How much money is in the federal bank account? These two graphs, updated daily, tell the story. – By Chris Wilson – Slate Magazine
[Via Slate]
Here’s one way to express how catastrophically screwed the U.S. government’s finances are: If the entire U.S budget were cut to zero, effective immediately—the military, all entitlements, the electricity bill for the Capitol—there still wouldn’t be enough money to cover the payments on old debt that come due every day. In fact, by Slate’s calculations, the payments would have dried us up in under a month. So for decades the strategy has been to borrow new money to pay down old debt—plus a little extra to kick to the Treasury’s coffers, since we habitually spend more than we take in. That continued to work this year until May 16, when we maxed out our congressional credit card. Since then, the Treasury has been living on savings and whatever revenue comes in. The first graph here very simply shows the balance in the Treasury’s bank account, which is published every weekday. The light-colored bars at the end represent the Bipartisan Policy Center’s projections for how long we can make it before the money all dries up. That date is Aug. 3.
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I’ve been looking for this data and am glad to see not only where to find it but also a nice graph. The Daily Treasury Statement is like the bank statement we get monthly, except that it comes out daily.
It summarized the US Treasury’s cash on a daily basis, allowing us to see how we are doing and whether we actually have enough cash in the ‘bank’ to meet our obligations. Read some of the statements as they tell you just how much was withdrawn or deposited on a daily basis
On May 16, we hit the debt ceiling ($14.294 trillion) and have stayed at the limit since. This can easily be seen in the figure below from the article.

We can borrow money but only that amount equal to the amount we pay down the debt. So the line remains flat.
Here is a graph of the daily bank acount going back to October:

You can see the paid depletion of money in the bank account as we hit the debt ceiling, as we could no longer borrow money to replenish the coffers. The balance has been maintained by a variety of tricks – much like moving around accounts, selling off 401K accounts or selling off our family valuables on ebay.
But eventually, we run out of things to sell and have no more investments to sell. We are left with only borrowing more (which the debt ceiling prevents us from doing) or only paying a little of what we owe out of what we bring in each day.
After August 2, we will only be able to pay off things with the money that comes in each day. That works out to about $76 billion every two weeks. $22 billion in SS benefits goes out every two weeks and about $20 billion goes out to Medicare. About $8 billion ininterest payments would need to be made. $26 billion would go to Defense spending.
All that adds up to $76 billion.
And that leaves no money for Mecicaid, for any non-defense salaries, for VA programs, for Unemployment benefits, or for any non-Defense government program. Nothing into FDIC funds, research at Univerisites shut down, and no more food programs for poor children.
So, we can meet some basic stuff but it will harm the poor, put hundreds of thousands of people out of work and pretty much devastate those least able to deal with the default.
Another thing I worry about is the fact that we have to pay our debt every so often, because securities held by others are redeemed. We need the cash to pay them and thus we have auctions every so often to get the money to pay those redemptions.
We have been doing that without raising the debt ceiling. Normally not a problem.We sell the debt at an auction and the enthusiasm of the buyers determines the interest rate. If lots of them want to buy, the push down the interest rate. If they are reticent, we have to offer a higher interst rate to get them to buy the debt. Except after defaulting, we HAVE to sell at any prices in order to pay off redemptions. We have no other way to get the money for redemptions.
The buyers know we HAVE to sell the debt at any cost. And that cost could be higher interest rates.
This would mean that the interest rate on almost everything would go up. It wouldbecome much harder for cities to borrow money becuase the cost of muicipal bonds would go up. Home loans would go up.
Just about everything would go up if the auctions resulted in higher interest rates.
August may not be a fun month at all if we default.
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