Treasury Admits It Underestimated Debt Needs, Predicts Ceiling Breach In 2012; $600 Billion More Debt In Second Half

Tyler Durden's picture


Back on April 30, when the US Treasury, together with the TBAC chaired by Matt Zames (who as everyone knows is being groomed to take over JPMorgan after Jamie gracefully steps down) sat down put together its latest debt funding needs projection, we openly mocked the numbers when we said "Now obviously we are all for the US needing less debt, however we wonder: did the US discover some magical source of tax revenue: last we checked the companies with $100+ billion in cash were paying virtually zero taxes, and US workers were making less and less courtesy of more and more jobs being converted into temp jobs with lower wages, and less withheld tax as a result." Sure enough, minutes ago the Treasury just admitted what we and our readers knew all along: in its quarterly Treasury refunding appetizer, it noted that during the "September 2012 quarter, Treasury expects to issue $276 billion in net marketable debt, assuming an end-of-September cash balance of $60 billion.  This borrowing estimate is $12 billion higher than announced in April 2012.  The increase is primarily due to lower receipts, higher outlays, redemptions of portfolio holdings by the Federal Reserve System, and higher issuances of State and Local Government securities." In other words: if only it wasn't for that pesky lack of revenue and excess spending our mocking would have been for nothing. Alas, it was spot on, and as a result instead of needing $253 billion in fiscal Q4, the US will need $272 billion (after having a $5 greater financing need in fiscal Q3, calendar Q1 as also expected).

Finally, in calendar Q4, the Treasury expects to get back to its roots, at which point it will need $331 billion in debt, 21% more than in calendar Q3, and 17% more than in calendar Q4 of 2011.

Alas, as the chart below shows, which forecasts US Treasury debt based on the just released numbers, all these numbers will ultimately need to be revised even higher as it is now inevitable that the debt ceiling will be breached in 2012, only not as the Treasury predicts toward the end of December, but well before that.

Some other factoids:

  • Treasury forecasts total debt on September 30, 2012 of $16,132 billion and total debt on December 31, 2012 of $16,448 billion. As a reminder, the debt ceiling is $16,394 billion
  • Total debt incurred by the US in the second half of calendar 2012 is estimated to be $592 billion; total financial needs are expected to $603 billion.
    • Total debt incurred in calendar Q4 is expected to be $316 billion, higher than both Q3 ($276 billion) and Q4 2011 ($310 billion).
  • Total debt incurred by the US in all of calendar 2012 is estimated to be $1.165 trillion
    • Total debt incurred by the US in all of calendar 2011 was $1.051 trillion.
  • In other words, calendar 2012 will see a 10% increase in total debt, while total US GDP is expected to rise by just under 2% for the full year.
  • Assuming the Treasury's numbers are correct, each calendar day in the second half will see the US Treasury issue on average $3.3 billion in debt every day, and $136MM every hour; on a work day basis, this amounts to $4.8 billion in new debt each work day, and $200 million every working hour.
  • Assuming 1% sequential growth in GDP, the US will close 2012 with a debt/GDP ratio of 103.4%.
  • Keep in mind, all these numbers will be revised worse in 3 months when the next refunding statement is released.

One word: "Sustainable"

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Mon, 07/30/2012 - 16:12 | 2663302 flacon
flacon's picture

When will this shit ever end? 

Mon, 07/30/2012 - 16:12 | 2663306 SilverTree
SilverTree's picture

It ends when we die.

Mon, 07/30/2012 - 17:05 | 2663477 veyron
veyron's picture

Will we all be dying in 2012?

Mon, 07/30/2012 - 17:21 | 2663523 I am more equal...
I am more equal than others's picture

Only those selected for termination.  Your notice will be hand delivered by mob rule. 

Mon, 07/30/2012 - 17:32 | 2663556 LawsofPhysics
LawsofPhysics's picture

Long rope and guillotines then?  Better start organizing your mob now.

Tue, 07/31/2012 - 02:56 | 2664255 Simon Endean
Simon Endean's picture

Well, here's hoping we all renew at Carousel!

Tue, 07/31/2012 - 04:43 | 2664316 10mm
10mm's picture

Lock in on those high capacity mags,they are starting to move like hot cakes.

Mon, 07/30/2012 - 17:42 | 2663586 lunaticfringe
lunaticfringe's picture

Except for the death thing which is kind of a drawback, I find this all fantastically bullish!

Mon, 07/30/2012 - 18:50 | 2663681 Rainman
Rainman's picture

Obama '12 bitchez...they just gotta make it to 11/7 !!

Mon, 07/30/2012 - 17:47 | 2663595 circusoflife
circusoflife's picture

awesome user pic!  The only people who die, are those who want to die....

Mon, 07/30/2012 - 22:05 | 2663987 The Gooch
The Gooch's picture

Yes! and we'll be dying in 2013 too!


Mon, 07/30/2012 - 16:13 | 2663307 Pladizow
Pladizow's picture

"This borrowing estimate is $12 billion higher than announced in April 2012"

Isnt that only 3 days worth of borrowing?

Mon, 07/30/2012 - 16:20 | 2663332 DoChenRollingBearing
DoChenRollingBearing's picture

Is anybody here surprised?

"It's all George Bush's fault!" -- Barrack Obama

Mon, 07/30/2012 - 16:27 | 2663355 RationalPrepper
RationalPrepper's picture

Even more surprising - it does look like they'll manage to avoid the breach until after the elections.

Mon, 07/30/2012 - 16:37 | 2663390 JLee2027
JLee2027's picture

Too bad. One would have hoped the Jaws of Hell would have opened to bite their ass well before.

Tue, 07/31/2012 - 01:53 | 2664224 DeadFred
DeadFred's picture

There's still time, keep those fingers crossed.

Mon, 07/30/2012 - 17:35 | 2663563 Papasmurf
Papasmurf's picture

Great when a plan comes together.

Mon, 07/30/2012 - 18:04 | 2663621 NotApplicable
NotApplicable's picture

The key to your phrase is "look like." I would have been shocked if they didn't find a way to conceal the breach until after the selection.

Mon, 07/30/2012 - 16:38 | 2663396 New_Meat
New_Meat's picture

"Missed it by this much!"

Mon, 07/30/2012 - 17:15 | 2663507 mikla
mikla's picture

Missed by that much

Good quote!

Of course, the Treasury is wrong.  As documented by ZH a year ago, the "run-rate" for debt issuance is 30-40% higher than the projected rate (mentioned in this article), because the "off-balance-sheet" liabilities are being forced back onto the balance sheet as cash-flow payments must be made.

The *real* issue is far higher than what is listed here.  Governments only fall through cash-flow problems, and those are in the middle of the exponential blowout.

Mon, 07/30/2012 - 17:30 | 2663545 LawsofPhysics
LawsofPhysics's picture

Sounds like we need another unfunded war or two.

Mon, 07/30/2012 - 17:46 | 2663589 mikla
mikla's picture

Krugman was serious about the Alien Invasion.

Mars Attacks

Mon, 07/30/2012 - 20:04 | 2663796 Offthebeach
Offthebeach's picture

We need to have it here.
Keep all the Haliburton contract see ice jobs here. On both sides. This.k of the Krugman approved Keynesian multiplyer effect with all the destruction! Not to mention advertising rights and reality TV show potential!

Mon, 07/30/2012 - 16:20 | 2663334 Michael
Michael's picture

It's like magic, I think about a subject like this the night before, something I haven't heard about in a while, and the story magically appears on ZH the very next day. I wonder what makes that work.

Mon, 07/30/2012 - 17:23 | 2663531 DavidC
DavidC's picture

Ah Michael, it's not like magic, it IS magic!


Mon, 07/30/2012 - 18:09 | 2663624 NotApplicable
NotApplicable's picture

Reply of the day! Kudos.

Mon, 07/30/2012 - 17:34 | 2663559 earleflorida
earleflorida's picture

the amorphous cloud of like minds in surreal slumber awaken always through the 'music of the spheres'

Mon, 07/30/2012 - 16:22 | 2663343 FlyoverCountryS...
FlyoverCountrySchmuck's picture


You mean MSNBC/The Daily Show, and Will&Grace are not the entire economy???



Mon, 07/30/2012 - 17:39 | 2663575 i_call_you_my_base
i_call_you_my_base's picture

Will & Grace? How long have you been off the grid?

Tue, 07/31/2012 - 07:11 | 2664391 rufusbird
rufusbird's picture

cut it out Wally...

Mon, 07/30/2012 - 16:36 | 2663387 JimBowie1958
JimBowie1958's picture

LOL, yeah, so just shut down the government one day each month for the last three months - problem solved!


Mon, 07/30/2012 - 17:33 | 2663557 AGuy
AGuy's picture

"so just shut down the government one day each month for the last three months. problem solved!"

More like: "Just keep the gov't open one day each month, forever. Problem Solved!"

Mon, 07/30/2012 - 16:19 | 2663333 cougar_w
cougar_w's picture

In about 12 months. Maybe nine.

You got that long to get your shit together. After this time next year there won't be any getting together any more shit.

Mon, 07/30/2012 - 16:37 | 2663394 mademesmile
mademesmile's picture

You sound like my husband, who wants to add to our small arms pile. I want to add to my jewlery collection. Who knows, maybe we can do both.

Mon, 07/30/2012 - 16:42 | 2663406 HungrySeagull
HungrySeagull's picture

A diamond encrusted shotgun stock would be a good compromise.

Mon, 07/30/2012 - 16:47 | 2663423 cougar_w
cougar_w's picture

Silver bullets come in handy when confronted with the undead.

Mon, 07/30/2012 - 17:19 | 2663520 mademesmile
mademesmile's picture

Haha, the glint would be enought to blind someone. If I get talked onto getting a concealed carry, my weapon of choice will be a thing to behold.

Mon, 07/30/2012 - 22:19 | 2664010 The Gooch
The Gooch's picture

cougar_w. The eternal optimist.

Mon, 07/30/2012 - 16:38 | 2663395 JLee2027
JLee2027's picture

There's no way to predict when. Could be this week. Or in years.

Mon, 07/30/2012 - 16:44 | 2663412 cougar_w
cougar_w's picture

You are mostly correct.

However, not this week they have enough ammo to handle this week and next. And most likely, not many years because they are seriously running out of ammo.

It's not a crap shoot; they are running out of runway. That's a very different kind of call.

Mon, 07/30/2012 - 17:16 | 2663516 Ookspay
Ookspay's picture

During the US War of Independence General George Washington allowed his troops to pillage the poulation to keep the army supplied. They did however, give worthless IOU's to the hapless citizens. Revolution part deux will be very similar.

Mon, 07/30/2012 - 17:37 | 2663568 earleflorida
earleflorida's picture

0.001% = Loyalist

Mon, 07/30/2012 - 21:57 | 2663972 TheFourthStooge-ing
TheFourthStooge-ing's picture

cougar_w said:

In about 12 months. Maybe nine.

You got that long to get your shit together. After this time next year there won't be any getting together any more shit.

Black Cat Moan - BBA Live

"Get my shit together..."

Mon, 07/30/2012 - 16:20 | 2663335 TrustWho
TrustWho's picture

...War, rationing, and likely, martial law.

Mon, 07/30/2012 - 17:12 | 2663504 RichardENixon
RichardENixon's picture

Will that pre-empt the 3 hour WWE Monday Night Raw broadcast tonight? Sure hope not, I heard they're bringing Gorgeous George back.

Mon, 07/30/2012 - 17:21 | 2663526 LMAOLORI
LMAOLORI's picture



DHS gears up for civil unrest prior to presidential elections

Tue, 07/31/2012 - 04:49 | 2664317 10mm
10mm's picture

Ahhh,thee youngsters will again be getting dragged away by those turtle looking people.I really wish they save all that youthful energy for when it counts.stay home election day,or as "Carlin " would do,jack off.

Mon, 07/30/2012 - 16:33 | 2663377 DosZap
DosZap's picture

When will this shit ever end? 

When the goal is accomplished that it was intended to produce from Day 1.

Mon, 07/30/2012 - 16:38 | 2663392 HD
HD's picture

"When will this shit ever end?"


 If I went long - the market would implode in mere seconds. As long as I'm losing my shirt the world economy will be safe.


Mon, 07/30/2012 - 17:22 | 2663527 humblepie
humblepie's picture

HD, you should go long, and the rest of us at ZH will go short. We'll cut you in on our earnings on the market implosion. Deal?

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