Who Owns America's Debt?

In all the catcalls from China and Russia over our downgrade, it might be useful to consider who actually holds American treasuries to get an accurate picture of where we are.

The largest foreign owner is China with only $1.1 trillion and Japan is close behind in second at $900 billion. Another $3.2 trillion is being held by mutual funds,union pensions and other investors. In total,private investors account for $8,229 trillion of our debt.

The Public holds another $4.6 trillion. Social Security holds $2.6 trillion. Federal employees pension account for $782.7 billion and Medicare $337 billion. And an assorted number of government programs holds the rest.

Also, the Fed holds about $1.7 trillion.

By the way, the new CBO director released another study on Social Security. It actually has two more years of life in it, paying 100% out through 2038. In short, it does not contribute at all to our debt in any way shape or form. In fact, it seems to be holding our debt. Think of it as double China and let's give it suitable political influence for it.

Now Standard and Poors as well as Moody's say that we must cut the national debt by $4trillion over 10 years. This was the deal President Obama was trying to reach with John Boehner before the teabaggers erupted. So now why don't we get rid of the Bush tax cuts and we save $5.7 trillion over the same period. That leaves enough to pay China back and other Arab states. So we would not have any foreign owners of our debt.

Now that was simple. Then the remaining problem will be the escalating health costs in ten to twenty years.

Even though Standard and Poors attacked the Republicans for refusing to consider tax revenues in any debt reduction, the downgrade only empowers the Republican framing of the issue. As Warren Buffett pointed out, we have no credit problem or debt problem. We have a jobs problem. We shouldn't get detoured by some high-roller who stands to make $10 billion on a $1 billion bet.