US Economic And Market Risks Are Details Of The Negotiated Budget Settlement And Not US Bond Default: US Treasury Cash Inflows And Outflows

As the CBO stated at the end of September (see next paragraph), the US Treasury cash inflows from prepayment of taxes, mostly witholding from paychecks, is about $7 billion per day. The October 31 interest payment on US Treasury securities is about $6 billion dollars, or less than 1 day's receipt of funds, and the large quarterly interest payment on November 15 is about $30 billion, or about 4 to 5 days of cash inflows. The US government has more than sufficient cash inflows to avoid a default on US debt payments. 5 to 6 days cash inflows from witholding taxes on paychecks is sufficient to prevent a US debt default. Additonally, US government workers' salaries, and US payments to contractors and state and local governments will be delayed, not avoided, and the economic impact will be temporary and not equivalent to a slowdown in the economy caused by a permanent decrease in employment. The real risk to the future of the US economy and the stock and bond markets are the terms of the budget settlement between the President and the Congress. What if any increases in taxes will be agreed to and what if any cuts in US government spending, subsidies and entitlement programs will occur? The uncertainty to the markets and the economy is the terms of the budget agreement and not the prospect of a US debt default.

From Congressional Budget Office Report, September 25, 2013, "Federal Debt and the Statutory Limit, September 2013:"

What Are The Upcoming Key Dates For Treasury Cash Flows And Debt Issuance?
In the coming weeks, transactions on certain dates will have a significant influence on when the Treasury will exhaust the borrowing authority created by its extra-ordinary measures and will have insufficient cash to pay obligations as they become due.

Cash Outflows from the Treasury

• October 1—payments to Medicare Advantage and Medicare Part D plans; pay for active-duty members of the military; and benefit payments for civil service and military retirees, veterans, and recipients of Supplemental Security Income (about $42 billion, in total).
• October 3—payments of Social Security benefits (about $25 billion).
• October 9, 16, and 23—additional Social Security benefit payments (about $12 billion each time).
• October 31—payment of interest on Treasury securities (about $6 billion).
• November 1—payments of Social Security benefits (shifted from the third of the month, which falls on a Sunday); payments to Medicare Advantage and Medicare Part D plans; pay for active-duty members of the military; and benefit payments for civil service and military retirees, veterans, and recipients of Supplemental Security Income (about $67 billion).
• November 13—payments of additional Social Security benefits (about $12 billion).
• November 15—large quarterly payment of interest on Treasury securities (about $30 billion).
• Most of the benefit payments involve redeeming GAS securities from a trust fund, thereby temporarily providing additional room to borrow from the public in order to raise cash.
• In addition to these payments, government spending for its ongoing programs and activities is likely to average about $10 billion a day over the next several weeks, but can vary from one business day to the next.

Issuance of Government Account Series Securities
At the beginning of October, large investments will be made in both the Military Retirement Fund and the Medicare-Eligible Retiree Health Care Fund to account for the amortization of the unfunded liability for certain retirement benefits earned by military personnel for service before 1985 and for accrual contributions to cover the cost of future benefits for current military personnel. Those payments are expected to boost the amount of debt held by government accounts by a total of about $80 billion.

Also, in the middle of October, the Highway Trust Fund is expected to receive an intragovernmental payment from the general fund, thereby increasing debt held by government accounts by $12 billion.

Cash Inflows to the Treasury
Most inflows will be from remittances by employers of income and payroll taxes withheld from paychecks. Those remittances typically average about $7 billion per day but can vary significantly from one business day to the next.