. Nothing terribly interesting here, though this does push the YOY outlays growth rate to 1% from flat at the end of February.

March, is likely the least interesting of the quarter end months as individual taxes, usually high in a quarter end get pushed to April 15. There are corporate taxes, but only ~35B or so. This March happens to have an additional business day over last year, which should add some marginal revenue and outlays. Refunds should remain strong, coming in between $60-70B.

For February, my initial forecast of $210B was only $1B off the actual at $211B…which as I have explained isn’t nearly impressive as it sounds. For March, I’m going to guess a $5B surplus…. Last March had a $25B deficit, but between this surprise revenue, and moderate baseline revenue growth, offset by some outlay timing, $5B surplus seems to me like as good of a guess as I can muster.

The US Daily Cash Deficit for Friday 2/27/2015 was $39.4B bringing the February full month cash deficit to $211B, $1B over my initial estimate of a $210B deficit for the month. So hooray for wild ass guesses….even though my last guess was between $200B and $210B 🙂

February went off mostly as expected with a huge deficit thanks primarily to about $119B of individual tax refunds. Revenue ends up +$19B YOY, not too shabby, while outlays were up$4B. Put it all together and we had another OK month. For the year, revenue is up 3.7%, good for the slowest start since 2010 when revenues through February were down 2.7%. Outlays are flat for the year, which continues to surprise me, but that’s a good thing. SS/Medicaid/Medicare continue to increase….their combined YOY increase is 9%, good for $13B per month in extra spending, but this has been offset by interest timing, lower payments to defense vendors, and unemployment payments. Also helping has been what I suspect is the cash benefit of issuing debt at a premium. The YOY shift has gone from 5B of “expense” last year through 2 months as debt was issued at a discount, to an $8B benefit so far this year thanks to apparent premiums. It’s not material in the big picture, but if it continues I’ll probably need to make some adjustments.

So far, 2014 looks to be slow but steady revenue growth with more or less flat outlays. If this continues, we will continue to make progress in the deficit reduction arena, but it will slow to a crawl compared to prior years. Still, the year is young, and March/April have the potential for big surprises either way. After the April dust settles, we should have a much better idea where the full year is headed. Until then…stay tuned for March, which should have steady stream of tax refunds and some solid mid month corporate taxes…