Primary Dealers See 2013 Deficit As High As $1.04 Trillion

Tyler Durden's picture

Yesterday we had our 15 minutes of fun with the CBO's latest budget forecast, which, while wrong as always, provided the mainstream media with its dose of propaganda optimism, by "forecasting" that the baseline 2013 budget deficit will be some $845 billion, well below the $1+ trillion deficit in 2012 (and quite a bit above the CBO's last year 2013 deficit forecast of $585 billion). It will be higher. And we know that not only because the CBO is a complete and utter failure when it comes to predicting the future (which as Rajoy would say would be "just as forecast, except for everything that does happen"), but because earlier today the Primary Dealers that make up the Treasury Borrowing Advisory Committee (a topic we have written extensively about in the past), released their own 2013 budget deficit forecast. The picture there is far less optimistic: the median estimate is some $929 billion, however it is the upside range that is where reality lies, and this number is, according to the likes of Goldman and JPM (who head the TBAC) as well as the 18 other Primary Dealers, as high as $1.037 trillion.

Needless to say, when fiscal 2013 closes on September 30, 2013, this number too will be an optimistic estimate of reality.

Source: US Treasury

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EscapeKey's picture

$1.04tn? But the Fed only prints $1.02tn!

We need moar QE!

Pladizow's picture

1 million seconds ago = 12 days ago
1 billion seconds ago = 32 years ago
1 trillion seconds ago  = 32, 000 years ago

US National Debt = $16.5 Trillion

Chances of ever being paid back = ZERO!

DoChenRollingBearing's picture

It's all good.  It will never be paid back, of course not.

Fuck Bernanke, fuck Obama, fuck the Congress.  We're fucked!


Gold, bitchez!



trav777's picture

much trillions

so if it ain't gonna be paid back, then why you mad bro?

LawsofPhysics's picture

Time for a golden jubilee, bitchez.

ghostfaceinvestah's picture

Jubilee is coming, is my bet.  Central banks will extinguish the debt of their countries in a coordinated effort, probably by 2015, may be earlier if Japan starts to implode.  Sheeple will hardly blink an eye.

Bunga Bunga's picture

If it's so easy, why they haven't done it earlier?

LawsofPhysics's picture

It hasn't been done.  The last time it was tried in earnest, we had a world war.  When it comes to feeling "entitled", no one feels more entitled then those bloodlines who have benefitted from decades of banking largesse.

No form of entitlement more vile than "birthright" entitlment.  They deserve that interest just by being born into the trust, now pay up.

CH1's picture

Well, that plus the Fed's 85 Billion per month puts us well over $2T.

Print on the left! Print on the right!

Stand up, sit down, fight, fight, fight!

Go, Benny!!!

boogerbently's picture

"Primary Dealers See 2013 Deficit As High As $1.04 Trillion"

That only accounts for the printing, not the pre-existing "overspending."

Panafrican Funktron Robot's picture

Current system = carcass stripping

Upcoming system = winter

kaiserhoff's picture

With all due respect to the Tylers, the actual debt is a multiple of the amounts discussed lately.  I would estimate 150-200 trillion if all unfunded liabilities and outstanding contracts were traced.  Even the Fed admits as much.


This renders discussion of "current deficits" woefully inadequate.

not a twin's picture

CBO rule #1: There’s no such thing as the business cycle.

CBO rule #2: Always assume the economy will accelerate towards a full employment level of output, peaking at an unusually rapid growth rate in a few years time.

CBO rule #3: Ignore ample evidence and even CBO research showing that its assumptions are overly optimistic. Embed warnings of the problems with this approach in long reports that never enter the broader debate.

trav777's picture

the CBO does analysis that tell people what they want to hear.  And because it's "nonpartisan" and "Democrats and Republicans agree," that makes what they say TRUE.

km4's picture

The CBO Has Made One Assumption That Will Almost Certainly Be Proven Wrong

by Bruce Krasting, My Take On Financial Events

A few snippets of data from the Congressional Budget Office’s Budget and Economic Outlook 2003.

  • Estimated 10-year budge surplus = $5.6T.  Reality = $6.6T deficit. A 200+% miss.
  • Estimate for 2012 Debt Held by Public = $1.2T (5% of GDP) Reality = Debt Held by Public = $11.6T. A 1000% miss.
  • Estimate for fiscal 2012 GDP = $17.4T Reality = $15.8T. A 25% miss.

I think the CBO is out on a limb with this critical assumption. I think they are all wet with the generally rosy outlook it says is in our future. If you believe the CBO, the last thing you would do would be to address some of America’s daunting problems. After all, everything is going to be on easy street, so why sweat the small stuff? If we just do “nothing” -  everything will turn out just fine.

I think the CBO has done our legislators, and the country a disservice with this report. A great excuse to do nothing for a few more years has been created. I’ll be generous, and give the CBO a D+for this effort.

Stoploss's picture

That means we have a negative GDP print coming.


Hey, it's a party now.

misnomer's picture

My math teacher never gave me a D+ for getting all the answers wrong, no matter how close you were.

Definitely an F, at most an I for Incomplete. (which is what the school system gives kids nowadays, instead of F, 'cause kids aren't allowed to fail anymore)

trav777's picture

nah i can attest that they certainly do give Fs.  Kids are allowed to fail.

Maybe not black kids, and they have to adjust for NCLB the percentages that pass to qualify as a compliant school by race, but whatever.

Jim Quinn's picture

The National Debt has increased by $409 billion in FY13 after 127 days. That is $3.22 billion per day. At the current rate, the National Debt will go up by $1.175 trillion in FY13. That’s only $335 billion more than the CBO prediction. Just a rounding error for a government drone being paid to spew the propaganda of the ruling class.

kito's picture

tyler, perhaps you could comment on why has the deficit spinning backwards???..................

fonzannoon's picture

anticipated future growth.

Panafrican Funktron Robot's picture

They restrict their data only to official sources.  In the case of the deficit number, they source that data from the CBO, so it's going to:

1.  Lag

2.  Contain some optimism bias.

They may adjust depending on the outcome of the sequester.  Another can kick will shift that sucker in reverse in a hurry.  

Transitory's picture

The deficit is spinning backwards because 2011 the deficit was 1.3 trillion and 2012 was 1.1 trillion. They are predicting forward based on past changes. Unless you were being snarky, of course, in which case, bravo.

vote_libertarian_party's picture

geeeeeee...I wonder if we hear from the Dems "Well the deficit is going to be so LOWWWWWW we don't need to cut anything." 

miker's picture

The deficit will be over a trillion again.  The gains from the big tax deal (60B) are already eaten up by Sandy.

If they enact sequestration cuts, that will reduce spending 100B (good) but probably will lose about a third in lost tax revenue on that spending so net spending cut will be 70B.  Last fiscal year deficit squeaked in at 1.1 T with some last month shell gaming by Geithner and crew.  They were despartely trying to show some reduction.  About 60-70 B deficit from last year carried forward into this FY, so that will wipe out sequester gains.

I think the economy is actually getting worse in spite of all the cheerleading and propaganda numbers.  That is why I think the stock market will continue to climb.  It is all they have to try and convince folks that things are good.

More than a little crazy making and I'm afraid some folks will get burned by entering the market period.



Bunga Bunga's picture

More debt, more QE, that's the only way to keep the the status quo. They have no choice, they will do it for decades as long it does not collapse by it's own weight. US is only 104%, at least 10 years or 96% to go and still not failing (see Japan).

Black Markets's picture

If you look at countries that have defaulted over the past 20 years (including the likes of Russia and Brazil), then you would realise that post default life on the high street very much continues, and there is no mad max style collapse.

The real losers are the people who waste their lives preparing for something that really isn't as bad as everyone fears.

Even if the US does default, 3-5 years beyond the default things will be very much back to normal.

Empirical evidence says so.

not a twin's picture

From 1990 to 2000, incomes in Russia fell by a third and life expectancies by four years.  Life was already crappy for most people before the default in '99.  Getting back to crappy isn't saying much. 

I get it, Mad Max was fiction and doesn't describe anyplace in real life.  But if living standards in the U.S. fall to the level of any of the defaulters of the past 20 years (and Brazil, by the way, hasn't defaulted in this period), that's not a good result.

LawsofPhysics's picture

I point this out to people all the time.  Thing will be no differnent in the United States when compared with the Soviet Union's collapse.  Productive States will secede, black markets will boom, there will be one, rather small but "official" economy and a much larger economy off the books.

trav777's picture

Brazil is on its 3rd currency in a few decades, bud...

Colombia is well into devaluation of their peso, like 1800:1 when I was there.

But again, hell, I was just in fucking zimbabwe, FFS...they don't even HAVE a currency.  Life goes on and some people actually still have jobs (if they are connected to Mugabe somehow).  It was a hoot paying for everything in USD.  Like yeah, that's right bitches, whitey's fuckin paper

Panafrican Funktron Robot's picture

"Even if the US does default"

It did default.  

"3-5 years beyond the default things will be very much back to normal.  Empirical evidence says so."

So, we can compare apples to oranges, and use the past to predict the future?