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Obama Math? Deficit UP $138B In May, Debt DOWN $90B

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Try to do this math in your head: The government spent $138.732 billion more in May than it collected in tax revenues. But – the national debt decreased by $90.024 billion during the month. Confused? Yeah, me too.

In fact, the deficit went up $138.732 billion during the month, according to Treasury’s official accounting, while the debt went down $90.024 billion. – See more at: http://cnsnews.com/news/article/treasury-s-extraordinary-accounting-deficit-1387b-may-debt-down-90b#sthash.WPBbTpJv.dpuf

How can that be, you ask? As reported by CNSNews.com, the Treasury Department used “extraordinary measures” to avoid surpassing the legal debt limit. Feel better? Yeah, me neither.

According to Treasury’s official accounting, the spread between expenditures and revenues was approximately $228.756 billion. So where did the government get the $228.756 billion it needed to not only cover its $138.733 billion deficit for the month –  but to also pay down a net $90.024 billion in debt?

The first part of the answer is simple; the Treasury drew down its cash on hand by $179.182 billion. (In the Personal Financial Planning business, we call that “spending your cash reserves.”)

As a result, Treasury started the month with $213.863 billion cash on hand, according to the Daily Treasury Statement, and ended the month with only $34.681 billion cash on hand – a net drop of $179.182 billion in the federal government’s cash account. (Are you staying with me so far?)

But – and here’s where it gets tricky (“extraordinary”) – that massive draw down in cash still leaves an unexplained $49.574 billion of the $228.756-billion gap between the $138.733 billion increase in the federal government’s deficit during May and the $90.024 billion decrease in its net debt.

Where did that additional $49.574 billion come from?

Ah, the proverbial $64,000 question (or, in this case, the $49.574 billion question). As luck would have it, CNSNews.com asked the Treasury Department that very question. A department spokesman pointed to the letter Treasury Secretary Jacob Lew sent to House Speaker John Boehner on May 17, which explained that the Treasury was going to begin using “extraordinary measures” to avoid hitting the current legal limit on the federal government’s debt.

“The appendix to the letter describes the extraordinary measures the Treasury can use to keep us under the debt limit,” said the spokesman. “Treasury estimates we can glean approximately $260 billion ‘head room’ from those measures to keep us under the limit at least until Labor Day. If we hadn’t used the extraordinary measures, it’s likely the debt would have climbed.”

Okay, that clears that up. NOT. I suppose we could dig into the Treasury’s letter and learn all about the “extraordinary measures,” couldn’t we? But – suffice it to say – none of those measures would allow us – and our monthly budgets – to spend more money than we take in and reduce our debt at the same time. Only in Washington.

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Categories: Debt, federal debt, Federal Deficit, Politics

Tags: , , , , , , , , , , ,

4 replies

  1. It has been said many times – but it is always worth saying it again…..

    “If this was a private company, they would be in prison for fraudulent accounting”.

  2. See the problem is that you’re using math and they are using arithmetic. Same way spending more money each budget year and claiming to make cuts.

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