Who or what exactly is the biggest holder of the U.S. Government Debt?

[Samantha]

China? Japan? Take a look at the slideshow at this link. Please note the arrow slightly left to the title. As you click the arrow, it starts at #15 and proceeds down to #1. You might be surprised at #1.

http://www.cnbc.com/id/29880401/page/1

Hopefully, you will not miss #9 (this will probably surprise you).

Just to titillate your curiosity, I am posting now #6:

"6. Pension Funds

U.S. debt holdings: $903.4 billion

Pension funds control large amounts of money, reserved for personal retirements, and thus are obligated to make investments that are considered to be safe. This group includes both private and local government pension funds, totaling $903.4 billion. The private pension fund category also includes US Treasury securities held by the Federal Employees Retirement System Thrift Savings Plan "G Fund." (emphasis added)

It seems to me that if the Federal Employees Retirement System is the sixth largest holder of the public debt, slowing that growth down might be accomplished with restricting the COLA increases over a number of years, but that is just my narrow perspective.... Add that to the portion of the debt you see in #1, a pattern starts to emerge. Both of these holders, numbers 1 and 6, have been accessed by Uncle Sam to defray expenses such as in the case of #1, the Iraq war -- among other things, and #6, in the aftermath of 911. Problem: when the bill becomes due to be paid back, the U.S. economy is in recession and selling additional Treasury Notes to replace the portion redeemed is very difficult at this time.

Yes, that is a big problem but connecting the dots does give one clues as to why we hear the things we hear today.

Comments?

Sam

[elleng]

1. WE the PEOPLE!

[Samantha]

6. You are exactly right -- but all we hear is the debt owed by China and other foreign countries

Isn't that amazing -- that no politician mentions the largest holder of the U.S. debt is its own citizens? Or perhaps not so amazing, just politics. So they want to attack the debt by asking poor and middle class people to sacrifice. Halliburton and The Carlyle Group, not so much.

Thank you for posting on my thread. You obviously have been paying attention!

Sam

[elleng]

9. You're welcome, Sam.

I do try to pay attention, understand how things work, and why things happen.

[PETRUS]

21. And that tactic relies on a misunderstanding.

Right wing blowhards all red faced shouting about "borrowing from China" to pay for public programs. But federal spending is not the primary driver of foreign debt; the trade deficit is. And our trade policies are largely defined by the interests of corporations like Goldman Sachs, Boeing, Pfizer, and Walmart.

[Samantha]

28. Thank you for your post

You made a great point.

Sam

[MiniMe]

2. I was pretty sure that was the answer

Thanks for posting.

[Samantha]

7. I just like to make sure everyone knows that

and remembers it when in the coming days we hear politicians talk about the huge U.S. debt China owns....

Thanks for posting on my thread.

Sam

[bluestate10]

3. US citizens hold around 80% of US debt. Social Security is a big holder. nt

[Samantha]

8. Did you add them all up or did you already have this figure?

Well maybe you knew this before I posted this thread. Hate to blow the tease in my thread but SS Trust Fund is #1.

Thanks for posting on my thread.

Sam

[HiPointDem]

16. US Debt to the penny & who holds it:

something over $4 trillion is held as government trust funds like SS = intragovernmental holdings. SS is the biggest single holder.

http://www.treasurydirect.gov/NP/BPDLogin?application=np

according to the link "ownership of federal securities" in the page below, about $9 trillion is held by "private investors". which i imagine represents individuals, pension & investment funds, city & state governments, business or foreign entities, etc.

http://www.treasurydirect.gov/govt/resources/faq/faq_publicdebt.htm#DebtMakeup

[JaneyVee]

4. Lets face it, we're never going to retire. We will work until we are broken.

[Samantha]

10. It appears that is the plan

Unless we try to stop the politicians and corporations from implementing that plan.

Thanks for posting on my thread.

Sam

[Historic NY]

5. US (us)....borrowed from the SS trust fund.

[Samantha]

11. Yes, and the huge babyboomer retirement has started en masse

The bill is due and the till is empty. Huge, huge problem.

Thanks for posting on my thread.

Sam

[BlueStreak]

12. And understand that the real "fiscal cliff"

is the fact that our defense spending, tax cuts, and other programs have spent all that money that is owed to the two trust funds. The funds themselves are somewhat solvent (Medicare) and very solid (Social Security). The only near term issue with Social Security is that because the boomers are starting to draw benefits, the funds needs a little of its money back -- and George Bush spent it.

That is "the cliff". So rather than returning to the Clinton rates that are necessary to fund our government without mooching off the Social Security and Medicare funds, the Obama/Boehner solution is to cut Social Security.

[Samantha]

13. All you say is very true

And there is also another fact. I saw an interview Geithner gave some time ago saying as the funds in the Social Security Trust Fund are needed now that the Boomer retirement has started, as funds are withdrawn, replacement treasury notes need to be sold. In this economy, Geithner continued, that is not so easy. That, I believe, is a big conundrum. What does one do when the bill is to be paid, and the till has been emptied out? I do not think it is a coincidence that in today's discussion, as the talks continue over the Social Security COLA, whatever is agreed upon will be applied to Federal Government employees' retirement as well. In other words, the number 1 debt holder and number 6 will be hit.

Thank you for posting on my thread.

Sam

[BlueStreak]

19. Great point.

It isn't that people wouldn't put their money into Tbills. The problem is that they are paying virtually no interest. The Fed has backed itself into a dogmatic corner -- the same corner that Japan suffered in since the early 1990s -- where these idiots have this abiding philosophy that money supply will solve the problem. No. Money supply only solves a MONEY SUPPLY problem. We have an economy that needs direct investment in infrastructure work, immediate construction jobs, etc.

Cutting interest rates to zero doesn't incentivize very many people to open new businesses. You don't open or expand a business just because money is cheap (and not terribly available). You expand your business when you see CUSTOMERS. That is the only way out of this mess. Our economy is 70% driven by consumers. We need EMPLOYED consumers. With all this talk about "the cliff, when was the last time you heard anybody say a single word about getting unemployment down to 5%. Austerity doesn't do that. Cutting Social Security doesn't do that.

Obama has completely lost control of the conversation. Again. Or maybe he just doesn't care. He has had plenty of opportunity to talk about the real issues and instead has chosen to play the "Cliff" game.

Another thing about those artificially low interest rates -- which have done practically nothing to boost the economy -- they are killing seniors. Many seniors have some savings that they diligently set aside to go along with their Social Security and any pension they might have. For generations, the advice to investors was to reduce risk as you approach retirement. That means shifting to interest-bearing instruments. But now there is virtually no interest -- actually NEGATIVE interest rates when you account for inflation. So we are cutting their Social Security on top of killing their savings. We have the wrong people in charge of our economic system.

[BlueStreak]

20. And one more thing ...

Fact 1: Social Security is the biggest holder of US debt and Medicare is one of the biggest.

Fact 2: For a decade, the Fed has been holding interest rates artificially low.

The Fed says they have the rates low to stimulate the economy, but that is mostly bullshit. People don't grow businesses because interest rates are low. They build businesses when they see customer demand.

So what is really going on here? The Fed policy is designed to a) benefit the banks that can get money now basically for free , and b) to benefit the Federal government that has a $14 T debt to serve. If we had to pay a real market interest rate, that would add another $600 Bn a year to our deficit. Nothing tricky there. Simple facts and simple arithmetic.

Now, what does this say about Social Security? It says we have been cheating the Social Security fund out of something like $100-$200 billion a year in interest for at least the last decade. You think another trillion or two in the social security fund would make a difference? You bet it would.

THIS is what seniors are now being forced to pay for. (And with good luck we all become seniors eventually so this massive scam screws us all -- some sooner than others.)

[kelliekat44]

14. Actually, why worry...they will never ask to collect it. your credit card debt is fine as long as

the credit card company doesn't ask you to pay it all back all at once without any notice. The debt scare has been used by the RW for decades and we have survived...and we will continue to survive. The name of the game is "cash flow" and that works for countries as well as for citizens.

[dkf]

15. I don't know how to categorize debt owned by the Federal reserve when we all know they printed $

And one day they need to sell it or return it to the treasury.

It's incredibly ponzi-ish.

[JDPriestly]

17. Yes. Basically, for years and years,

the government has been "borrowing" from those of us who are now seniors or about to retire with no plan to repay what they have "borrowed."

That is stealing, pure and simple. Stealing and the thieves are the very wealthy like Romney who lobbied tax cuts for themselves from a government that they enlisted to actually steal the money to fund the tax cuts for them.

And then there is our overblown military. Why so many bases in Europe? Why so many in Japan? What are we doing storing our highly dangerous materials in remote places in the world? Are we that frightened that people will realize what we are up to? Do we really have that many enemies?

I pride myself on having good relationships with all my neighbors. Why does the US have so many "enemies"?

Maybe it is because our government has not only stolen from us seniors and from its own employees but from others around the word?

I'm just asking.

[Samantha]

18. I agree with everything you say

I would only change one word, your word "stealing" I think of as "defaulting." Of course, I am technically wrong because I know the Social Security act can be repealed tomorrow. I learned this from Bernanke when he spoke at a Senate hearing! I thought this was an appalling thing to say but he didn't seem to flinch as he spoke.

The problem is for Uncle Sam that it touts investment into U.S. Treasury Bonds as the safest investment in the world. Many countries have invested in them because they agree. However, looking at the fact that Uncle Sam is now considering cutting Social Security and the Federal Government pensions (numbers one and sixth as the largest debt holders) by slowing down the rate of growth over the next years may not technically be legally a default, but it certainly feels like one when looking at the fact a participant might lose $18,000+ if he or she lives 25 years into retirement.

I just qualified the first of this month for Social Security and I receive my first check next month. I have paid my FICA taxes for over 40 years, in fact, overpaying them since the deal was struck in 1982 or 1983 to overcharge participants FICA in order to fund the huge Boomer retirement now in progress. I am not so wrapped up in myself that I think these things revolve around me; but I do think there are millions just like me, and we are all getting the short end of the stick.

True, the deficit has to be addressed but two of the largest profiteers from the unfunded wars, Halliburton and The Carlyle Group, paid little or no corporate taxes. Why should not they, and other corporations rather than middle class and impoverished Americans being asked to step up to the plate?

I do not expect to remain a Democrat if this deal is passed. And I think the Democrat legislators that sign off on it leave themselves very exposed when they run for re-election.

Thank you for posting on my thread.

Sam

[FarCenter]

23. Social Security is not an investment plan

You pay in whatever Social Security taxes are defined by law at the time.

You get out whatever Social Security benefits laws determine at the time.

For example, may father retired with SS benefits shortly after his occupation was covered and got out far more than he ever paid in.

[Samantha]

24. No, it is not an investment plan

It is an insurance policy against poverty.

Thank you for posting on my thread.

Sam

[FarCenter]

22. Well, that's for the $16 trillion of Treasury debt. There is another $24 trillion government agency

See page 49 and following "OWNERSHIP OF FEDERAL SECURITIES" in "The Treasury Bulletin".

http://www.fms.treas.gov/bulletin/b2012_4.pdf

[JDPriestly]

25. I found the budget outlays on page 18 interesting too.

The federal retirement system's holdings are an important part of our purported deficit crisis just as are Social Security holdings.

A lot of that money is due to be paid out over the next 20-30 years as the people who put it in, the baby boomers retire.

What is more, that same pattern will be repeated on the stock market. Those turning 70 1/2 now and in the coming years will be required by law to take a percentage of money out of their 401(K) accounts and move it into accounts on which they pay taxes.

That will increase tax revenues slightly (or not at all depending on the incomes of the people taking the money out and how much they take out), but reduce the amount of money available for investment in Wall Street.

This baby boomer crisis was foreseeable. The Reagan administration tried to prepare for it with regard to Social Security. We were encouraged to save, but during the Bush administration many of us lost our jobs as we began to get older and our employers could hire younger people. Some in my age group borrowed a lot of money and lost their homes.

They are now sentenced to paying rent out of their Social Security the rest of their lives. A chained CPI will be dreadful for them because rents will rise but their incomes will not increase to make up for those increases. That will shift more people to the Section 8 roles.

The crux of the matter is that the government is not doing nearly enough to encourage good paying, good tax-revenue sources such as manufacturing jobs in the US. Our trade policy sounds idealistic but is in fact dreadful. It results in the outsourcing and exporting of jobs to other countries. Our young people are working as masseuses and selling junk at the malls instead of making the things that we need like socks and pants and farm machinery.

Until we wise up and change our trade policy to favor American workers, we will continue to face a fiscal cliff.

[Samantha]

27. This is a great post

I agree with every word but I think the reason the government is not doing anything to encourage good paying jobs is because corporations want to pay $2.00 hourly, and they and the billionaires seem to be running the show. Pardon my cynicism; it is all too much. I just don't understand why the don't go off the cliff and recover 4 trillion in the next 10 years.

Sam

[Samantha]

29. Could you take a look at this, JDPriestly -- regarding the Post Office

Like many others, I had previously thought the USPO was on the verge of default as a result of its overpayment into its pension and health funds, legislated by George W. Bush* in 2006. The PO has one of the largest, if not the largest, unionized work forces. Since the passage of that legislation, some have said it was a method by which to break the union, and I thought that was true as well.

However, I started thinking where is that lump sum which they have accumulated? Could it possibly have been required to do so because the funds would be stored in a place where it too, like the Social Security Trust Fund and the Federal Government Employees' Pension Funds, could be accessed by Uncle Sam. So I took a look this evening, and I believe those funds might be in what I describe in the original thread as the Number 6th largest debt holder,

"6. "Pension Funds

U.S. debt holdings: $903.4 billion

Pension funds control large amounts of money, reserved for personal retirements, and thus are obligated to make investments that are considered to be safe. This group includes both private and local government pension funds, totaling $903.4 billion. The private pension fund category also includes US Treasury securities held by the Federal Employees Retirement System Thrift Savings Plan "G Fund." (emphasis added)."

Of course, part of the prepayment was for health insurance costs, but I did not see any slide which described in its definition as holding the Post Office's contribution for that particular reason. But the interesting thing is that Bush* passed this legislation in 2006, requiring the PO to pre-fund 80 percent of its retiree benefits. In 2006, Bush* had the unfunded Bush* tax cuts and two wars ongoing so perhaps a significant reason that politicians are willing to let the USPO default has something to do with borrowing from those funds and being unable to pay them back as well.... What do you think?

Sam

[1StrongBlackMan]

26. So you mean ...

the China Owning the U.S. threat narrative is ... a lie?

Color me surprised.

[Samantha]

30. I bet you are surprised, about as much as I

The largest holder of U.S. debt is its own citizenry, so don't ever let anyone tell you anything different.

Thanks for posting on my thread.

Sam