Monday, July 25, 2005

Interest payments to foreign owners of U.S. Federal Debt

According to the current Treasury Bulletin (, foreign and international ownership of the federal debt totals $2,037 billion. At an annual interest rate of 4% (perhaps a bit high), U.S taxpayers must pay these foreign owners of U.S treasury instruments $81,480,000,000 ($81.5 billion) each year in interest payments. As we worry about our current account deficit which stood at roughly $680 billion last year we should be mindful that over 10% of this value is in the form of these interest payments rather than for imported goods and services.

With the trade imbalances with China in the news we might note that the Chinese government and institutions own roughly $280 billion of the U.S. federal debt. We are paying $11.2 billion in interest payments each year or about $10 to each Chinese citizen for their assistance in financing our accumulating budget deficits.


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