Pie chart of who owns the US debt.

March 23, 2007 8:51 PM

Pie chart of who owns the US debt.
posted by Brandon Blatcher (46 comments total)

Thanks. I keep hearing people talk about how "The Chinese keep loaning us money, they'll own the government, bla bla bla." It's really only a very small part, just 4%.

I'm assuming the part owned by the government represents the Social Security trust fund?
posted by delmoi at 8:57 PM on March 23, 2007

Oh god, I so don't understand this stuff.

How the hell does the government owe itself money?!

(head asplodes)
posted by Afroblanco at 9:05 PM on March 23, 2007 [2 favorites has favorites]

There's a Social Security trust fund? Wow! Tell me more about this delmoi 'cause I'm curious about it. You mean the government is holding 3 trillion dollars somewhere to take care of Social Security?

I'm curious about what the 2.7 trillion American Citizens own, and who actually owns that. 'cause in my own investments, other than what my mutual funds own (and I don't own any bond funds), I don't personally own any federal debt.

I am also curious about what the Federal Reserve portion means.
posted by Eekacat at 9:05 PM on March 23, 2007

So how would this pie chart look for new debt?

So for the next fiscal year, the US Gov't needs to borrow $X.

What percentage comes from what fashion of lenders? Do the percentages look the same?

Because it matters, at least in terms of economics crisis, which is very often the context I hear "the Chinese fund the US gov't" thrown around in.

If the Chinese, say, funded something like 90% of new debt, today, and other lenders were scarce, then the Chinese have a pretty handy bargaining chip with the US gov't, even if the US only owes them 4% of their overall debt.

There is not an infinite supply of lending. How much of new lending capacity is locked up in the hands of people not really our friends?

And when are we going to pay this shit off, no matter who own s it. You can't spend in the red forever.
posted by teece at 9:06 PM on March 23, 2007 [1 favorite has favorites]

There's a Social Security trust fund? Wow! Tell me more about this delmoi 'cause I'm curious about it

Well, you can read the Wikipedia article if you'd like.
posted by delmoi at 9:11 PM on March 23, 2007

Fuck!

The Japanese own 6%?!?
posted by hackly_fracture at 9:12 PM on March 23, 2007 [1 favorite has favorites]

More thanks for finding something to allay the fear of cabals of evil Chinese bond-holders.

then the Chinese have a pretty handy bargaining chip with the US gov't

To do what? They own some of the paper. So what?

"But they could ruin our economy!"

So could the British, but we ain't afeared of them. We're China's biggest customer! Who do you think is buying all the teddy bears and shower curtains and toaster ovens? They have a vested interest in keeping us fat and happy. And they'd like to keep their own money safe, so they put it into the safest investment on the planet ... U.S. Treasury bonds.

Yawn.
posted by frogan at 9:17 PM on March 23, 2007

OK delmoi, the first paragraph says that it's securities issued by the government. There's no trust fund anywhere. They use the 15% joe shmoe worker pays (yeah the employer pays half, but it's a part of your compensation package) as an extra tax to pay for bullshit the government thinks is important, but doesn't want to tax corporations or investment income to pay for. There is no trust fund delmoi. So try again.
posted by Eekacat at 9:20 PM on March 23, 2007

I think if I remember a Newshour episode from a year or two ago, the trust funds are mainly a set of government IOUs payable to itself in the future, a "robbing Peter to pay Paul" arrangement.
posted by Blazecock Pileon at 9:24 PM on March 23, 2007

To do what?

Stop lending, that's why I was talking about new debt. Read carefully. I don't know if the debt picture is bleak enough that any one country could cause the US heartburn right now (I doubt it), but that is the context I generally heard this talked about in. Not the owners of total debt, but rather the owners of new debt.

And given the current spending trends, it is undeniable that we are heading to the point where we get there. We can't borrow forever. At some point, we turn it around, or we give some other country the opportunity to send our economy into tailspin by refusing to loan us anymore new money. (Or we send the economy into a tailspin by defaulting. Or we hope for hyper-inflation to erase all of the debt away, and maybe not totally nuke our economy).

I really don't think there's any reason for optimism in the debt picture at all. This pie chart is cool trivia, but beyond that it's not as informative as the author seems to think it is.
posted by teece at 9:27 PM on March 23, 2007

Not to mention, teece, that by defaulting the government is fucking over it's own citizens who apparently own 2.6 trillion in debt. It's a clusterfuck no matter how you look at it.
posted by Eekacat at 9:31 PM on March 23, 2007

I would really like to see this chart broken down by time periods. Who owns debt accrued during the 90s, during the 80s, and so on back to the 40s. Could be a fascinating window into the changing dynamics of our debt picture.

So, umm, somebody go do that.
posted by hank_14 at 9:46 PM on March 23, 2007

the trust funds are mainly a set of government IOUs payable to itself in the future, a "robbing Peter to pay Paul" arrangement.

Either Blazecock Pileon's account has been hijacked by a Republican, or he's forgotten everything George Lakoff ever wrote.

And, teece, we can borrow forever. What we can't do is expand the debt (and the cost of its financing) beyond our ability to pay it. So far, we're not in catastrophe mode, but given the aging of our population (and the looming SS and Medicare needs), we ought to be net holders of foreign capital stocks. Or at the very worst we should be breakeven over the course of the business cycle.
posted by Kwantsar at 9:50 PM on March 23, 2007

The U.S. must have a really bad rep with Equifax. I'd pay the $15 to see the credit report.
posted by inconsequentialist at 9:53 PM on March 23, 2007

This chart is all kinds of stupid.

First, the debt is not $8+ trillion, it's $4.9 trillion as of the end of 2006. He gets the $8 trillion number by adding in the intragovernmental debt - the money the government lends to itself - to reach the $8 trillion.

Pay attention, though. This guy is the useful idiot that is supplying the "intellectual" framework for the Rush Limbaughs of the world.

The mechanism of govt financing is quite complex. When the govt loans money to itself , for pensions, social Security, etc. IT is basically issuing a note that says "You need to have $x in your account, so I'll just lend you the money that hasn't been printed yet and that we haven't borrowed yet." This is a loan of money that exists nowhere in the system. When Al Gore was talking about a lockbox for social security and we all laughed and laughed, he was talking about making sure the money loaned to the SS trust fund actually existed somewhere in the world economy first.

By contrast, the regular govt debt that you hear about all the time, bonds, t-bills, etc. is "real money". You lend your actual money to the government and they'll give it back later + interest. When you consider only this debt, foreign ownership of the debt reaches about 50%.

The intragovernmental debt is shady because when you play follow the money, the fairy-tale magic loan money from the government to the trust funds ends up allowing the govt to cut checks for very real money based on nothing. Those trusts are supposed to be fully funded. They aren't so the government loans itself money to fund them. Again, the money in that loan didn't come from anywhere.

We could argue about whether it matters or not, because the bookkeeping ticks can work for us as well as against us. The Comptroller of the GAO is worried, and as the govt's chief accountant, that's a bad sign.

The real problem is why there is any foreign debt ownership in the first place. We import more than we export, which means money is leaving the country. When they get all these dollars, they have to do something with them, i.e. buy something priced in dollars, so they typically by govt. debt. Very safe, very liquid. But they may also end up buying other dollar assets, such as the 2% of Disney that Saudi prince owns, or the country's ports, etc.

But we need them to buy govt debt and not the other dollar-denominated stuff because the government supports a lot of people, who don't actually work for the govt. I don't mean welfare, I mean middle class welfare, like defense industry jobs, people who get NIH, DOE, or other govt research grants, etc. Every employee of Ford who works on the Crown Victoria basically has a "welfare" job, because the only people who buy those cars (other than cabbies) are cops and the fed govt, and the cops get federal grant money anyway. All those National Guardsmen who claim they never signed up for war or never expected to go to war, what did they sign up for? A govt' paycheck, funded by debt. If a single mom on food stamps gets the stigma of welfare, then so do all the others. All that deficit spending supports a big ecosystem. I'm not knocking any of it, but facts are facts.

Furthermore, the trend in the future is basically for fewer Americans to be working (because of retirement, lack of jobs, whatever, the result ins the same) and more to be consuming. so in the future imports are up, exports are down, govt spending is way up, and foreign debt ownership is way up.

And to anyone that argues that foreign govts can't really influence policy, I remind you that on this goofy chart, the third line of foreign owners of debt is OPEC. Look up "petrodollars", recall how we staunchly defend our "ally" Saudi arabia, and above all, remember this.

During the first Gulf War, a Wall Street Journal reporter asked an anonymous Kuwaiti leader why the Kuwaitis were not staying to fight for their homeland. His response?

"That is what we have our American slaves for."
posted by Pastabagel at 9:54 PM on March 23, 2007 [27 favorites has favorites]

Grrr. The link to the GAO above should have gone to this (PDF).
posted by Pastabagel at 9:56 PM on March 23, 2007 [1 favorite has favorites]

And to clarify my earlier snark, I mean to say the the "Robbing Peter to Pay Paul" argument isn't one you typically hear from American Liberals, who see the trust fund principally as hard-earned and very real claims principally (albeit indirectly) owned by America's seniors, who have worked their entire lives, saving diligently to earn an explicit claim of the future economic prosperity that their sacrifice has made possbile.
posted by Kwantsar at 9:56 PM on March 23, 2007

Given all that, the hysteria about debt to China is still unfounded.
posted by smackfu at 9:57 PM on March 23, 2007

But China is very scary.
posted by b1tr0t at 10:11 PM on March 23, 2007

"During the first Gulf War, a Wall Street Journal reporter asked an anonymous Kuwaiti leader why the Kuwaitis were not staying to fight for their homeland. His response?

'That is what we have our American slaves for.'"
posted by Pastabagel at 12:54 AM on March 24

Aha, U.S. troops as Mamluks! Slaves in Hummers, so to speak. Hmm, an Empire... And then come the Chinese!
posted by davy at 10:22 PM on March 23, 2007 [4 favorites has favorites]

The pie chart is bogus. Remove from the equation all the "Peter from Paul" bullshit. That's there to make it look less problematic than it really is. We don't owe the majority of the national debt to ourselves. That's patently absurd.

Using the guy's own numbers, which I hazard to guess are conservative in their estimates, we owe over TWO POINT TWO FOUR TRILLION ($2,240,000,000,000.00) dollars to foreign interests. Let's try to put that insanely impossible number into perspective, shall we? Bill Gates is worth as of this post response, approximately twenty five point seventy-two billion (or to be slightly more specific, yet still approximating, $25,720,241,744.04 ). If Bill Gates gave everything he owns to the American gov't solely to over the debt we currently owe the rest of the planet, it would only cover about ONE TENTH.

I am offended that Dittoheads like that think we're all so dull as to fall for this shell game. They seek to belittle the seriousness of this dilemma by playing with the numbers, and trying to make trillions of dollars look like a paltry sum.

There's seeing the glass as half full as opposed to half empty. There's also just sticking your head in the sand. Skeptical Optimist? HA! Try Conservative Spin Doctor.

Find a piechart that actually takes the issue seriously and then get back to me.
posted by ZachsMind at 10:53 PM on March 23, 2007 [1 favorite has favorites]

And to clarify my earlier snark, I mean to say the the "Robbing Peter to Pay Paul" argument isn't one you typically hear from American Liberals, who see the trust fund principally as hard-earned and very real claims principally (albeit indirectly) owned by America's seniors

Ironically, if one attempts to solve long-term Social Security insolvency by limiting payments by income bracket, you will very quickly and loudly hear "American Reactionaries" howl that the system is meant to pay them back for years of hard work, regardless of whether or not they actually need the income from this quasi-insurance program.

So I'm not sure my comment about IOUs necessarily must have a ideological component. The "robbing Peter to pay Paul" concept is (to me) more about how the government is trying to solve current cost overlays, basically by putting it off for our kids to solve. That kind of thinking cuts across the left-right divide, as President Bush has more than adequately shown during his seven years of ineptitude.

Here's my ideological take on the debt: Meanwhile, we still allocate over 50% of discretionary funds to failed military campaigns and military-industrial corporate welfare programs. There's certainly fat to trim all over the budget, which doesn't require an impact on Medicare and Social Security benefits, which would allow us to pay down the debt and free our kids and grandkids of the shackles of owing someone else.
posted by Blazecock Pileon at 10:56 PM on March 23, 2007

Oh no. Sorry. It's late. I was wrong. Not one tenth. One one hundredth. I think... all those zeroes. I'm gonna go to bed. If I wake up in the morning to find that my house has been turned into a sweatshop for makin' sneakers, I'm gonna say i told you so. =P
posted by ZachsMind at 10:57 PM on March 23, 2007

I'm curious about what the 2.7 trillion American Citizens own, and who actually owns that. 'cause in my own investments, other than what my mutual funds own (and I don't own any bond funds), I don't personally own any federal debt.

Next time you get your quarterly statement, look at the pie chart. That percentage labeled "bonds" is mostly in T-bills bought by fund managers to keep balanced funds balanced.

Or, you could be me, who has about 25% of his retirement money in bond funds, mostly short and long-term T-notes. Really need to start ramping down my bond exposure....
posted by dw at 11:01 PM on March 23, 2007

The "trust fund" works like this: say you and your spouse save money every month for the kids' college fund, and you put the bills in a jar on the fridge. Each month, without telling you, your spouse takes the money out of the jar, spends it, and puts an IOU in the jar instead. He/she even will 'pay interest' on the IOU.

When it comes time for college, you're in for a surprise.
posted by Malor at 11:11 PM on March 23, 2007 [3 favorites has favorites]

Noam Chomsky explains what's so terrible about all this debt (and it doesn't have much to do with China). He said this back in the 90s; hence the reference to Clinton.

"The United States is deeply in debt -- that was part of the whole Reagan/Bush program, in fact: to put the country so deeply in debt that there would be virtually no way for the government to pursue programs of social spending anymore. And what "being in debt" really means is that the Treasury Department has sold a ton of securities -- bonds and notes and so on -- to investors, who then trade them back and forth on the bond market. Well, according to the Wall Street Journal, by now about $150 billion a day worth of U.S. Treasury securities alone is traded this way. The article then explained what this means: it means that if the investing community which holds those securities doesn’t like any U.S. government policies, it can very quickly sell off just a tiny signal amount of Treasury bonds, and that will have the automatic effect of raising the interest rate, which then will have the further automatic effect of increasing the deficit. Okay, this article calculated that if such a "signal" sufficed to raise the interest rate by 1 percent, it would add $20 billion to the deficit overnight -- meaning if Clinton (say in someone’s dream) proposed a $20 billion social spending program, the international investing community could effectively turn it into a $40 billion program instantly, just by a signal, and any further moves in that direction would be totally cut off."

I found the quote here. (You'll have to scroll down a bit).

What I'm wondering is... when we say that "American Citizens" hold this debt... how many of those "citizens" are actually, like, insurance companies and other large corporations?
posted by Clay201 at 12:20 AM on March 24, 2007

Fuck! The Japanese own 6%?!?

Actually, it's not the Japanese, it's one Japanese. A mister Tanaka. He lives next door to me, in an elegant but modest house. He's a very nice man.
posted by flapjax at midnite at 12:45 AM on March 24, 2007 [3 favorites has favorites]

So, should I pay off my Visa? Or can I just promise to pay it off?
posted by maxwelton at 12:54 AM on March 24, 2007

You can be like the Government and pay it off with another Visa, maxwelton. Works great until the banks feel like you don't rate a loan or you can't cover the interest. ;)

IMO, Social Security and Medicare underfunding is exactly like companies underfunding their pension programs, except that since it's the government, rather than actually making up the difference so the trust fund would be sound in an actuarial sense, they decided to use some of the extra cash flow we had coming in, thanks to the SS/Medicare programs to pay for immediate benefits. Thanks to Raygun and the Congressional Dems both for that one.

We're fine, until too many people retire and we find that don't have enough cash flow to cover the expenses and whoops, we burned through our savings, too, so no retirement fund (metaphorical, not literal) to keep us going, either!

The author of the linked site is so schizophrenic that he simultaneously uses the trust fund IOUs to handwave away foreign ownership of the debt and to say "it's not that bad, we just owe half of it to ourselves," when in reality it's our money that was entrusted to the government that they pilfered to pay for black ops and huge military budgets, sort of like some companies underfund their pension plans to increase profits or create them where they should not rightfully exist in the first place. God forbid the capital owners be left out in the cold when their investment turned out not to be such a good one, after all. Just take the money you promised to the workers!

Same with the government for the last twenty-odd years despite the author's ridiculous attempts to wave it all away in a sleight of hand more worthy of a grade school magic show.

Debt is useful for some things, but we're frittering it away rather than spending it on infrastructure improvements and other investments in our future. Bombing Iraq to the tune of half a trillion dollars or whatever the figure has gotten up to by this point is not an investment in our future. Creating more paramilitary police isn't, either.

All that needs to be said about the author of the piece that includes the pie chart is on his website:

Did the armed forces of the United States of America win decisive victories in Afghanistan and in Iraq in 2001-2003 . . .

(a) because of what Clinton did for the military in the 1990s, or . . .
(b) in spite of what Clinton did to the military in the 1990s?

That he would write that in 2005 shows that he's going beyond optimism and delving deep into delusion.
posted by wierdo at 1:41 AM on March 24, 2007 [1 favorite has favorites]

"decisive victories" in Iraq and Afghanastan? I'd say he just made a few typos. It should read "divisive quagmires"
posted by tehloki at 2:50 AM on March 24, 2007

I wish skeptical optimists actually existed and not this conman who ka-jiggers his data.
posted by dances_with_sneetches at 6:38 AM on March 24, 2007

I wish skeptical optimists actually existed

Oh, they do.
posted by edverb at 7:11 AM on March 24, 2007

Yes, yes, but how much do the Jews own?
posted by klangklangston at 8:22 AM on March 24, 2007

"Meanwhile, we still allocate over 50% of discretionary funds to failed military campaigns and military-industrial corporate welfare programs. There's certainly fat to trim all over the budget, which doesn't require an impact on Medicare and Social Security benefits..."

I hereby second Blazecock Pileon.
posted by davy at 8:30 AM on March 24, 2007

Hey Klangy, Mr. Tanaka is of the Mosaic persuasion.
posted by davy at 8:31 AM on March 24, 2007

From the Warren Buffett quotes:

"Managers thinking about accounting issues should never forget one of Abraham Lincoln's favorite riddles: `How many legs does a dog have if you call his tail a leg?' The answer: `Four, because calling a tail a leg does not make it a leg'."
posted by gimonca at 8:39 AM on March 24, 2007

When the govt loans money to itself , for pensions, social Security, etc. IT is basically issuing a note that says "You need to have $x in your account, so I'll just lend you the money that hasn't been printed yet and that we haven't borrowed yet."

To my understanding, this is incorrect. The 1986 Greenspan agreement jacked up FICA to surplus. The $2T presently in the SSTF represents the OVERPAYMENT of FICA contributors + accumulated interest over the past 20-odd years. These overpayments were then merrily spent by the Congress on general fund obligations.

So WRT robbing "Peter to pay Paul" . . . Peter is a FICA payer and Paul is the typical high-income person who pays the great bulk of income taxes. These are largely two populations due to the ~$90K annual FICA cap.

'course, I said this a year ago, too.
posted by Heywood Mogroot at 9:14 AM on March 24, 2007

Yes, yes, but how much do the Jews own?

Is the pie crust kosher?
posted by Blazecock Pileon at 9:45 AM on March 24, 2007

The skeptical optimist counts the Federal Reserve twice, unless "US Monetary Authority" means something else. This chart

http://www.bondmarkets.com/story.asp?id=1215

breaks down the 2006 Q:2 Holders

413b 9.6% Individuals
255b 5.9% Mutual Funds
165b 3.8% Insurance Companies
766b 17.8% US Monetary Authority
225b 5.2% State and Local Government
2029b 47.1% Foreign and International
319b 7.4% Pension Funds
155b 3.6% Other

Like the US government holdings, I am unwilling to count the Fed either time. So estimating 2007 numbers:
2240b Foreign and International
1102b US Citizens
3342b total
putting China's ownership of US debt at 10.6% (if you buy the estimated numbers)

I'm not arguing foreign ownership of debt is dangerous, though for me, it does help support my alcohol intake, so, like my ex-girlfriend, it might be a good thing. Frogan and Smackfu might be right, it might blow over.

I am arguing that spinning numbers to fit this view is crap.

Delmoi: very good joke
Eekacat, Hank, and Clay: The link I quoted has all the info you ask for

Can anyone tell my how to turn my text yellow?
posted by rakish_yet_centered at 11:37 AM on March 24, 2007

Woops, math error.

Like the US government holdings, I am unwilling to count the Fed either time. So estimating 2007 numbers:
2240b Foreign and International
1888b US Citizens
4128b total
putting China's ownership of US debt at 8.6% (if you buy the estimated numbers)
posted by rakish_yet_centered at 11:46 AM on March 24, 2007

how to turn my text yellow?

<a href="http://www.house.gov/paul">Your (yellow) text here</a>
posted by Heywood Mogroot at 12:08 PM on March 24, 2007

How'd you do that without using the < plaintext> tag? Last time I did that, I broke metafilter.
posted by tehloki at 12:17 PM on March 24, 2007

Ok, maybe the debt is appalling, but not compared to that data presentation. A pie chart is good for one thing only -- comparing parts of a whole by comparing the relative angles of the segments. But even that only works well if the damn thing is a circle. How do you interpret the angles when (even including the idiotic 3-d addition to the vertical dimension) your pie is an oval? I counted only 5 labeled pie slices out of 27, but I could be off because my eyes started to bleed from the color selection. The rest I guess you are supposed to match up to the chart on the right. But why? Why not just list the amounts, along with a column giving percents? Or just leave the information as text, which seemed perfectly adequate for conveying all of the important points in the paragraph above the pie chart.
posted by Killick at 5:41 PM on March 24, 2007

GE Capital graphs the trend of foreign holders of US Treasurys over time. LINK

It also breaks down the 2006 holdings by country and delta from 2005.

I'd say some of the fear of Chinese investment may be hype, but at the same time, it's been the Chinese investors who have kept the auctions rolling lately and it's fear of a Chinese walkout that adds a lot of interest rate risk to the bond market.
posted by surplus at 7:56 PM on March 24, 2007

fear of a Chinese walkout that adds a lot of interest rate risk to the bond market.

That's an odd thing to say. How do you square this risk with the flat term structure?
posted by Kwantsar at 11:59 PM on March 24, 2007

Okay, so let's say Social Security is fully funded. Where do you park the money? Put it in the local bank? How do you choose the bank? Or do you find an investment that's rock solid and guaranteed to preserve the principal? I'd say Treasury Bonds would be good. Is this essentially what is done when the US gov't "borrows" the Social Security Trust Fund? Or am I misunderstanding the transaction.
posted by Mental Wimp at 10:16 PM on March 26, 2007