Confirming recently reduced estimates of US debt borrowing needs - mostly as a result of new funds brought in via Trump's trade tariffs - the Treasury Department today lowered its estimates of fourth-quarter borrowings to $425 billion from the $440 billion forecast it made in July, while assuming an end-of-December cash balance of $410 billion, up from $390 billion 4 months ago.

The revised Treasury numbers bring the total net borrowing needs for calendar 2018 at $1.338 trillion, while borrowings for fiscal year 2018 (which ended on Sept. 30) amounted to just under $1.2 trillion.

The Treasury also released its first estimate of borrowing needs for the January – March 2019 quarter, which it expects to hit $356 billion, well below the $488 billion borrowed in the same quarter of 2018, while assuming an end-of-March cash balance of $320 billion.

Meanwhile, during the July – September 2018 quarter, the last of fiscal 2018, the Treasury borrowed $353 billion in net debt, up from the $329 billion it had estimated in July and ended the quarter with a cash balance of $385 billion, which was also higher than the $350 billion forecast previously. The increase in borrowing resulted from the higher end-of-quarter cash balance partially offset by higher net cash flows.

So why did the US borrow $1.2 trillion in Fiscal 2018 even though the official budget deficit was reported to be $779 billion for the same period? That is mostly due to "off budget" items that Congress thinks shouldn’t be part of the normal budgetary process. It includes things like Social Security and Medicare, which vary from year to year, and can be anywhere from $200 billion to almost $500 billion.

Of course, since the US Treasury ultimately ends up borrowing those dollars as the table above shows, the true deficit that adds to the debt is actually about 50% higher than the number discussed by the media.

Oh, and finally, over 40% of the on-budget deficit went simply to pay $325 billion in interest on previously-issued debt. This number is set to explode higher in the coming years.