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February 6, 2007
TANNER QUESTIONS TREASURY SECRETARY
ON GROWING DEBT TO FOREIGN COUNTRIES
Fears security risk of borrowing from foreign sources
for President's new $2.9 trillion budget proposal
Congressman John Tanner again pressed U.S. Treasury Secretary Henry Paulson on the Bush Administration’s growing dependence on foreign investors to finance U.S. deficits.
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Foreign Ownership of U.S. Debt |
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- The Bush Administration has borrowed more money from foreign countries than all 42 previous presidents combined. - In 1980, 17 percent of the U.S. privately-held debt was borrowed from foreign sources. In 2006, 44 percent was borrowed from foreign sources. - The largest foreign owners of U.S. federal debt is Japan ($637 billion), China ($346 billion), United Kingdom ($223 billion), OPEC nations ($98 billion) and South Korea ($68 billion). - Since 2001, China has increased its ownership of U.S. debt by about 500 percent. Source: Treasury Department |
Foreign ownership of U.S. debt is a potential threat to national security and the U.S. economy, and the U.S. is forced to spend taxpayer money to make interest payments to foreign investors, Tanner said in a hearing of the House Ways and Means Committee, on which he serves.
The federal debt is $8.6 trillion, more than $2 trillion of which is owed to foreign investors. The President’s new $2.9 trillion budget proposal would add an additional $239 billion deficit in the upcoming budget year.
“Last year, the [$248 billion] deficit was covered by borrowing, almost 90 percent of which was from non-U.S. citizens,” Tanner said to Paulson during the committee hearing. “Last year alone, this country wrote interest checks to non-U.S. interests of over $140 billion, more than we appropriate for the Education, [Veterans Affairs] and Justice departments combined.
“At some point, it seems to me we will come to a national security issue if the financial leverage continues.”
Paulson indicated that the Administration will need to ask Congress within the calendar year to raise the debt ceiling – the amount the federal government is allowed to borrow, including from foreign sources.
Tanner had asked a similar question of President Bush after Bush delivered a speech to the House Democratic Caucus. According to news reports of that meeting, Bush said he did not know which specific countries held ownership of the U.S. debt and said his administration hopes to balance the federal budget by the year 2012, well into the next president’s administration.
Tanner represents Tennessee’s 8th Congressional district in west and middle Tennessee. He is a founding member of the fiscally conservative Blue Dog Democrats.
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Contact: Randy Ford, 202.225.4714
