US Posts Two Month Combined Surplus As Debt Rises By $137 Billion

Moments ago, and a few hours ahead of the president's State of the Union speech, the FMS announced (with a 20 minutes early leak), that in January the deficit of the US government was in fact a surplus of some $2.883 billion, better than the expected $2 billion deficit. This was the first January surplus since 2008, and was an improvement on the already impressive $1.191 billion deficit from December, which in turn brings the total fiscal year to date deficit to $290 billion. On the surface this would be great news as it indicates that tax hikes are having an impact on the US budget surplus, but of course, a quick glance below the surface reminds us that January was the month during which the Treasury was forced to raid the various government retirement funds to fund operations, and otherwise operate under the debt ceiling, which was only hiked in the last days of the month. And another glance indicates something fishier: while December and January combined resulted in a surplus of some $1.7 billion on the book, a quick glance at the total US debt over the period, shows an increase of some $137 billion in the same time period (or at least through February 4, when the accurate debt picture was once again revealed). In other words, while the US government was arguably generating funds from operations over the past two months and thus did not need a single penny in outside funding, debt soared.

We are confident that Obama will be delighted to take credit for the former in a few hours, although we are not holding our breath on him explaining the latter, not explaining where all this debt went. Who knows: maybe JPM merely lent out their VaR calculating spreadsheet to the US treasury. It is not as if either of those two entities would lie to anyone.

Finally, since the start of tax refund issuance by the IRS had been delayed by several weeks, don't expect the surplus picture to repeat itself any time soon. Maybe, ever.


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