I'm also surprised that the headline deficit wasn't even higher, given all the ginormous spending bills passed while Democrats still controlled the house in 2021-2022.
Here's my take on why that may be the case. It's largely conjecture, since I'm much to lazy to delve into details regarding the spending timeline for the appropriated funds. But to me it seems much more likely than not that politicians, who above all else want to get reelected, sought to place and sustain the economy on a deficit-financed "sugar high" that would last as long as possible. Hence the desire to extend the timeline for spending on infrastructure, chip fab subsidies, market interventions, etc.
I think that notion squares with my previous observation that the big-government crowd wanted to bake spending increases into the pie so that they could be sustained for as long as possible. Now you see that the Biden team is pushing for a $7.3 budget outline, as I posted a few days ago.
Connected with this, notice the large divergence between the monthly debt accumulation run rate during the last year and the headline budget deficit. I recently stated that the
real deficit should be considered to be the actually debt increase, including all the sleight-of-hand like "off the books" spending. After all, if money has been borrowed in the Treasury markets but not yet spent, does anyone seriously believe it's going to just sit there in government accounts and not be spent sometime in the near future?
Now, if you drill down to just a bit below the surface, you may notice something very interesting. Take a look at how the Treasury General Account (TGA) has been nicely stuffed over the last 12 months.
https://fred.stlouisfed.org/series/D2WLTGAL
As you can see, the balance tends to hang around the $300 billion level, give or take about $100 billion, unless something unusual is happening, such as when it skyrocketed in readiness for covid-related relief/stimulus.
But now it's about $600 billion higher than that approximate long-term average.
So, what the hell is going on here? Are Janet Yellen and her Treasury deputies anticipating an emergency or crisis sometime soon?
(Oh, yes! Isn't there a critical event coming up on November 5th of this year?)
If I'm a Treasury Secretary with a nearly trillion-dollar checkbook, and have available funds of $600 billion or more in excess of what is really needed for day-to-day operations, I sure do have a shot at making a lot of stuff all around the country look juicier than it really is.
Therefore, I think you can expect the Treasury to helicopter-drop cash into as many nooks and crannies of the economy as possible in order to keep the headline unemployment rate near historical lows, and the macroeconomy having a "feel" that's as nice as possible.
