Treasury Forecasts $447 Billion In Funding Needs Thru End Of September - $300 Billion Shy Of Trendline

Tyler Durden's picture

Earlier today, the Treasury forecast that in the third and fourth fiscal quarter of 2012 (April-September), the US would need a total of $447 billion in new debt (split $182 billion in Q3 and $265 billion in Q4), bringing the total debt balance to just over $16 trillion by the end of September. While this is a commendable forecast, and one which certainly has provided to alleviate rumors that the US debt ceiling of $16.4 trillion would be breached by the mid/end of September, the chart below shows that it may be just a tad optimistic. 

First of all, here is what the Treasury just predicted:

  • During the April - June 2012 quarter, Treasury expects to issue $182 billion in net marketable debt, assuming an end-of-June cash balance of $95 billion.  This borrowing estimate is $19 billion lower than announced in January 2012.  The decrease is primarily due to projections of lower outlays and higher issuances of State and Local Government securities, partially offset by lower receipts.
  • During the July - September 2012 quarter, Treasury expects to issue $265 billion in net marketable debt, assuming an end-of-September cash balance of $95 billion.
  • During the January - March 2012 quarter, Treasury issued $401 billion in net marketable debt, and ended the quarter with a cash balance of $43 billion.  In January 2012, Treasury estimated $444 billion in net marketable borrowing and assumed an end-of-March cash balance of $30 billion.  The higher cash balance and lower borrowing were driven primarily by lower-than-projected outlays and higher net issuances of State and Local Government Securities.

And the actual sources and uses:

So far so good.

The only problem is that when one superimposes the projected debt issuance with the historical one. 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. And unless we missed some grand reconciliation in D.C., our elected representatives were pushing for more spending, not less... So maybe someone smarter than us can explain how the trendline of debt issued to date, and the forecasted debt differ by a cumulative $300 billion over the next 5 months?