Treasury’s ‘Extraordinary’ Accounting: Deficit UP $138.7B in May, Debt DOWN $90B

June 17, 2013 - 2:57 PM
Jacob Lew

U.S. Treasury Secretary Jacob Lew prepares to shake hands with Chinese President Xi Jinping at a meeting in Beijing on March 19, 2013. (AP Photo/Andy Wong)

(CNSNews.com) - Thanks to a large draw down in the federal government’s cash on hand and to the “extraordinary measures” that the Treasury is currently taking to avoid surpassing the legal limit on the federal debt, the federal deficit and the federal debt actually went in dramatically different directions in May.

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.

That means that even though the federal government spent $138.732 billion more in May than it took in through tax revenues, it was still able to decrease its outstanding debt by $90.024 billion during the month.

The result was a spread of about $228.756 billion between the increased deficit and the decreased debt. Where did the government get this $228.756 billion it needed not only to cover its $138.733 billion deficit for the month but also pay down a net $90.024 billion in debt?

Part of the answer is simple: The Treasury drew down its cash on hand by $179.182 billion. The 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.

But that massive draw down in cash still leaves 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?

CNSNews.com asked the Treasury Department. 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.”

Among the “extraordinary measures” the Treasury can use during a “Debt Issuance Suspension Period,” Lew explained in the appendix to his letter, is to change the way it accounts for the pension funds of federal employees.