Econintersect: The headline is no joke. The U.S. Treasury expects to reduce the national debt with a $35 billion surplus in the second quarter of 2013.
Only two months ago the projection had been for a $103 billion deficit. Details of the quarterly borrowing schedule are due out tomorrow (Wednesday 01 May 2013). The last time there was a quarter with a reduction in the national debt was in 2007. And before that there were several quarters with national debt reduction 1998-2000. And before that it happened in 1969-1970.
What do those three previous debt paydowns have in common? They all preceeded recessions.
The likelihood of a persistence of debt reduction beyond the current quarter is unlikely. The Treasury expects the national debt to be growing again with $223 billion needed in new debt in the third quarter. For the entire fiscal year 2013 the CBO (Congressional Budget Office) estimated (05 February 2013) a deficit of $845 billion. For FY 2014 the estimate was $616 billion and for 2015 $430 billion.
- US expects first cut in debt since 2007 (Robin Harding and Michael Mackenzie, Financial Times, 30 April 2013)
- CBO: 2013 deficit will be less than $1 trillion for first time in five years (Lori Montgomery, Washington Post, 05 February 2013)
- The Budget and Economic Outlook: Fiscal Years 2013 to 2023 (CBO, February 2013)
- Deficits to shrink through 2015, but debt to deepen: CBO (David Lawder, Reuters, Chicago Tribune, 05 February 2013)