Who Owns the Debt?

  •  February 22, 2007

I found this graph over on the Skeptical Optimist. It describes who owns the US Public Debt:

Free Image Hosting at allyoucanupload.com

The moonbats are claiming that our national debt is owned by China. The truth is that the Chinese in 2006 owned only $321 Billion Dollars. That’s about a month and an half of what we spend. Hardly a catastrophe.
One factoid that confuses a lot of people is that or official debt is 8.7 Trillion dollars. What we owe the public is somewhat over half of that. (The light blue) The rest of the debt is what’s owed to the Social Security trust fund and other government ‘trust funds’. I guess I don’t consider that a debt we owe since any amount redeemed is going to have to be paid by the taxpayers. Social Security is a mess, but it’s not a debt.
By and large the public debt is half owned by US citizens and US businesses. The rest is owned by foreigners that feel that the US is a better place to invest their money.

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  • http://Array Bat One

    Marty,

    The chart lists all federal debt. The biggest chunk of that debt is “Special” bonds issued at reduced interest rates to the Social Security “Trust Fund.” This has been going on since LBJ and the Unitary Budget Act, which essentially allows the surplus Social Security funds collected from everyone’s payroll taxes, to be “loaned” to the US Treasury in exchange for these bonds.

    There is NO Social Security Trust Fund. Only a whole bunch of bonds, which SS will have to start redeeming in just a few years, depending on the projections used, to pay out benefits for retiring baby-boomers.

    Of course, we already know what the state of the federal budget is. And there is no provision in any of the current budget projections for the cost of redeeming those bonds when the Social Security retirement fund goes into a negative cash flow/

  • Mark D

    The moonbats are claiming that our national debt is owned by China.

    Does this pertain to me?
    If so, you mis read my comment.
    I never heard anyone say China owned our debt, even the Chinese aren’t that crazy.

  • Bat One

    Don’t flatter yourself, Mark. You’re hardly the only “moonbat” around.

  • Bat One

    R108,

    It is also an attempt to lay the groundwork for rationalizing raising taxes.

  • Bat One

    Marty,

    Actually, your Enron analogy is right on the money (pun intended!)

    The federal government books the Social Security “surplus” (the amount taken in from taxes that exceeds the amount needed to pay out current benefits) as revenue to the General Fund, and issues the “Special Bond” to the so-called “trust fund” account. The government does not, however, book the resulting unfunded liability, that is, the net present value of that bond which will need to be paid out of general fund revenues when it (the bond) comes due.

    In a very simplistic sense the federal government, OUR federal government, is doing exactly what it prosecuted Enron and Arthur Anderson for doing.

  • robert108

    The entire ploy of the so-called “national debt” is an attempt by the political class to avoid the blame for their wasteful and excessive spending habits. They are using our money to buy the votes of their special interest groups.

  • http://SayAnythingBlog.com The_Whistler_ofnd

    To add to what Bat said, future socials security payments will not be made from those bonds.

    They can only be paid from higher taxes. (likely) Program cuts in the general budget (yeah right) or future benefits will be reduced to people that are currently working now. (very likely).

    So that’s not a debt, but we do have a monster obligation out there and Congress is lying about it.

  • http://SayAnythingBlog.com The_Whistler_ofnd

    Well actually I thought you had said that and you corrected me. But I’ve seen it in other threads.

    I found this in our ‘discussion’ (bats and clubs) but I thought it was interesting and deserved a post of it’s own.

  • Marty

    allyoucanupload huh?

    Nice concept — too bad you can’t download anything from that site…

  • Mark D

    They do hold $1.0663 trillion in currency reserves.

    1987: 16.1b
    1997: 148.2
    2005: 623.0
    2006: 845.2

    Let’s hope they keep it up.

  • Marty

    Now wait a minute.

    I’m no economist so help me out here. The SO keeps mentioning “who is buying our debt” as in “who buys T-bonds”. Yet the biggest slice of his pie-chart is the “U.S. Government”.

    So does our government really buy most of the T-bonds that it issues itself?

    I dunno man, but that sounds like something Enron would do… what am I missing here?

  • Mark D

    Damn!!!!

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