America's Debt Holders
So just whom does America owe its $12 Trillion debt?
The US Federal debt is mainly divided between two accounts – Intergovernmental Holdings and Dept Held By The Public.
Intergovernmental Holdings -- roughly $4.5 Trillion – are largely surpluses in Social Security and Medicare. For years the amounts collected from workers paychecks for Social Security and Medicare have been more than the annual payouts for those programs. Many Americans falsely believe this extra money has been invested for future retirees…placed in the often referred to “lock box.”
Unfortunately that Social Security and Medicare “lock box” has never existed. Rather Congress has been borrowing these surplus Social Security and Medicare funds to mask the true annual deficits the Federal Government has been running.
Another description for how Congress has been running Social Security and Medicare would be a “Ponzi” scheme so large, it makes Bernie Madoff look like a wayward kid shoplifting a pack of gum.
Just like any other Ponzi scheme, it works well for a while, but a day of reckoning is inevitable. For Social Security and Medicare, that day is upon us. Social Security ran a deficit in 2009 and is expected to again in 2010 because of the recession. According to the Social Security Trust Board, unless Social Security is dramatically reformed, come 2016 Social Security will permanently run a deficit as the baby boomers retire. The same is true for Medicare in 2017.
That means if we don’t balance the budget by 2016 when Social Security moves from surplus to permanent deficit, we likely won’t without a cataclysmic economy collapse.
Debt Held By The Public – roughly $7.5 Trillion – consists largely holders of Treasury Bills sold to finance the federal Government’s annual deficit. Foreign countries hold the vast majority of these debts, many hostile to the United States. The 5 largest debt-holding entities are:
Because the US dollar has been falling in value against other currencies, China and other countries have signaled their worry about continuing to lend to the US. If any of these 5 largest foreign holders of US debt wanted to crash the US economy, they could by simply sharply selling off their dollar holdings.
Clearly, US owed foreign debt puts foreign entities in a position of creating economic turmoil for the US – creating a significant loss of US economic independence.
Numbers in BILLIONS. Source: US Treasury -- http://www.treas.gov/tic/mfh.txt
The US Federal debt is mainly divided between two accounts – Intergovernmental Holdings and Dept Held By The Public.
Intergovernmental Holdings -- roughly $4.5 Trillion – are largely surpluses in Social Security and Medicare. For years the amounts collected from workers paychecks for Social Security and Medicare have been more than the annual payouts for those programs. Many Americans falsely believe this extra money has been invested for future retirees…placed in the often referred to “lock box.”
Unfortunately that Social Security and Medicare “lock box” has never existed. Rather Congress has been borrowing these surplus Social Security and Medicare funds to mask the true annual deficits the Federal Government has been running.
Another description for how Congress has been running Social Security and Medicare would be a “Ponzi” scheme so large, it makes Bernie Madoff look like a wayward kid shoplifting a pack of gum.
Just like any other Ponzi scheme, it works well for a while, but a day of reckoning is inevitable. For Social Security and Medicare, that day is upon us. Social Security ran a deficit in 2009 and is expected to again in 2010 because of the recession. According to the Social Security Trust Board, unless Social Security is dramatically reformed, come 2016 Social Security will permanently run a deficit as the baby boomers retire. The same is true for Medicare in 2017.
That means if we don’t balance the budget by 2016 when Social Security moves from surplus to permanent deficit, we likely won’t without a cataclysmic economy collapse.
Debt Held By The Public – roughly $7.5 Trillion – consists largely holders of Treasury Bills sold to finance the federal Government’s annual deficit. Foreign countries hold the vast majority of these debts, many hostile to the United States. The 5 largest debt-holding entities are:
Because the US dollar has been falling in value against other currencies, China and other countries have signaled their worry about continuing to lend to the US. If any of these 5 largest foreign holders of US debt wanted to crash the US economy, they could by simply sharply selling off their dollar holdings.
Clearly, US owed foreign debt puts foreign entities in a position of creating economic turmoil for the US – creating a significant loss of US economic independence.
Numbers in BILLIONS. Source: US Treasury -- http://www.treas.gov/tic/mfh.txt
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