Correction: Who Owns the National Debt?

On my last post, I made an error in reporting who owns the federal debt, and I apologize for any confusion it may have caused. I originally reported 86 percent is owned by and owed to Americans. Here are the correct facts:


The total public debt as of 8/1/2011 is $14.3 trillion or $46,708 per U.S. citizen. It is higher than the total value of China's, the United Kingdom's and Australia's economies together. Our national debt is growing by $3.5 billion per day or $2 million per minute.

Only 32 percent or about $4.6 trillion is owned by the federal government (intragovernmental holdings) as IOUs for Social Security, federal pensions, etc. About $3 trillion is owed to Social Security and the Federal Reserve Bank holds about $2 trillion.

About $5.3 trillion or 37 percent are private holdings by American investors, corporations (especially banks and pension funds), and holdings by state and local governments.

The remaining $4.4 trillion or 30 percent is owned by foreigners. China owns 8 percent of our debt or about $1.2 billion. This makes the Chinese the third largest holder of U.S. debt. Only the Social Security Trust Fund and the Federal Reserve Bank hold more.

Therefore, about $9.9 trillion or 69 percent, not 86 percent, of the national debt is owned by and owed to Americans.

Sources used include: http://usgovinfo.about.com/od/moneymatters/ss/How-Much-US-Debt-Does-China-Own.htm  http://www.usdebtclock.org/

http://www.treasurydirect.gov/NP/BPDLogin?application=np
http://www.fms.treas.gov/bulletin/index.html
http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt
http://www.defeatthedebt.com/

Debt Ceiling: Letter to Florida's Senator Bill Nelson

Senator Bill Nelson (Dem.-FL) sent an email asking for his constituents input regarding the debt ceiling issue. Below is a copy of the letter I sent in response:

Dear Senator Nelson:


The cycle of constant expansion of the nation's debt has to stop. It is bankrupting us and our children. It is unsustainable. I support these principles:

1. Every dollar of debt ceiling increase must be matched by spending cuts. These cuts must be made BEFORE additional dollars may be borrowed. The old trick of raising the ceiling on the promise of future cuts that never seem to come must be avoided. For this reason, I do not like either the Boehner or Reid plans. We do not need yet another commission. Congress needs to do its job and cut the red ink.

2. There should be no income tax increases on anyone, especially corporations, during a recession. Even President Kennedy knew tax cuts, not increases, promoted job growth and economic expansion. I support a Fair Tax, but only if the 16th Amendment is repealed. It is wrong that the top 2% of taxpayers pay 80% of taxes and that over 50%, including myself, owe none.

3. No debt ceiling increase should be granted until the President submits a balanced budget. It is dereliction of duty for him not to have submitted a budget for the current fiscal year. He insists we do not need a balanced budget amendment. I say, "Prove it!"

4. The current Social Security, Medicare and Medicaid programs are not sustainable and must be reformed. I support increasing or even removing the cap on income subject to FICA withholdings. The current $250,000 maximum is too low to keep the system solvent.

5. If a default is unavoidable because Congress continues to fail to act and the President continues to refuse to lead, then payments of our debts need to go out in this order:

a. active duty military
b. retired military
c. Social Security recipients (retirees, disabled, & children)
d. government contractors
e. government civil service workers
f. U.S. bondholders
g. foreign aid recipients
h. all other obligations
i. elected officials and their staff

Sincerely,
Susan M. Lamb