This is a funny joke. What happens when the federal government runs out of cash?
Okay, it’s not a joke.
It’s no secret that the government is waiting on a budget from Congress and the President. This would also give the government permission to start spending money again. As of right now, the temporary extension is supposed to last through the end of the week. But a look at their cash situation suggests they might not last that long.
The Treasury Department kindly posts a daily update of their finances. You can track the money flowing out and trickling in. You can see the oldest available report here and the newest available report here (as of this writing). The cash level is called “Federal Reserve Account”.
As the linked story above discusses, the government is more or less down to it’s last $14. Sure a few bucks might come in every day, but the outflow is substantial. They aren’t just going month to month, it’s hour to hour.
This is kind of scary when you think about all the things that rely on government cash. Does the President stop working because he’s not getting a paycheck? What about the Secret Service? Well they’d keep going, but for how long we don’t really know.
Why does this escape headlines in the major media? I’m not sure. But it’s clear that for decades the government would rather leave the public in the dark about the details of their finances. Sure they post these reports, but how often does anyone talk about them?
Other than tax revenue the government gets its cash from selling Treasury bonds, notes and bills. But this is like waiting until next week for your loan to clear and you have to stretch $14 until then.
The government can do this. At any given time they owe billions of dollars to contractors, utilities, employees, and bondholders. Like anyone, they can stretch this out a bit by delaying payments. Do that more than a couple of times and your credit rating may suffer. If people think this is going to become a regular problem, they’ll start charging more interest. This is a fine line the Treasury must walk.
This is besides the point though, as of right now the government has no need for cash. With no budget in place for beyond Friday, they should be low on cash. Perhaps cash management is the one thing the government is efficient at doing.
Photo: peasap
 By The Weakonomist |
The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics. Also keep in mind that nothing I say can be construed as financial advice. |
