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 Rest of the Story Behind President Obama's Deficit Claim and PolitiFact's "Fact Checking"

In a speech at Knox College in Illinois on July 24, 2013, President Obama said ...

"... our deficits are falling at the fastest rate in 60 years."

The fact-checking website PolitiFact even rated this claim as true.  However, PolitiFact fails to put this claim and their "true" rating into proper context.  It is much like saying that it is true that the Nazis did good things, as some still claim, while ignoring the big picture of their atrocities and mass murder.

It is indeed true that "our deficits are falling at the fastest rate in 60 years," as shown in the following figure (click to enlarge).  According to the PolitiFact article, the White House makes this claim using a four-year change in the deficit as a percentage of the U.S. gross domestic product, as shown in this chart.  However, what both President Obama and PolitiFact fail to mention is that while "our deficits are falling at the fastest rate in 60 years," this comes after increasing our deficits at the fastest rate since we won World War II after defeating the Nazis and the Japanese Empire.  The deficit reduction is laudable, but it also comes as a result of the prior massive deficits.  Some of the deficit spending during President Obama's first term can be attributed to Bush-era spending, under a Democrat-controlled Congress, including seizing Fannie Mae and Freddie Mac, TARP, and the initial auto bailouts. Additional spending happened under the Obama Administration, again with the Democrat-controlled Congress, including the $787 billion Stimulus, Cash for Clunkers, buying General Motors, 99 weeks of unemployment benefits, and increased welfare, food stamps, and disability benefits.

Let's look at this same information in another manner.  The following chart shows the annual budget surplus or deficit (mostly deficits) as measured as a percentage of the U.S. gross domestic product (GDP).  The bars are color-coded by political party of the President (red for Republican, blue for Democrat) and the Presidents are listed at the top.  As you can see, it is technically true that we are currently reducing our deficits at their fastest pace in 60 years, but only because we ran massive deficits in excess of $1 TRILLION for four years from 2009 through 2012.  Although the 2013 fiscal year isn't yet complete, the White House Office of Management and Budget (OMB) forecasts a smaller annual budget deficit of $759 billion, which helps bolster the President's claim.  However, as a percentage of GDP, this "greatly reduced" deficit still exceeds the largest deficit from President George H. W. Bush in 1992--twenty years earlier.  Part of the reason for the for the smaller budget deficit is the controversial sequestration process that enforces across-the-board budget reductions in spending growth.

Our Rating

We rate the President's claim as "technically true but misleading."  The President is making claims that omit the full context for his claims.

Unfortunately, this isn't the first time that we've found President Obama's claims to be factually correct but misleading.  He, or somebody on his staff, is apparently a fan of the classic book, How to Lie with Statistics.  For another example, see President Obama's claims "... that Ho Chi Minh was actually inspired by the U.S. Declaration of Independence and Constitution, and the words of Thomas Jefferson.”.  Based on Ho's actions, however, Ho apparently read a cheap knock-off translation of these works.

See also ...

• Digging Deeper Into President Obama's Manufacturing Jobs Claim
• What Does the Obama Job Chart Really Mean?

Misconceptions

We received the following tweet that originally alerted us to President Obama's deficit claim. Unfortunately, many of the President's supporters do not actually understand what the President claimed.

The United States government, in no way, shape, or form is the "smallest government in 50 years." The Twitterer is potentially mistaking a claim that we have the lowest percentage of people employed by the government in 45 years. Likewise, the President has not "reduced debt faster than any other President in history."  The President's claim is about deficit reduction, not debt reduction.  Here's a quick tutorial on the difference between deficit and debt, courtesy of the United States Treasury.

In order to have actual debt reduction, we must first run a budget surplus ... and we're in no danger of doing that any time soon.  However, based on changes to policy, it is possible to reduce the forecasted future debt while currently running a deficit.

The President's claim also covers the last 60 years (actually, 64-65 years), not all of U.S. history. There were much bigger improvements to deficits immediately following the end of World War II.

Sorry, we don't "Ignorant much" around these parts.

Methods

According to PolitiFact, the Obama Administration makes this claim using the annual budget deficit measured as a percentage of the U.S. gross domestic product (GDP).  They then measure the difference over a four-year time frame (YEAR(n) - YEAR(n-4).  The deficit as a percentage of GDP data is available directly from the White House web site as Table 1.2.  Use the field "Surplus or Deficit" under "Total".  We used the mid-year updated figures from the White House for 2013, which is not included in Table 1.2.  The updated values are -4.7% and $795 billion, which are to the benefit of the President's claim.

Data Sources

White House: Office of Management and Budget: Historical Tables

Table 1.2—Summary of Receipts, Outlays, and Surpluses or Deficits (-): 1789–2018 (Total Surplus or Deficit as a Percentage of U.S. GDP)
Table 1.1—Summary of Receipts, Outlays, and Surpluses or Deficits (-) as Percentages of GDP: 1930–2018 (Total Surplus or Deficit in Current Dollars)
www.whitehouse.gov/omb/budget/historicals

Wall Street Journal: White House Sees Smaller Budget Deficit in 2013 (Lower, revised 2013 deficit numbers based on mid-year update)

online.wsj.com/article/SB10001424127887323368704578594020152453486.html

PolitiFact: Obama says deficit is falling at the fastest rate in 60 years
www.politifact.com/truth-o-meter/statements/2013/jul/25/barack-obama/obama-says-deficit-falling-fastest-rate-60-years

FactCheck.org: Deficits Falling (From Way Up)
http://www.factcheck.org/2013/08/deficits-falling-from-way-up/

California May 2013 Unemployment Rate

According the Bureau of Labor Statistics (BLS), California's official unemployment rate continued to improve in May 2013, dropping by 0.4% from 0.9% in April to 8.6% in May. The national unemployment rate increased 0.1% to 7.6%. California's unemployment rate continues to lag the nation as a whole and is tied with New Jersey at the 5th-highest in the nation ahead of Nevada, Mississippi, Illinois, Rhode Island, and North Carolina.

SOURCE:  U.S. Department of Labor, Bureau of Labor Statistics:  Unemployment Rate for States, Seasonally Adjusted (April 2013, preliminary).

www.bls.gov/web/laus/laumstrk.htm

The current 8.6% unemployment rate is at its lowest level since October 2008, just before the 2008 Presidential election. The current 8.6% unemployment rate remains higher than the 7.0% peak during the prior recession although it currently is lower than the peak of the early 1990s recession.

Source: Federal Reserve Bank of St. Louis: Unemployment Rate in California (CAUR)

research.stlouisfed.org/fred2/series/CAUR/

Total non-farm payroll jobs in California grew by 10,800 jobs and presently stands at 14,612,500 jobs.  The current levels is up 727,200 jobs since the bottom of the recession but is is down 529,600 jobs from January 2008. At the current growth rate of 10,800 jobs per month, total employment will reach January 2008 levels in approximately four yours.

SOURCE: U.S. Department of Labor, Bureau of Labor Statistics:  California, Total Nonfarm, Seasonally adjusted - SMS06000000000000001.

data.bls.gov/cgi-bin/surveymost?sm+06

Approximately 1.6 million Californians remain unemployed, down 364,000 from May 2012.

At the national level, the civilian participation rates in the job market (CIVPART, EMRATIO) remain at their lowest levels in a generation and show no immediate signs of improvement.

The average (mean) duration of unemployment (UEMPMEAN) and the median duration of unemployment (UEMPMED) remain well above the highs set in prior recessions.  The average duration is for all those who are unemployed.  The median indicates that 50% of those who are unemployed had a longer duration, 50% had a shorter duration.  The difference between the mean and the median indicates that there are a large number of long-term unemployed people.  This may be a possible effect of providing 99 weeks of unemployment benefits.

Overall national unemployment rates exhibit their typical ethnic and education-level patterns.

Nationally, Black or African American unemployment is highest at 13.5%, followed by Hispanic or Latino unemployment at 9.1%.  White unemployment is 6.7% while Asian unemployment is lowest at 4.3%.

The unemployment rate is highest for those lacking a high school diploma, currently at 11.1%.  The data is only for those 25 and older, so it does not include teenage unemployment data. Those who are high school graduates, but no college have a 7.4% unemployment rate.  For those with a bachelor's degree or higher, unemployment stands at 3.8%.  In all categories, the overall unemployment rate is higher than historical averages.

A Rare Day Indeed: Drudge Report and Huffington Post are Critical of the Same Politician

June 6, 2013 was indeed a rare day.  The Drudge Report and Huffington Post are often politically diametrically opposed.  Both the Drudge Report and Huffington Post took aim at President Barack Obama and both disapproved of his Administration's policies allowing covert NSA eavesdropping and data mining operations that allegedly involved innocent Americans.

Drudge Report (June 6, 2013)

Huffington Post (June 6, 2013)

The IRS' Employee Union Historically Gives 90%+ to Democrats

The IRS is accused of targeting Tea Party and similar groups for excess scrutiny when these groups applied for tax-free 501(c)(4) status.  Various reasons for the extra scrutiny is alleged.  However, does the IRS' own public-sector employee union play a role?

IRS employees are organized by the National Treasury Employees Union (NTEU), who also manages employees within other divisions of the federal government.  The Tea Party groups advocate for smaller, more affordable government which is in direct conflict with employees and their union within the federal government.  Is this the reason for the additional IRS scrutiny?

While the NTEU isn't among the bigger political spenders at the national level, historically, they give roughly 90% or more to Democrats.

Targeting the Tea Parties While Obama Allies Remain Tax-Free

There is ample evidence that the Internal Revenue Service (IRS) investigated "Tea Party", "Patriot", and "9/12 Project" groups with "extreme prejudice" when they applied for 501(c)(4) tax-free status.  The excuse for the excessive reviews is because these grassroots groups may potentially engage in overt political activities.  Groups with 501(c)(4) tax-free status can also keep their donors secret while political organizations like the Republican and Democratic parties cannot because they're subject to campaign disclosure laws.

The excess IRS scrutiny, especially over concerns about overt political activity, is especially laughable given the 501(c)(4) status granted to another group, Organizing for Action (OFA).

Organizing for Action (OFA) is the latest incarnation of Barack Obama's Organizing for America (OFA) from the 2008 and 2012 Presidential elections.  Organizing for America (OFA) was a community organizing project of the Democratic National Committee (DNC). Organizing for Action is a tax-free, 501(c)(4) "social welfare" organization.  Does Organizing for Action directly advocate for any politician or political party, which might violate its tax-free status?  You decide.

• You can find Organizing for Action on the web at www.barackobama.com. This is the same web address used by President Obama's Organizing for America operation during the 2008 and 2012 election cycles.

• Organizing for Action's stated purpose is to "support President Obama."
  
• Organizing for Action uses the familiar, trademark Obama logo to brand its site.
  
• Organizing for Action is a tax-free 501(c)(4) organization meaning that it can keep its donors secret.

• The official, authenticated Twitter account for Barack Obama is @BarackObama.
  
• The Twitter page includes the President's photo and name.
  
• The profile summary acknowledges that the @BarackObama Twitter account is "run by Organizing for Action staff."
  
• The Twitter feed often includes links to other content found on the Organize for Action web page.

Again I ask, do you believe that tax-free Organizing for Action will advocate on direct behalf of any politician or political party?

How is Organizing for Action anything different than a tax-free branch of the Democratic Party?

How can the IRS, in good conscience, deny Tea Party groups for up to three years but approve of the President's community organizing group?  Need I remind you that the IRS is part of the Treasury Department, which itself is part of the Executive Branch headed by President Barack Obama?

Keeping It All In the Family: The Cozy Relations between Media and the Obama White House

Updated 5-JUN-2013

The traditional media coalition is often criticized for having a too-cozy relationship with the White House. This criticism becomes especially interesting when you consider the number of family connections in the media to current or former Obama Administration staff.  These are but a few.

(click to enlarge)

For example, current White House Press Secretary Jay Carney is married to Claire Shipman, a correspondent for ABC News and a contributor to ABC's Good Morning America.

Former Obama White House Press Secretary Robert Gibbs is now a contributor to NBC News and MSNBC.  Similarly, former Obama Senior Advisor David Axelrod is now senior political analyst for MSNBC.

Deputy National Security Advisor for Strategic Communications, Ben Rhodes, is the brother of CBS News President David Rhodes.  Ben Rhodes apparently coined the term "kinetic military action" for the U.S. involvement in toppling Libyan dictator Muammar al-Gaddafi.  According to media reports, Ben Rhodes advised President Obama to withdraw support for Egyptian President Hosni Mubarak as part of the Egyptian "Arab Spring".  Ben Rhodes also helped coordinate the Obama Administration's talking points for the Benghazi terrorist attack where U.S. Ambassador John Stevens and three other Americans were killed.  Ben Rhodes is also active in driving American policy in Syria.

Dr. Elizabeth Sherwood-Randall is Special Assistant to President Obama.  Previously, she was an advisor to then Senator Joe Biden, the current Vice-President of the United States. Her brother is Ben Sherwood, President of ABC News.

President Obama's new National Security Advisor, Susan Rice, is married to Ian Cameron, former executive producer for ABC News' "This Week" Sunday news show.  Susan Rice was former U.S. Ambassador to the United Nations.  She also gained notoriety during the Benghazi incident for the dubious claim, supposedly written by the U.S. "intelligence" community, that the Benghazi attack was caused by a little-viewed YouTube video.

Former Obama White House Director of the Office of Management and Budget, Peter Orzag, is married to the lovely Bianna Golodryga, who is co-anchor on the weekend edition of Good Morning America (GMA).  GMA is part of ABC News, under Ben Sherwood.  Peter Orzag is now Vice Chairman of Global Banking at Citigroup. The Orzag/Golodryga relationship began with a DC sex scandal.

Former White House Deputy Press Secretary, Katie Hogan, is married to ABC News reporter, Matthew Jaffe. According to his official ABC News bio, Jaffe covered the 2012 Presidential election for ABC News and Univision.  Interestingly, his wife, Katie Hogan, stepped down as White House Deputy Press Secretary to join President Obama's 2012 re-election campaign as deputy press secretary. Katie Hogan now serves as spokeswoman for President Obama's Organizing for Action, a tax-free 501(c)(4) organization.

Tom Nides is former Deputy Secretary of State for Management and Resources under then Secretary of State Hillary Clinton.  Mr. Nides is married to Virginia Moseley, who is Vice-President and Deputy Bureau Chief for CNN's Washington, D.C. bureau.  Virginia Moseley was former senior Washington producer for ABC News' Good Morning America (GMA).  Apparently, Virginia Moseley and Ben Sherwood were also former college classmates.

Do these relationships matter? Consider the coverage of the Benghazi fiasco and the news media's role in covering the story.  For example, CBS reporter Sharyl Attkisson actively bulldogged investigations into the Benghazi incident.  Yet, her stories did not appear on broadcast for five months.  Could this be because CBS News is run by the brother of a White House official actively involved in "crafting" the official Obama Administration's message on Benghazi?