Who does the US owe money to? 2020 update I Up to Us (2024)

The federal debt currently exceeds $23.4trillion. It's estimated that it could grow by an additional $13 trillion before 2028. The current level of spending is unsustainable, and experts agree that the current deficit will have disastrous consequences for the economy.

The US basically owes money to two groups:

  1. The public

  2. Intragovernmental holdings

How does the federal debt work?

The government finances the operation of the different federal agencies by issuing treasuries. The Treasury Department is in charge of issuing enough savings bonds, Treasury bonds, and Treasury inflation-protected securities to finance the government's current budget.

Revenues generated by taxes are used to pay the bonds that come to maturity. Investors, including banks, foreign governments and individuals, can cash in on these bonds when they reach maturity. The debt ceiling is the cap that is set on what the Treasury Department can issue.

Congress keeps raising the debt ceiling to finance government spending. A deficit occurs when spending increases faster than revenues.

Who owns this debt?

The public owes 74percent of the current federal debt. Intragovernmental debt accounts for 26percent or $5.9 trillion. The public includes foreign investors and foreign governments. These two groups account for 30 percent of the debt. Individual investors and banks represent 15 percent of the debt.

The Federal Reserve is holding 12 percent of the treasuries issued. The Federal Reserve has been purchasing these bonds to keep interest rates low after the 2008 Financial Crisis. States and local governments hold 5 percent of the debt.

Foreign governments who have purchased U.S. treasuries include China, Japan, Brazil, Ireland, the U.K. and others. China represents 29 percent of all treasuries issued to other countries, which corresponds to $1.18 trillion. Japan holds the equivalent of $1.03 trillion in treasuries.

Investing in U.S. treasuries is a deliberate strategy for foreign countries. China has been using these bonds to keep the Yuan weaker than the U.S. dollar and benefit from low import prices. Intragovernmental debt encompasses different funds and holdings.

Some agencies take in revenues and use this money to purchase treasury bonds. This makes the revenues usable by other agencies, and these bonds can be redeemed in the future when these funds and holdings need money.

Social security and disability insurance accounts for half of the intragovernmental debt. Medicare accounts for 3 percent, and retirement funds for the military and civil servants represent 36 percent of this debt.

What are the consequences of the current deficit level?

Borrowing at this rate is causing the cost of debt to increase. Securing additional funds is becoming increasingly difficult, and the government is faced with higher interest rates. It is estimated that the interest alone on the current federal debt will reach $7 trillion over the next 10 years.

Who does the US owe money to? 2020 update I Up to Us (3)

By 2026, interest would represent the third largest category in terms of government spending. Higher interest rates are creating a snowball effect that results in the debt growing at an increasingly faster pace. High interest rates are also affecting consumers who end up spending more on mortgages and other loans.

The federal deficit will also impact economic growth and the private sector. A deficit means there are less funds available for projects that would dynamize the economy, such as financing construction projects to improve the country's infrastructure.

The government is also flooding financial markets with treasuries, which means the private sector will have an increasingly hard time with securing funds from investors.

Want to know more about the consequences of the current deficit level? Check our charts about the national debt and its effects.

What can you do about this issue? Take action!

There are currently no plans to reduce federal spending or increase revenues. This is an issue that will affect future generations and greatly reduce economic growth for the years to come. Net Impact has been raising awareness on this issue and advocating for responsible fiscal policies with our Up to Us program. You can make a difference by hosting an event in your campus and raising awareness of our fiscal future.With the 2020 election coming up, it is important that we are informed on how our votes can shape our future. Check out the 2020 Election page to learn more about fiscal issues, voter registration, and how to get involved with this year's election.

Who does the US owe money to? 2020 update I Up to Us (2024)


Who does the US owe money to? 2020 update I Up to Us? ›

The public owes 74 percent of the current federal debt. Intragovernmental debt accounts for 26 percent or $5.9 trillion. The public includes foreign investors and foreign governments. These two groups account for 30 percent of the debt.

Who does us owe the most money to? ›

Nearly half of all US foreign-owned debt comes from five countries.
Country/territoryUS foreign-owned debt (January 2023)
United Kingdom$668,300,000,000
6 more rows

Who is the US government borrowing money from? ›

The federal government borrows money from the public by issuing securities—bills, notes, and bonds—through the Treasury. Treasury securities are attractive to investors because they are: Backed by the full faith and credit of the United States government. Offered in a wide range of maturities.

Why does the US owe money? ›

When the federal government spends more than its budget, it creates a deficit. In the fiscal year of 2023, it spent about $381 billion more than it collected in revenues. To pay that deficit, the government borrows money. That can happen by selling marketable securities like treasury bonds.

Who holds U.S. debt by country? ›

Top Foreign Owners of US National Debt
  • Japan. $1,098.2. 14.52%
  • China. $769.6. 10.17%
  • United Kingdom. $693. 9.16%
  • Luxembourg. $345.4. 4.57%
  • Cayman Islands. $323.8. 4.28%

How much does China owe America? ›

The United States pays interest on approximately $850 billion in debt held by the People's Republic of China. China, however, is currently in default on its sovereign debt held by American bondholders.

How can the United States get out of debt? ›

Tax hikes alone are rarely enough to stimulate the economy and pay down debt. Governments often issue debt in the form of bonds to raise money. Spending cuts and tax hikes combined have helped lower the deficit. Bailouts and debt defaults have disadvantages but can help a government solve a debt problem.

When did the US start borrowing money? ›

The Beginning of U.S. Debt

Paying for the American Revolutionary War (1775 - 1783) was the start of the country's debt. Some of the founding fathers formed a group and borrowed money from France and the Netherlands to pay for the war. To manage the new country's money, the Department of Finance was created in 1781.

Does the US borrow money from China? ›

U.S. debt offers the safest haven for Chinese forex reserves, which effectively means that China offers loans to the U.S. so that the U.S. can keep buying the goods China produces.

Is the US still borrowing money? ›

Total US federal government debt breached $30 trillion mark for the first time in history in February 2022. As of December 2023, total federal debt was $33.1 trillion; $26.5 trillion held by the public and $12.1 trillion in intragovernmental debt.

Which country has no debt? ›

1) Switzerland

Switzerland is a country that, in practically all economic and social metrics, is an example to follow. With a population of almost 9 million people, Switzerland has no natural resources of its own, no access to the sea, and virtually no public debt.

Does the US owe money to anyone? ›

There are two kinds of national debt: intragovernmental and public. Intragovernmental is debt held by the Federal Reserve and Social Security and other government agencies. Public debt is held by the public: individual investors, institutions, foreign governments.

Does the US owe money to itself? ›

The $34 trillion gross federal debt includes debt held by the public as well as debt held by federal trust funds and other government accounts. In very basic terms, this can be thought of as debt that the government owes to others plus debt that it owes to itself.

What is the most indebted country in the world? ›

Profiles of Select Countries by National Debt
  • Japan. Japan has the highest percentage of national debt in the world at 259.43% of its annual GDP. ...
  • United States. ...
  • China. ...
  • Russia.

What happens if China dumps US bonds? ›

If China sells their holdings of U.S. Treasury Bonds, the Renminbi will rise and that will lead to financial instability that will lead to a lot of issues such as making their exports more expensive. China is constantly burning through their holdings of FX reserves to “support” the Yuan.

Is China's debt higher than the US? ›

Debt as a share of GDP has risen to about the same level as in the United States, while in dollar terms China's total debt ($47.5 trillion) is still markedly below that of the United States (close to $70 trillion). As for non-financial corporate debt, China's 28 percent share is the largest in the world.

Does the US owe any other country money? ›

The US government owes money to governments, central banks, companies, and individual investors around the world. As reported by the US Department of the Treasury, the US owes a total of $7.4 trillion in Treasury securities to foreign countries.

Why does the US owe Japan money? ›

Why does the US owe so much debt to Japan? Because this has been an industrial policy of Japan and America, to give Japan the access to US market, and Japan to actively encourage lower yen, so to export to US at cheaper price.

How much money does the US owe to everyone? ›

The $34 trillion gross federal debt includes debt held by the public as well as debt held by federal trust funds and other government accounts. In very basic terms, this can be thought of as debt that the government owes to others plus debt that it owes to itself.

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