It’s generally broken down into three components – a small piece held by the Federal Reserve [red], a growing intergovernmental piece held by the Federal Government [blue], and the piece held by the Public [yellow] primarily in the form of Treasury Securities.
The debts held by the Federal Government [blue] are the entitlement programs [eg Social Security] which are a problem unto themselves. It’s what people mean when they frown and say, "We’ve got to do something about Social Security and Medicare." The GAO projects that with the accumulating interest, this portion will exceed all government revenue in 25 years]. It’s imponderable so I’ll move on [redrawing the graph so that part won’t show so much].
If there’s a hero in this story, it’s President Bill Clinton [though he floundered on the personal character front]. With a mild tax increase, welfare reform, and cuts in Military Spending , he dramatically decreased the Public Debt, though the Federal Debt continued unabated [upper graph]. And then came President George W. Bush and Vice President Dick Cheney. Their constituents were the same ones President Reagan had courted [the wealthy]. So they cut taxes taxes [several times]. And then they marched us off to war in Afghanistan, and followed that with an unprovoked invasion of Iraq for good measure. Expensive enterprises, War. While it appears they were gentler on the National Debt until the recent financial crash than their mentor, President Reagan, they did their own damage in another way that’s less apparent.
This data in this next graph was really hard to come by [1][2]. It partitions the Public Debt between the debt held by Americans and the debt held in foreign countries [the majority of this overseas debt is in the form of U.S. Treasury Securities held by foreign governments]. I could only find data back as far as 1986, but it’s enough to make the point.
[This is a conservative estimate. There’s another more disturbing estimate here]
Under President Clinton, the foreign ownership of our National Debt changed very little between his inauguration and leaving office. With President Bush, it was another matter. He financed his misadventures by selling off America to foreign governments in the form of U.S. Treasury Securities. There’s really not much to say about this graph – it’s meaning is self evident. Who owns all of these Treasury Notes? Just about everyone on the planet except us [3][4].
So the National Debt is a Treasure Treasury Trove of problems. First there is the sheer magnitude of the debt itself. Second is the growing problem of our social entitlement programs. Adding to that, President Bush sold America on the International Market – so now instead of being a financially independent country, we are an interest bearing Commodity in the world’s marketplace [our interest payments feed foreign economies rather than our own]. Oh yeah, did I mention that we are in the middle of the biggest downturn in the economy since the Great Depression
And we’re still at it!
[…] Maybe all of you knew that, but I didn’t. Then I started trying to figure out how much of our National Debt was foreign owned. That turned out to be a more difficult task than I imagined because of the […]