$5.5T: U.S. Foreign Debt Up 78% Under Obama

December 17, 2012 - 11:45 AM

Barack Obama, China

President Barack Obama and Chinese Premier Wen Jiabao at East Asia Summit in Cambodia, Nov. 20, 2012. (AP Photo/Carolyn Kaster)

(CNSNews.com) - The amount of money the U.S. government has borrowed from foreign interests hit a record high at the end of October, according to data released today by the U.S. Treasury.

As of Oct. 31, the U.S. government owed $5,482,200,000,000 to foreign interests, according to the Treasury. That was up from $5,476,200,000 as of Sept. 30.

The foreign debt of the U.S. government equaled $47,482 for each of the 115,459,000 full-time workers (including full-time government workers) there were in the United States in October, according to data published by the Bureau of Labor Statistics. Similarly, it equaled $47,706 for each of the 114,916,000 households the Census Bureau estimated there were in the United States in September.

At the end of January 2009, when President Barack Obama was inaugurated, the U.S. government owed $3,071,700,000,000 to foreign interests. Since then the U.S. government’s debt to foreign interests has increased by $2,410,500,000,000—or 78 percent.

As of the end of October, entities in Mainland China remained the largest holders of U.S. government debt, with $1,161,500,000,000 in holdings. However, over the past year, the Mainland Chinese have actually decreased their holding of U.S. government debt. As of the end of October 2011, entities in Mainland China had owned $1,256,000,000,000 in U.S. government debt. Since then, they have dropped $94,500,000,000 of their U.S. government debt holdings—or 7.5 percent.

The Chinese have especially divested from low-yield short-term U.S. Treasury bills. At the end of May 2009, entities in Mainland China had owned $210.407 billion in U.S. Treasury bills. As of the end of October, they owned only $3.866 billion—a drop of more than 98 percent.

While the Mainland Chinese have drawn back their investment in U.S. government debt, the Japanese have increased theirs. At the end of October 2011, the Japanese owned, $1,006,100,000,000 in U.S. government debt. At then end of October 2012, they owned $1,134,700,000,000—and increase of 128,600,000,000, or almost 13 percent.

As of the end of October, the total debt of the U.S. government was $16,261,471,000,000. That included $4,849,872,000,000 in "intragovernmental debt" that the government had borrowed from the Social Security Trust Fund and other government trust funds and $11,411,598,000,000 that the government had borrowed from the “public”--including money borrowed from entities in Mainland China, and in other foreign countries, and from the Federal Reserve.

At the end of October, the Federal Reserve owned $1,650,297,000,000 in U.S. government debt—which exceeded even the $1,161,500,000,000 owned by entities in Mainland China, and which made the Fed the world’s largest single owner of U.S. government debt.

Of the $11,411,598,000,000 in U.S. government debt held by the “public,” $1,619,648,000,000 was in short-term Treasury bills. These short-term Treasury bills roll over so frequently that the Treasury had to sell $5,303,507,000,000 in fiscal 2012 to maintain the government’s debt, according to the Daily Treasury Statement for Sept. 28, 2012, the last business day of fiscal 2012.

Were the debt now held in Treasury bills converted into longer-term Treasury notes and bonds, the government would need to pay a higher interest rate on the debt.

In October, while the average annual interest rate was only 0.135 percent on Treasury bills, it was 1.962 percent on Treasury notes (which mature in 2 to 10 years), and 5.331 percent on Treasury bonds (which mature in 30 years).