No Runny Eggs

If you pay attention to financial news, you probably know the federal government ran a $82.7 billion deficit in the month of April. As JammieWearingFool notes, it’s a record-setting 19th consecutive month of monthly deficits, and only the 13th of the past 56 Aprils to post a montly deficit.

Before I get to the “how much worse”, I do have to note that the government did “accelerate” some payments from May 1 to April 30. However, that is only somewhere south of $19 billion in additional outlays, and only reduces the “natural” monthly deficit to $64 billion (give or take a couple billion).

The first two parts of the “how much worse is it” comes from Tom Blumer. Do you remember what I said about April historically being a surplus month for the feds? In April 2007, the monthly surplus was $178 billion, and in April 2008, the monthly surplus was $159 billion. Compare that to the $21 billion deficit in April 2009 and this April’s $83 billion deficit.

That flows into the second part from Tom – tax revenues are still cratering, both from before the start of The Great Recession (soon to be named The Greatest Depression) and from last year. Total federal receipts for April are down 36.1% from April 2007, and down 7.9% from April 2009.

On that note, the best instantaneous measure of income generation is, at least until the effects of PlaceboCare distort it, the portion of the FICA/SECA tax that goes to the Hospital Insurance portion of Medicare. It taxes every dollar earned at the same percentage, and despite an extra Friday, the FICA (withheld) take was 2.6% lower in April 2010 than it was in April 2009, and the SECA (that’s from the first-quarter 2010 quarterly estimated payments plus any unpaid portion from 2009) take was 4.0% lower in April 2010 than it was in 2009. The combined drop from April 2009 to April 2010 is 3.0%. If this is a “recovery”, then it’s not only a jobless one, but a payless one.

The third part comes from Karl Denninger via Dad29. The national debt increased not by $83 billion, but by $175 billion. Karl caught the usual suspect – the various “trust funds” buying more Treasuries.

There, however, is a second part, noted by Fox Business at the time and fallen into the memory hole. Back in February, the Treasury announced it was “recapitalizing” something called the Supplementary Financing Program. It was originally a “temporary” infusion of $300 billion of cash from the Treasury to the Federal Reserve back in September 2008 (that’s right, pre-TARP) to allow the Federal Reserve to do stuff like prop up AIG. Since that cash was funded with Treasury securities, it became a “victim” of the bump-up against the debt ceiling, and had dropped to $5 billion by February. Since Timothy “TurboTax” Geithner, the architect of the SFP when he was head of the New York Federal Reserve, liked the no-strings-attached slush fund so much, as soon as the debt ceiling was raised, he decided to bring it back to $200 billion between the end of February and the end of April. I wonder who the next AIG/GM is – the Communists in the Executive Branch are already planning for their next corporate takeover.

The “cute” trick is that while all that money came from the sale of bonds and remains there because said bonds are being rolled over, since it’s “cash”, the amount available to the Federal Reserve is counted as part of the Treasury’s “Operating Cash” and thus offsets the debt issued to create it. Specifically for April, $75 billion went out the door that way.