Were it your personal bank account, you would get it — and change your ways. But it is not your personal bank account, it is the Treasury of the United States — funded by your tax dollars and money borrowed in your name — and it is now controlled by elected officials of both parties who do not seem to get it at all.
If you want to take a look at the Treasury Department’s latest statement for its bank accounts, it is available online now at fms.treas.gov/dts/index.html. The statement is like a fiscal snapshot of a nation rapidly descending into bankruptcy.
According to the Daily Treasury Report for Feb. 28, the federal government took in $851.47 billion in revenues in February — which included $63.7 billion in new net debt. On the other side of the ledger, it spent $1.009 trillion over the course of the month, including $585 billion to redeem maturing government securities. That gave the government a deficit for the month of $158.5 billion.
To keep the national debt from growing by more than the $63.7 billion in new net debt the Treasury undertook in February, the Obama administration drew down the Treasury’s cash reserves to cover the shortfall.
At the beginning of February, according to the statement, the Treasury had $349.1 billion in cash in its accounts. At the end of February, it had only $190.6 billion.
Taking a slightly longer view, it is clear that from January to February the government significantly altered the way it handled its money. In January, the government indulged a great deal more net borrowing — adding $105.8 billion in net debt. At the same time, it did not drain its cash account at all. Instead, it started the month with $342.7 billion cash on hand and finished with $349.1 billion.
But by the end of January, in addition to having amassed $349.1 billion in cash reserves, the Treasury had also amassed a total national debt of $14.131 trillion, of which $14.078 trillion was subject to a legal $14.294 trillion limit on the national debt. Heading into February, the Treasury was only legally authorized to borrow another $215.4 billion. If it continued to increase the debt at January’s pace of $105.8 billion per month, it would take little more than two months to exhaust the government’s legal borrowing authority.
As Matt Cover pointed out in a recent CNSNews.com report, as the Treasury approaches the debt ceiling, it can draw down its cash reserve. That is exactly what it did in February.
The problem with this tactic is that if the Treasury continues to draw down its cash reserves at February’s pace of $158.5 billion per month, it will drain its remaining stash of $190.6 billion in less than five weeks.
So, now we see the Treasury’s dilemma: It could go back to borrowing at its January rate, but then it would run out of legal borrowing authority in a matter of weeks. Or it could continue to spend down its cash reserves at February’s rate, but then it would run out of cash in a matter of weeks.
Either way, in a matter of weeks, the federal government’s broke.
What’s a $3.819-trillion-per-year federal behemoth to do in such a situation?
One solution would be to have Congress and President Barack Obama enact a new law upping the limit on the amount of money the Treasury can borrow.
But that would be very politically inconvenient. Right now, you see, Congress and the president are trying to finally work out legislation to fund the government for fiscal year 2011 — which started five months ago on Oct. 1, 2010.
At this moment, Congress is prepared to send the president a continuing resolution that will keep the government funded for two weeks past March 4, when the current continuing resolution funding the government expires.
House Republicans say this two-week continuing resolution will cut $4 billion from this year’s budget — that is $4 billion from a $3.819 trillion budget that is projected to run a $1.645 trillion deficit.
The $4 billion the proposed two-week continuing resolution would cut is about one-fortieth of the $158.5 billion shortfall the government needed to drain last month from its cash reserve. In other words, it equals less than one day’s worth of federal overspending.
As of Feb. 25, according to the Treasury’s Department’s Bureau of the Public Debt, the total federal debt equaled $14.195 trillion ($14,194,764,339,462.64). There are 112,611,029 households in the United States, according to the Census Bureau. That means the federal government already owes $126,051 for every household in the country.
It will be more next month, the month after that and the month after that, and next year — no matter which party wins the debate over the latest continuing resolution.
Neither President Obama nor Senate Democrats nor House Republicans have presented a plan that would produce a federal surplus and actually reduce our national debt. They are only debating who is more likely to marginally delay the inevitable day of reckoning.