The tenacious and relentless Joe Firestone has a nice post up at correntewire this week that does some projections on what Congress may be thinking with respect to federal deficit spending through March of next year.
Well, here we are again, House leaders have agreed on a compromise continuing spending resolution at the same level as before from October 2012 through January 2013. It’s likely now that the President(s?) will probably try to make the money available for deficit spending as of today, last through the time period of the continuing resolution so that one deal including both the budget and raising the debt limit can be made by March of 2013. According to the July 31, Daily Treasury Statement, there’s $499,424,000,000 left until the debt ceiling. That’s an average of $62,428,000,000 deficit spending per month for the next 8 months, ending March 31, 2013. For the past 10 months, average deficit spending was at $114,802.3 Billion per month,My emphasis. Joe has dug out the details of what he sees as a desire by Congress to only net issue $62B/mo. of USTs through next March; while over the last previous 10 months, the non-government sector (both domestic and external) have been demanding and taking $114B/mo.
The non-government sector always wins in this "contest of wills". So expect the monthly deficits going forward to be closer to the $114B recent trend levels.
That said, although Congress cannot dictate a level of the federal deficit, they can probably take certain actions in which they retain discretion related to the rate of withdrawals from the Treasury accounts. So expect slower government vendor payments, delayed awards of federal contracts, an underfunded US Postal Service pension fund, slower (less timely) Medicare and Medicaid reimbursements, delayed infrastructure project starts and so forth. This as Treasury seeks to reduce the rate of US Treasury account withdrawals where they have some discretion in an effort to reduce the rate of new net Treasury securities issuance.
Joe goes on to repeat the great and larger policy proposal for Treasury to simply deposit a large minted coin (btw struck in platinum, suck it up moron gold-lover commodity fetishist sickos) with a $T face value to top-over the Treasury General Account. This is a method to avoid an unnecessary "fiscal cliff" that could be created by the present policy of UST issuance that is limited via a separate and redundant congressional action in the form of "debt ceiling" legislation.
Thanks for this analysis Joe!
(Mike, this does not look like a "good" development... $114B/mo. will come, but "kicking and screaming", reduced cash-flow for many, like attaching a leech onto an already sick patient, etc...)