Treasury To Pay Part of Natl. Debt. -- Can someone please explain this?

[s0me0nesmind1]

WASHINGTON—The federal government said Monday it would pay down a small portion of the national debt this quarter for the first time in six years.
The debt reduction, seen as temporary, is a sign that higher tax receipts and spending cuts are improving Washington's finances. The respite in borrowing will likely give the Obama administration a bit more time before running up against the federal debt ceiling.
The Treasury Department said that it expects to retire a net $35 billion in bonds, notes and bills from April to the end of June. That compares with its estimate from earlier this year that it would rack up an additional $103 billion in marketable debt in the second quarter.
"The paydown this quarter, the first since 2007 is emblematic of the turn in budget finances from horrible, to grim on their way to steadily better," Eric Green, global head of research at TD Securities, said in a note.
The drawdown comes in a season that traditionally sees relatively strong government receipts coming from April tax payments. But in the same quarter a year earlier, the Treasury Department boosted net debt outstanding by $172 billion.
The revenue boost this year came from higher tax rates for wealthier households and higher payroll taxes, as well as the impact of wage increases and delays in paying individual income-tax refunds.
Still, the usual shortfalls will likely return quickly. The Treasury said it expects to borrow a net $223 billion in the July-to-September period. And the budget deficit will likely hit $845 billion in the fiscal year ending Sept. 30, down from more than $1 trillion the prior four years, according to the Congressional Budget Office.

http://finance.yahoo.com/news/treasury-pay-down-debt-first-232000698.html

Can someone please explain to me -- how when we are in a negative loss... as in still losing money... how we are paying down debt? What are we having a circle jerk of paying debt with debt?

Honest question, since I'm no expert on the Fed and how our debt system works - so as much as I wouldn't mind putting it in ATOT I figured it would lead here.

 

[Brovane]

Easy in this quarter the Government is taking in more money that it needs to pay the bills. Money doesn't come in evenly to the Federal government over the entire year. Their is spike in revenues.

 

[s0me0nesmind1]

Easy in this quarter the Government is taking in more money that it needs to pay the bills. Money doesn't come in evenly to the Federal government over the entire year. Their is spike in revenues.

....How the hell are the spikes enough to equate to a 1 trillion deficit vs. a gain? C'mon get the fuck out of here. I'm definitely calling bullshit on that.

If anything it sounds more like a ploy to deceive people.

 

[Kntx]

....How the hell are the spikes enough to equate to a 1 trillion deficit vs. a gain? C'mon get the fuck out of here. I'm definitely calling bullshit on that.

If anything it sounds more like a ploy to deceive people.

This QUARTER. For example, in the 3 months ending Apr 30 government revenues were 535 billion. In the same 3 months government expenses were 500 billion. Therefore 35 billion of debt retired.

 

[Genx87]

We are pulling in more tax revenues and thus dont need to borrow as much. With the increased revenues they will pay down some debt. We will still run a deficit for the overall year.

 

[Brovane]

....How the hell are the spikes enough to equate to a 1 trillion deficit vs. a gain? C'mon get the fuck out of here. I'm definitely calling bullshit on that.

If anything it sounds more like a ploy to deceive people.

Stop believing everything that Fox news tells you.

 

[TallBill]

Pushing back bills a few months doesn't count.

 

[frowertr]

It's silly anyway. Robbing Peter to pay Paul. Country is still screwed and getting worse by the day.

 

[Theb]

This is part of the reason the home finances analogy doesn't help people understand the budget deficit.

 

[zephyrprime]

Easy in this quarter the Government is taking in more money that it needs to pay the bills. Money doesn't come in evenly to the Federal government over the entire year. Their is spike in revenues.

this

 

[Attic]

This QUARTER. For example, in the 3 months ending Apr 30 government revenues were 535 billion. In the same 3 months government expenses were 500 billion. Therefore 35 billion of debt retired.

Measuring this based on three month time period is ridiculous when the budget deficit is based on a year period. The 3 months is not equal to other 3 three month periods, but what matters is the year period when discussing a budget deficit.

I'm not arguing whether a budget deficit is good or bad, just that its discussion should begin with an accurate measure of it for policy. This requires looking at a year period of running the country.

Bottom line is we are accumulating debt overall, even though if we ignore the broader picture we can focus on a bit of debt that was paid off. The bit we paid off lowered the high rate of debt growth, though clearly debt is growing not shrinking.

 

[wotan]

Easy in this quarter the Government is taking in more money that it needs to pay the bills. Money doesn't come in evenly to the Federal government over the entire year. Their is spike in revenues.

Think about it -- the Gov brings in the most during April (tax season.) What is so unbelievable about this?

 

[chucky2]

This is part of the reason the home finances analogy doesn't help people understand the budget deficit.

Not sure about that. This is no different than a household receiving money for some reason that lets them enjoy a monthly income greater than their expenses. Rather than save that money to offset the credit card debt they're living on since they insist on living outside their means, they instead take this unexpected money and pay off some of their house and/or car principle.

Which is a good thing.

Until 2 months down the road they're back to racking up credit card debt by continuing to live outside their means. All the while though they can tell people that a couple of months ago they paid more than they planned of their home loan principle down.

Awesome.

 

[Kntx]

Measuring this based on three month time period is ridiculous when the budget deficit is based on a year period. The 3 months is not equal to other 3 three month periods, but what matters is the year period when discussing a budget deficit.

I'm not arguing whether a budget deficit is good or bad, just that its discussion should begin with an accurate measure of it for policy. This requires looking at a year period of running the country.

Bottom line is we are accumulating debt overall, even though if we ignore the broader picture we can focus on a bit of debt that was paid off. The bit we paid off lowered the high rate of debt growth, though clearly debt is growing not shrinking.

I don't think you know what you are arguing. OP wanted to know how any debt was retired when there is an annual budget deficit. This was explained. Case closed.

 

[s0me0nesmind1]

Think about it -- the Gov brings in the most during April (tax season.) What is so unbelievable about this?

Think about it: You're wrong

The average person has their taxes withheld from their paycheck monthly. Very few people owe taxes, most people get taxes back.

 

[berzerker60]

Not sure about that. This is no different than a household receiving money for some reason that lets them enjoy a monthly income greater than their expenses. Rather than save that money to offset the credit card debt they're living on since they insist on living outside their means, they instead take this unexpected money and pay off some of their house and/or car principle.

Which is a good thing.

Until 2 months down the road they're back to racking up credit card debt by continuing to live outside their means. All the while though they can tell people that a couple of months ago they paid more than they planned of their home loan principle down.

Awesome.

Except the US "credit card debt" has a negative interest rate, meaning people are literally paying the federal government money to loan it money. It would be financially irresponsible NOT to borrow money when the real interest rates are negative.

And the "household finances" analogy continues to be fundamentally broken and awful. The government never has to repay its debts in full, nor would that be a good thing if it did. Its debts never "come due," nor can anyone "call in their debts." Its "expenses" are fundamentally linked to its "income" in a completely different way from a household. It owes most of its "debt" to its constituent citizens, which would be fairly unlikely in a household.

 

[airdata]

Go look up QE3. They've given themselves power to print money infinitely.

 

[ElFenix]

Think about it: You're wrong

The average person has their taxes withheld from their paycheck monthly. Very few people owe taxes, most people get taxes back.

for people that are withholding correctly that's going to be near a wash.

but i guarantee there's a lot more people out there that are owing a metric f-ton than getting a metric f-ton back.

 

[chucky2]

Except the US "credit card debt" has a negative interest rate, meaning people are literally paying the federal government money to loan it money. It would be financially irresponsible NOT to borrow money when the real interest rates are negative.

And the "household finances" analogy continues to be fundamentally broken and awful. The government never has to repay its debts in full, nor would that be a good thing if it did. Its debts never "come due," nor can anyone "call in their debts." Its "expenses" are fundamentally linked to its "income" in a completely different way from a household. It owes most of its "debt" to its constituent citizens, which would be fairly unlikely in a household.

It is quite interesting how in the entirety of everything else in life, when things are too good to be true, it's an indication that something bad will happen at some point (before, during, after) the deal. But, never for the Gov. The Gov apperently has a system that quite literally is assumed to make money in perpetuity. People will always buy our debt. Never ever will times change. Fascinating...

 

[berzerker60]

It is quite interesting how in the entirety of everything else in life, when things are too good to be true, it's an indication that something bad will happen at some point (before, during, after) the deal. But, never for the Gov. The Gov apperently has a system that quite literally is assumed to make money in perpetuity. People will always buy our debt. Never ever will times change. Fascinating...

Except no one has argued that...

 

[ElFenix]

And the "household finances" analogy continues to be fundamentally broken and awful. The government never has to repay its debts in full, nor would that be a good thing if it did. Its debts never "come due," nor can anyone "call in their debts." Its "expenses" are fundamentally linked to its "income" in a completely different way from a household. It owes most of its "debt" to its constituent citizens, which would be fairly unlikely in a household.

nevermind that the household description is not even accurate. government is generational, and generationally speaking families don't pay off their debts either. when mom and dad have finished paying their mortgage they take out a lease on a big lexus, the next generation is on their 2nd house and deciding which minivan to finance.

 

[Theb]

Think about it: You're wrong

The average person has their taxes withheld from their paycheck monthly. Very few people owe taxes, most people get taxes back.

http://www.fms.treas.gov/mts/index.html
April is a month with big receipts.

 

[Anarchist420]

they ought to just repudiate the debt or apportionate it to the States based upon representation and let the States decide.

Then the Federal govt could sell all of its land, its gold, and its weapons and the nightmare would end.

The creditors have no inherent right to get paid back since not every tax payer agreed to accumulate the debt. it would be painful for people who are in debt themselves, who have a lot of savings in U.S. dollars, or are employed by a business in debt, as well as those who got hurt in the short term chaos that would ensue but there would be a recovery and the States would be in better shape than it is now within 4 years from ending the U.S. govt.

 

[Pr0d1gy]

a circle jerk of paying debt with debt

That about sums it up. Welcome to reality.

 

[Attic]

nevermind that the household description is not even accurate. government is generational, and generationally speaking families don't pay off their debts either. when mom and dad have finished paying their mortgage they take out a lease on a big lexus, the next generation is on their 2nd house and deciding which minivan to finance.

The families financing power is generally more controlled in terms of a burden to taking on more and increasing debt levels. Government has many more tools to finance its existing and future needs and also pays a much lower financing rate.

Most older individuals I know who have been financially successful do not treat debt lightly. Government operates differently because it doesn't fear being broke or running out of money, natural it's debt level reacts appropriately.

Debt is seen as an opportunity for good results down the road by those who use it successfully, this ought to be the same for government and families. Those working to pay off the debt are also the same, namely families not goverment.