February was not an auspicious start to Obama’s record budget deficit-busting plans. The Daily Treasury Statement for the full month of February was just released, and it disclosed that while corporate tax withholdings, net of refunds, actually climbed marginally to $3.4 billion from $(3.4) billion in February 2009, individual tax withholdings plunged to a multi-year low of $30.7 billion. Combined, the two items also posted a multi low of $34 billion, less than the previous recent low from February 2009 when the first leg of the Greater Depression was allegedly at its zenith (see chart below). We can’t wait to hear how the “recession is over” brigade will paint this particular data point.
On a rolling twelve month basis, the government has to plug an LTM hole of about $250 billion in annual tax withholdings. The LTM individual tax withholdings have dropped to an unprecedented low of $1.275 trillion, compared to the $1.43 trillion as of September 2008 when the recession was about to start. If the government is unable to resurrect tax withholdings to historical levels before the interest rate on the $7.9 tillion in marketable debt starts climbing (even as the $7.9 is set to become about $10 trillion in just over a year), call it a ballgame.