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

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"

Comments

[sadpanda]

Tell me we're still gonna build that high speed train in California with federal money. It's a fucking priority. You can't get small business to build those things.

[goldenbuddha454]

Those high-speed rail projects are as useful as tits on a bull!  Who rides a friggin train these days, unless you live in a big city?  If you build it they will NOT come!  Its all just a payback to the union labor bunch from Lib politicians who think we still have the money to pay for this crap over and over again.  Who wants to get in a car, carpool to park it at the community parking, get on a train with 100 other sweaty, stinky people at elbows length they don't know, wait an hour to get to destination, get off, walk to somewhere, get back on that bacteria-laden hunk-a-junk go back to their car, pile in with their carpool buddies they just met and take each one of them home?  Can't think of a better way to spend a day! 

[Money Squid]

This is obviously due to global warming. An anthropogenic phenomenon

[bankruptcylawyer]

it's a shame gary johnson is not out there rallying about the debt ciebling instead of about pot. 

i love that guy, but his campaign message is a piece of shit---i blame his handlers. 

[poldark]

Another statistic I find interesting is interesrt payments on debt is 9.5% of tax revenue. What % of tax revenue will it have to be before the US goes bust? I don'tpay much attention to GDP figures because they are easily fiddled.

[goldenbuddha454]

Got that right!  First it was Libor, next will be gold manipulation and then GDP/Jobs numbers manipulation.  The fix is in.

[goldenbuddha454]

Tax-Cheat Tim say it aint so!  How could you underestimate the amount you owed in taxes  and underestimate U.S. debt funding all in the same administration?  This can't be true, can it?