As US Debt Hits New Record, Fiscal 2012 Tax Revenues Are 10% Higher Than Debt Issuance

Tyler Durden's picture

Today, the US total debt rose by $32 billion touching on a new record high of $15.392 trillion. As a reminder this is just the beginning: as we noted yesterday, according to the president's own budget total US debt is now expected to surpasses the greatest and final debt ceiling of $16.4 trillion just around September, and likely sooner with the addition of the $160 billion in additional debt needed to fund the extension of the Bush temporary yet perpetual tax cut through the end of 2012. So while we know that total debt to GDP is already over 100% and unlikely to ever decline back to double digits, thus putting into question the marginal utility of debt to generate further economic growth, another just as important question is what is the incremental utility of tax revenue relative to debt issuance, i.e., is America now issuing more debt than it is collecting from tax revenues: a step which would further cement its status as a banana debt republic. The chart below should provide some comfort in that regard. In fiscal 2012, starting October 31 through today, the US has collected $677.6 billion in withholdings taxes, while issuing $601 billion in debt over the same period of time. In other words, for now at least tax revenues are running 12% above debt issuance. Alas, considering that according to the president's own budget there is another $1 trillion in debt issuance over the next seven and a half months, we have a very distinct feeling the red line will cross the blue line yet again, and quite soon at that. Naturally, a logical question arises: why not just do away with taxes entirely and have all US capital needs be debt funded? After all, all that "saved or created" tax money would be used to buy bonds or better yet, iBonds, or something just as silly. And the USD would never, ever, lose its status as reserve currency...

Cumulative Fiscal 2012 YTD debt issuance vs tax withholdings.

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fonzannoon's picture

Geithner today said debt ceiling won't be breach until waaay waaaay out at the end of this year. So like 8 months from now. So lets focus on the philadelphia cream cheese index until then.

Mr Lennon Hendrix's picture

Gold price = Debt = Tax revenues.....

Which one is the dependent?

Nominal price can always increase, and the debt shows no sign of slowing down, but what about collecting taxes?  Will there be taxes to collect on a still unemployed America next year?  The next??

dlmaniac's picture

"Will there be taxes to collect on a still unemployed America next year?"


There's plenty tax to collect from the rest of the world, and that's what you need a global reserve currency for - When in doubt, PRINT! As long the suckers hold the dollar bag for US there's endless tax to collect from them.

SeattleBruce's picture

You're starting to see holes in that bag...

The Watchman's picture

They should just change it to something like 666 quintillion.

Mr Lennon Hendrix's picture

Soon Bernanke will own $666 trillion worth of USTs/MBSs/and as much hopium as Barack can smoke!

Get that pay-pah!  Pay-pah!!!

bingo was his name's picture

Its more of a debt suggestion - easy answer pass amendment that congress can't raise "ceiling" once but every two years expect by two thirds majority of both chambers.

TruthInSunshine's picture

Mr. Lennon Hendrix said:


What debt ceiling?


You can't see it because it's made from Hollywood prop glass. You need not even watch your head.

Benjamin Simon's picture

We should remember Mr.Lennon Hendrix, it is not so much a debt ceiling as it is a debt target.  Mr.O'Bama clearly believes it is better to aim high and succeed than to aim low and fail. 

SheepDog-One's picture

'Waaaay waaaay out at the end of the year' really by end of March at the latest then?

TruthInSunshine's picture

Obligatory. Now drink.


"The fact that we're here today to debate raising America's debt limit is a sign of leadership failure. Leadership means 'The buck stops here.' Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America's debt limit."

--Sen. Barack Obama, D-Ill.

  Senate Floor Speech

  March 20, 2006


Bonus quote FTW. Drink again, bitchez:


"We're not going to monetize the debt," Mr. Bernanke declared flatly, stressing that Congress needs to start making plans to bring down the deficit to avoid such a dangerous dilemma for the Fed.


"It is very, very important for Congress and administration to come to some kind of program, some kind of plan that will credibly show how the United States government is going to bring itself back to a sustainable position."


--Benjamin S. Bernankinscam

February 25, 2010

Bernanke to Congress: You Are Going to Have to Cross That Fiscal Valley Yourself

Schmuck Raker's picture

Hi TIS, maybe I can help. I speak Jive.

Let's see here...

"I therefore intend..."  hmmm "...start making plans..."  well, i see your problem, this is all Greek.

wisefool's picture

Many people dont under stand that Timmay pays his taxes when ever he wants. And when he/Paulson does, the IRS has legitimacy.

If the IRS has legitimacy, then the greeks can NONVIOLENTLY ....

Timmay, you had a low IQ. thats why you are a major FAIL. happens to the best of us.

SheepDog-One's picture

Big deal....who CARES with todays Barron's headline screaming in 5 inch high letters 'DOW 15,000!!'

SeattleBruce's picture

They should be screaming 'UN AND UNDEREMPLOYMENT 23%!!

MrBoompi's picture

I don't understand why debt would have to be issued if we are collecting enough revenue to cover our expenses, but I must now assume the issuance of debt, spending, and tax revenues are not related any more.  We must have to issue more debt for some other reason.

Manthong's picture

Um.. headline is bass ackwards?

body text:

"America now issuing more debt than it is collecting from tax revenues: a step which would further cement its status as a banana debt republic"

AgShaman's picture

"I would prefer not to"




Piranhanoia's picture

My agent fee is priced in as you can see.  I'm the old fashioned kind, I only get 10%.  

TruthInSunshine's picture

+1 for the Bartleby reference, and for being a fine scrivener.


Manthong's picture

Oh.. I get it now.. unfortunately.

I guess we're not in Kansas anymore.

Must be all the poppies.. I.. think.. I'll go... to slee.......

perelmanfan's picture

Oh Bartleby. Oh humanity!

Clycntct's picture

? "Fiscal 2012 Tax Revenues Are 10% Higher Than Debt Issuance"


Sudden Debt's picture

And now read it for the 3rd time...


And again....

Go on...

Just auto Shuffle....

ChrisFromMorningside's picture

Deficits don't matter. Budgets are unnecessary. There is no inflation.

Now please go back to mourning the latest celebrity death and playing Angry Birds on your iPad. Thank you sir.

SeattleBruce's picture

Contracts don't matter.  Laws don't matter....rinse, repeat....

Citxmech's picture

If unfunded liabilities were added to the red line it would already be above the blue line.

gloogle's picture

That graph looka lika sure sign we runnin' outta watta soon.....

bilbao's picture

How many of these articles do we have to read whining about how large our debt is before people realize that OUR MONEY SUPPLY COMES FROM DEBT!

Treasury auctions — in a fiat country, such as ours — are simply reserve drains for M0 reserves that were created by government spending. Ever since covertibility to gold ended in 1971, the auctions have served no purpose other than as a way for the Fed to target interest rates.

The Primary Dealers line up to have their reserves drained — they do this willingly, but are also obligated to, per their contract with the Fed. If the reserves don't exist for some reason, the Fed would know this in advance and just have the Treasury delay its auction until the reserves were lined up and targeted.

The funds to pay taxes and buy government securities come from government spending.

Treasury (deficit) spending creates reserves in bank reserve accounts at the Fed. When the Treasury spends, it credits these M0 reserve accounts. When you buy Treasuries, or pay taxes, the Treasury just deducts money from your bank's M0 reserve account. It's a merry go-round. And these M0 reserve accounts are crucial for our money supply to exist. They back our money supply.

Without government spending, these reserve accounts would have no money in them. And the only way you can get money into these reserve accounts is with government spending. In other words...

The funds to pay taxes and buy government securities come from government spending.

You don't buy Treasuries or pay taxes with bank loans or close substitutes for money. The Treasury doesn't take those forms of payment when the transactions are settled. The Treasury only deals with a bank's reserve account at the Fed. So, it really makes no difference if Directs, Indirects or Primary Dealers are draining their reserves accounts at the Fed.

ALL MONEY (except coins) COMES FROM DEBT, PERIOD. There is no other way to create money.

Unprepared's picture

"ALL MONEY (except coins) COMES FROM DEBT, PERIOD. There is no other way to create money"


Please restate your assumptions: There is no other way to create money ... in a fiat based, interest rate targeted monetary system economy. Put a bullet to the risk-free rate and all of that "money" evaporates and its commodity status is distroyed.


*Money is a promise, a claim, a contingency and not a commodity.

BliptoP3's picture

Currency is not money.  Damn it!

LynRobison's picture

The fact that our money supply comes from debt is indeed the problem -- the current monetary system is unstable and is destined to crash. The interest on debt can only be paid if the money supply continues to grow forever (which is why deflation is supposed to be so bad). A system that must grow forever cannot be sustained. At some point, the world runs out of physical collateral on which to base new debt, and CRASH goes the system. 

bilbao's picture

"At some point, the world runs out of physical collateral on which to base new debt, and CRASH goes the system"

You must be confused. Our national debt and money supply hasn't been based on physical collateral since 1971. We are fiat. The US government can issue an infinite amount of debt if need be — particularly since the reserves to buy debt will always exist from additional government deficit-spending. The process can be (and is) infinite. Much like a scorekeeper can never run out of points, the US government can never run out money or debt that it can issue. There is never an issue of solvency. There is never a risk of the US not being able to pay its bills. The US Debt is a myth:

SeattleBruce's picture

The faulty monetary system is the reason we are and should be whining.  We should be screaming about a better way!  For instance - non-debt based money, and deleveraging the debt.  But that would displace TPTB, so it'll take a real fight to change anything - LOTS AND LOTS of whining in fact.

Whiner's picture

You talkin to me? Debt bomb fuse ticking. USA empire straining to breaking point. Light up Iran and re-elect Hopey Clown. Snap, crackle and POP!

vote_libertarian_party's picture

Nobody believes me when I say that any recovery they see now is because the gvt is mainlining adrenaline with a firehose.


Once the bond pump slows down even a little...sigh....nobody listens.

SheepDog-One's picture

Dont worry, those people INSIST on being the ones with bug eyes after the unthinkable happens one morning and theyre wiped out and asking 'What happened? Why didnt anyone warn me'?

ChrisFromMorningside's picture

You mean just like "no one saw the housing bubble coming."

"No one" meaning "no Keynesians, no one in government, and no one in the mainstream media." Of course, millions did see it coming ... but they're all kooky Austian School economists, or Ron Paul followers, or they lack an MBA parchment on their wall so who cares, right?


LouisDega's picture

Damn... My tax rep at H&R Block didnt make any mention of this. He said im ok Spider

John Law Lives's picture

Things didn't turn out well for Spider.

The look on Pesci's face right before he shoots Spider is priceless.  He looks like a complete psycho.

LouisDega's picture

Great movie. Nothing like quality cinema. Thanks, But i meant it as one of those movie quotes that fits well with a lot of situations. Sort of like the grandaddy of them all and one that especially holds true today , "Were gonna need a bigger boat"

Big Slick's picture

"The chart below should provide some comfort in that regard."

By that argument if my annual salary is $112,000 and I consistantly borrow $100,000 every year, I should be good, right?


Sudden Debt's picture

If you use that 100k to buy gold and silver, than yes you should be fine ;)