The United States owes a national debt totaling $14 trillion. The nation is on the brink of defaulting on that accumulated debt – failing to pay the principal and interest that falls due. The US Treasury calculates that default will occur on August 2, 2011 unless it is given the authority to borrow more money. It is probably a good idea that we learn just who we owe the money to so we can figure out just who it is that we will be stiffing next Tuesday.
The largest single holder of the United States National Debt is the Social Security Trust Fund which holds $2.67 Trillion, or about 19% of the total. That is right, the largest single creditor that the United States has is the Social Security System itself and through the system the present and future Social Security beneficiaries; you and I and every other American wage earner who has paid into the system are the United States largest creditors.
That is why the Republican plan to “cut the deficit” by cutting the payments to Social Security beneficiaries – what they call euphemistically “entitlements” – is utter nonsense. Reducing Social Security payments won’t do anything to reduce the national government’s operating deficit. All it would do is increase the amount the Social Security Trust Funds invests in the national debt; increasing the stake it holds in the debt.
The second largest creditor of the United States is the US Treasury itself holding $1.63 Trillion or 11.3% of the total. Those funds have come from such earmarked tax revenues as motor fuel tax deposited into the various Federal trust funds that are earmarked for our roads and bridges; our seaports and airports; and our waterways, rivers, and canals. They represent our present and future investments in our vital transportation infrastructure.
State and local governments together with public and private pension plans account for $1.33 trillion or 9.2% of the whole. 11% is held by U.S. citizens either directly or through mutual or money market funds. Just over 50% of the national debt is owned by the American people, either directly or through their governments — $7 trillion that we collectively owe to ourselves. If our government – if the Congress permits our government to default on our national debt it will be the American people who bear the brunt of the blow and the impact will send ripples of economic pain through the nation first and then the rest of the world. Recovery from that economic tsunami will take generations and may bring down the Republic.