The
U.S. debt is $21 trillion. Most headlines focus on how much the
United States owes China, one of the largest foreign owners. What many people don’t know is that the
Social Security Trust Fund, aka
your retirement money, owns most of the
national debt.
The
U.S. Treasury manages the U.S. debt through its Bureau of the Public Debt.
The debt falls into two broad categories: Intragovernmental Holdings and
Debt Held by the Public.
Intragovernmental Holdings. This is the portion of the federal debt owed to
230 other federal agencies. It
totals $5.6 trillion, almost 30 percent of the debt. Why would the government owe money to itself? Some agencies, like the Social Security Trust Fund, take in more revenue from taxes than they need. Rather than stick this cash under a giant mattress, these agencies buy U.S. Treasurys with it.
Which agencies own the most Treasurys? Social Security, by a long shot. Here's the
detailed breakdown as of December 31, 2016.
- Social Security (Social Security Trust Fund and Federal Disability Insurance Trust Fund) - $2.801 trillion
- Office of Personnel Management Retirement - $888 billion
- Military Retirement Fund - $670 billion
- Medicare (Federal Hospital Insurance Trust Fund, Federal Supplementary Medical Insurance Trust Fund) - $294 billion
- All other retirement funds - $304 billion
- Cash on hand to fund federal government operations - $580 billion.
Debt Held by the Public. The public holds the rest of the national debt ($14.7 trillion). Foreign governments and investors hold nearly half of it. One-fourth is held by other governmental entities. These include the
Federal Reserve, as well as state and local governments. Fifteen percent is held by
mutual funds, private pension funds and holders of savings bonds and Treasury notes. The remaining 10 percent is owned by businesses, like
banks and insurance companies. It's also held by an assortment of trusts, companies, and investors.
Here's the breakdown of holders of the public debt as of December 2016:
- Foreign - $6.004 trillion
- Federal Reserve - $2.465 trillion
- Mutual funds - $1.671 trillion
- State and local government, including their pension funds - $905 billion
- Private pension funds - $553 billion
- Banks - $663 billion
- Insurance companies - $347 billion
- U.S. savings bonds - $166 billion
- Other (individuals, government-sponsored enterprises, brokers and dealers, bank personal trusts and estates, corporate and non-corporate businesses, and other investors) - $1.662 trillion.
In December 2017,
China owned $1.2 trillion of U.S. debt. It's the largest
foreign holder of U.S. Treasury securities. The second largest holder is
Japan at $1.1 trillion. Both Japan and
China want to keep the
value of the dollar higher than the value of their currencies. That helps keep their exports affordable for the United States, which helps their economies grow. That's why, despite China's occasional threats to sell its holdings, both countries are happy to be America's biggest foreign bankers. China replaced the
United Kingdom as the second largest foreign holder on May 31, 2007. That's when it increased its holdings to $699 billion, outpacing the United Kingdom's $640 billion.
Ireland is third, holding $326 billion. The Cayman Islands is fourth, at $270 billion. The
Bureau of International Settlements believes it is a front for
sovereign wealth funds and
hedge funds whose owners don't want to reveal their positions. So are Luxembourg ($218 billion) and Belgium ($119 billion).
After the Cayman Islands, the next largest holders are
Brazil, the UK, Switzerland,
Hong Kong, Taiwan, Saudi Arabia, and
India. They each hold between $14 4and $257 billion.