Is the U.S. Treasury Hiding Debt (Again)?

"You can observe a lot by just watching." 

-- Yogi Berra

A number of web sites have been amazed that the U.S. public debt holds remarkably steady near the maximum legal limit of $16,699,396,000,000.00 ($16.699 TRILLION) for 70 days and counting.  Has the U.S. government stopped spending?  Okay, pick yourself off the floor from laughing.  No, the Treasury is simply hiding debt using "extraordinary measures", as they've done in the past.

The Treasury provides the daily debt status on their web site.  You can also search for historical data. Here's a chart the graphs this total pubic debt since January 1, 2008.  Click to enlarge.  The chart also shows the legal debt limit in effect over time.  Note that there have been prior periods where the debt remained remarkably flat for a long period of time--before August 2, 2011 as an example.

As soon as Congress approves a new, higher debt limit, the Treasury remarkably reports a surge in new debt.  It's an old game.  After Congress increased the debt ceiling on August 1, 2011, miraculously, the U.S. needed to borrow nearly a quarter trillion dollars in new debt!  Where did Treasury hide that $238 billion in debt?  Similarly, the Treasury borrowed $120 billion in new debt over a two day period starting January 30, 2012.  Enron and WorldCom accountants would be proud.

Applying a linear regression of the data (R-squared is 0.9874, indicating a good match), it appears that the U.S. government is borrowing roughly $3 billion a day!  Granted, the Federal Reserve is currently buying $85 billion in U.S. debt per month, so the two numbers jive nicely ($85 billion divided by 30.4 days per month equals about $2.8 billion per day).  As reported by the Treasury, the total public debt remained flat at about $16.699 TRILLION. However, at $3 billion per day, the projected debt very likely currently exceeds $17.10 TRILLION.  So where is Treasury hiding that extra third to half a trillion dollars?

Once Congress inevitably increases the debt limit, as they always do, stay tuned for a whopper of a borrowing day by the Treasury.  Of course, we could balance the federal budget, but ...

See also ...

United States Treasury Department: The Daily History of the Debt Results (1-JAN-2011 to 26-JUL-2013, “Total Public Debt Outstanding”)

www.treasurydirect.gov/NP/debt/search?startMonth=01&startDay=01&startYear=2011&endMonth=07&endDay=26&endYear=2013

The Concord Coalition: Understanding the Federal Debt Liming (Increases in the Debt Limit since 1997)

www.concordcoalition.org/issue-briefs/2013/0114/understanding-federal-debt-limit

Congressional Research Service: The Debt Limit: History and Recent Increases (May 22, 2013)
www.fas.org/sgp/crs/misc/RL31967.pdf

Soquel by the Creek: The Debt Ceiling and Where Do You Hide $238 BILLION?
soquelbythecreek.blogspot.com/2011/08/debt-ceiling-and-where-do-you-hide-238.html

The Debt Ceiling and Where Do You Hide $238 BILLION?

If you followed the USA's debt-ceiling debate, you may remember that U.S. Treasury Secretary Timothy Geithner said that the U.S. Government would reach the Congress-imposed debt ceiling on 16-MAY-2011.

As Congress did little to act on the debt ceiling up to that point, the debt-ceiling debate was delayed until a 1-AUG-2011 drop-dead date. The Treasury admitted to delaying payments to certain federal retirement and disability funds to postpone the date beyond 16-MAY-2011. Using the ever-popular "everybody-does-it" defense, Secretary Geithner claims, "Each of these actions has been taken in the past by my predecessors during previous debt limit impasses."

After tortuous debate and political wrangling, the U.S. Congress agreed to increase the debt ceiling. Immediately afterward, the U.S. Treasury borrowed a record $238.3 BILLION in a single day!

(click to enlarge)

The chart above uses data directly from the U.S. Treasury and shows the accumulated total public debt from 1-JAN-2011 until 3-AUG-2011. The red line shows the TOTAL public debt. Not all of the debt is subject to the debt ceiling (as described here and here), so the line seemingly crosses the official debt ceiling limit. However, the red line flattens out on 16-MAY-2011, the day that Treasury Secretary Timothy Geithner says that the U.S. hit the official debt limit.

At first glance, it would appear that the U.S. debt did not increase from 16-MAY-2011 until 2-AUG-2011 and then suddenly the debt increases by $238.3 BILLION. However, from the historical "burn-rate", the U.S. Government was in reality still borrowing an average of $2.72 BILLION per day! The blue dashed line shows extrapolated borrowing even during the period where the official total debt flat-lines.

In essence, the Government merely stopped borrowing on the open market and instead borrowed from federal employees and retirees--many whom where likely unknowing and unwilling U.S. creditors.

So, where did the U.S. Treasury "hide" this $238.3 BILLION? If a public company acted this way, these actions would likely trigger an SEC investigation (and shareholder lawsuits). But, as we sadly know, the U.S. government isn't constrained by the same rules that it mandates for everybody else.

In a side note, the total USA public debt is rapidly reaching the size of the U.S. gross domestic product (GDP). In 2010, the U.S. GDP was $14.658 TRILLION.

QUESTIONS:

• Where did the U.S. Treasury "hide" this $238.3 BILLION?
• Were their actions legal?
• Were their action ethical?
• The Congress delayed action on handling the debt crisis well beyond the original 16-MAY-2011 date. How much did Congress' inaction cost the nation?

See also ...

• "Growth in USA Public Debt (2001 to 2021)"
  http://soquelbythecreek.blogspot.com/2011/07/usa-public-debt-january-2001-to-june.html
  
• "IDEA: Government Efficiency Standards Modeled on Fuel Standards"
  http://soquelbythecreek.blogspot.com/2011/07/idea-government-efficiency-standards.html