Last week or the week before that, almost buried in the reporting about the final form of the “debt deal” and the drops in the stock market and the downgrading of America’s credit by S & P, CNN reported on a “a quick and fascinating breakdown by total amount held and percentage of total US debt, according to Business Insider.” The list they published is as follows (except I reversed the order):
1. Social Security Trust Fund, $2.67 trillion (19 percent)
2. The US Treasury, $1.63 trillion (11.3 percent)
3. China, 1.16 trillion (8 percent)
4. US Households, $954.4 billion (6.6 percent)
5. Japan, $912.4 billion (6.4 percent)
6. State and Local Governments, $506.1 billion (3.5 percent)
7. Private Pension Funds, $504.76 (3.5 percent)
8. United Kingdom, $346.5 billion (2.4 percent)
9. Money Market Mutual Funds, $337.7 billion (2.4 percent)
10. State, Local and Federal Retirement Funds, $320.9 billion (2.2 percent)
11. Commercial Banks, $301.8 billion (2.1 percent)
12. Mutual Funds, $300.5 billion (2 percent)
13. Oil Exporting Countries, $229.8 billion (1.6 percent)
14. Brazil, $211.4 billion (1.5 percent)
15. Taiwan, $153.4 billion (1.1 percent)
16. Caribbean Banking Centers, $148.3 billion (1 percent)
17. Hong Kong, $121.9 billion (0.9 percent)
America owes foreigners about $4.5 trillion.
America owes America $9.6 trillion.
What do these numbers mean? I assume that when the US borrowed from Social Security they gave the agency treasury bonds equal to the debt? I assume that as these bonds mature, the Federal government is supposed to pay back Social Security. Would Social Security be solvent for much longer if the government did not borrow these funds? I would like to know the answer to that. I assume the same arrangement is true with State and Local Governments, with Private Pension Funds, with Money Market Mutual Funds, State, Local and Federal Retirement Funds, Commercial Banks, and Mutual Funds – these groups “bought” bonds and the government got cash and these bonds will mature (hopefully not all at the same time) and will have to be redeemed by the US Government. We must hope that our government is good for it, as they say they are, and we must keep the faith.
As far as the forms our foreign debt takes, I do not know. Perhaps we also traded treasury (US) bonds for cash in these cases. Will we have to give up our social security in all its forms if everyone happens to call in their debt at the same time? How much of this debt represents actual cash debt and how much represents debt in the form of US Bonds or securities? What are the interest payments on these debts and how do those get paid? What percent of the budget do these interest payments represent? There is obviously a lot more to learn about this debt.
What kinds of debts do other governments have? What percent of their national budgets do their debts consume? Are we way out of line in terms of the amount of debt held by nations at this time? If Americans can generously send money to suffering groups around the world, could we buy our way out of debt by contributing emergency funds to our own government (on a strictly voluntary basis)? Actually the answer to that is no. 9.5 trillion dollars divided by 190 million American workers comes out to about $50,000 in debt per working American. 9.5 trillion dollars divided by 307 million Americans represents $31,000 in debt for each American, babies and all. It is, however, doubtful that we would be called upon to pay all of our debt at once and immediately.
I would rather pay a bit more in taxes than lose Social Security right now. Medicare, in a country with health care costs as high as ours, is problematic. I find my myself nervous about how often I go to the doctor and I also find myself trying to cost my government as little as possible, but I know I will not always be able to get away with minimal medical care. Medicaid also could use some fixes. Of the three programs, the one I would like to keep basically unchanged is Social Security.
Enough conjecture, I need to go on a fact-finding mission.
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