When we ask ourselves who really owns the national debt in 2019, most will answer China. This is because the coverage by the television media groups leaves a strong impression that China owns most of the debt. This in fact is not true. In fact, foreigners as a whole only own 29% of the publicly owned total.
National Debt consists of Two Categories:
The U.S. national debt consists of two categories. Intragovernmental holdings and public holdings.
Intragovernmental holdings consist of 230 other federal U.S. agencies. They total almost $6 trillion or 26% of the national debt. An example of one of these agencies is the Social Security Administration. The social security trust fund collects more revenue than it pays out. They then take these dollars and invest it in U.S. Treasuries as an investment and thereby helps fund our national debt. In addition to the Social Security Administration, several other governmental retirement funds as well as medicare and other insurance trust funds own a portion of the debt.
The public holds the remaining debt of approximately $16 trillion. Of this amount, foreign governments own about 30% or $4.8trillion. The remaining amount consists of investors and banks holding 15%, the Federal Reserve holding 12%, and mutual funds holding 9%. Local and State governments own 5% and the remaining is held by insurance and pension funds along with savings bonds.
So, who owns the U.S. national debt in 2019? Mostly we do. Of the $23 trillion total, the U.S. government and domestic investors own $18.2 trillion of the debt. This doesn’t mean however that we are off the hook to pay it back. It will have to be paid back. Having an understanding of what makes up this total is essential in strategizing on how to handle it properly going forward.
To learn more about how we arrived at $23 trillion dollars, read How much is the National Debt in 2019 article that will guide you through history of how we arrived where we are.