Government Debt to Foreigners Sets New Record

Government Debt to Foreigners Sets New Record
August 24, 2012

The money the U.S. government owes to foreign entities rose to a record $5.2923 trillion in June, according to data released in mid-August by the U.S. Treasury.

In May, the U.S. Treasury owed $5.2581 trillion to foreign entities. On net, in June the U.S. government borrowed an additional $34.2 billion from foreign entities in order to fund U.S. government operations.

The U.S. government’s indebtedness to foreign interests has grown by 72.3 percent during President Barack Obama’s term in office. In January 2009, when Obama was inaugurated, the U.S. government owed $3.0717 trillion to foreign entities, according to the Treasury Department. That has increased by $2.2206 trillion—or 72.3 percent—to the record $5.2923 trillion.

Japan Gaining on China

Entities in the People’s Republic of China remain the largest holders of U.S. government debt. Entities in Japan, however, are on track to eclipse the Chinese as the top holders of U.S. government debt.

In June, the Chinese held $1.1643 trillion in U.S. government debt, up slightly from the $1.1640 trillion in U.S. government debt the Chinese held in May. However, Chinese ownership of U.S. government debt hit an historical peak of $1.3149 trillion in July 2011 and has been on a generally downward trend since then.

Entities in Japan, by contrast, have been consistently increasing their ownership of U.S. government debt. In June the Japanese owned $1.1193 trillion in U.S. debt; in May they owned $1.1089 trillion. In June 2011, the Japanese owned only $881.5 in U.S. government debt.

Federal Reserve Holds the Most

Although the Chinese maintained their place as the top foreign owners of U.S. debt in June, they are not the top owners of U.S. debt in the world. That distinction belongs to the U.S. Federal Reserve, which according to its July monthly report owned $1.667 trillion in U.S. government debt in June.

As of the end of June, the total debt of the federal government was $15,856,367,214,324.44. Of that debt, $4,812,182,369,712.78 was money the federal government owed to itself (i.e., money the Treasury had borrowed from federal trust funds such as the Social Security Trust Fund, etc.). The Treasury calls this type of debt “intragovernmental” debt.

The remaining $11,044,184,844,611.66 the federal government owed as of the end of June was debt held by the “public.” This is debt in the form of Treasury securities the government is obligated to pay off in cash.

The combined $6.9593 trillion that U.S. Treasury owed both to foreign entities ($5.2923 trillion) and the Federal Reserve ($1.667 trillion) at the end of June, equaled about 63 percent of the federal government’s debt held by the public.

Terry Jeffrey (tjeffrey@cnsnews.com) is editor-in-chief of CNSNews.com, where an earlier version of this article appeared. Used with permission from CNSNews.com.

Internet Info

Treasury Department report on U.S. government debt owed to foreign entities: http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt