A detailed heat budget has been constructed for the subtropics of the Southern Hemisphere which details the fluxes through the surface, top-of-atmosphere, and within the atmosphere to determine how the cooling that drives the downward branch of the Hadley circulation comes about. It is widely assumed that the primary heat balance in the subsiding branch of the Hadley circulation is between the adiabatic warming from subsidence and the diabatic effects of infrared radiative cooling to space but this is shown to be incorrect. We show that the cooling in the subtropics also arises from heat transport to higher latitudes by quasi-horizontal air flow in the transient baroclinic eddies. Similarly results apply in the Northern Hemisphere except stationary waves also play a role in winter. Effectively, the radiation to space is distributed over middle and high latitudes and is not limited to the clear dry regions in the subtropics. Further we argue that some of the radiative cooling in the subtropics is a consequence of the transient baroclinic eddies. Results have implications for theories of the Hadley circulation and water vapor feedback in the climate system.