Foreign Holdings of Federal Debt

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Foreign Holdings of Federal Debt
    March 28, 2016
            (RS22331)
          Jump to Main Text of ReportContentsSelected Statistics on Foreign Holdings of Federal Debt
Foreign Investment in U.S. Federal Debt: Why Is It an Issue of Concern?

      Figures
      Figure 1. Breakdown of Official vs. Private Foreign Holdings of U.S. Federal Debt

    

      Tables
      Table 1. Estimated Ownership of U.S. Treasury Securities
Table 2. Top 10 Foreign Holders of Federal Debt, by Country

    
SummaryForeign Holdings of Federal Debt
Marc Labonte
Specialist in Macroeconomic Policy
Jared C. Nagel
Information Research Specialist
May 28, 2015

Congressional Research Service
7-5700
www.crs.gov
RS22331

 Foreign Holdings of Federal Debt

Summary
This report presents current data on estimated ownership of U.S. Treasury securities and major
 holders of federal debt by country. Federal debt represents the accumulated balance of borrowing
 by the federal government. To finance federal borrowing, U.S. Treasury securities are sold to
 investors. Treasury securities may be purchased directly from the Treasury or on the secondary
 market by individual private investors, financial institutions in the United States or overseas, and
 foreign, state, or local governments. Foreign investors have held slightly less than half of the
 publicly held federal debt in recent years, prompting questions on the location of the foreign
 holders and how much debt they hold.

    This report will be updated annually or as events warrant.

Congressional Research Service

 
    
  Foreign Holdings of Federal Debt

Contents
Selected Statistics on Foreign Holdings of Federal Debt ................................................................ 1
Foreign Investment in U.S. Federal Debt: Why Is It an Issue of Concern?..................................... 3

Figures
Figure 1. Breakdown of Official vs. Private Foreign Holdings of U.S. Federal Debt ..................... 3

Tables
Table 1. Estimated Ownership of U.S. Treasury Securities ............................................................. 1
Table 2. The Top 10 Foreign Holders of Federal Debt, by Country ................................................ 2

Contacts
Author Contact Information............................................................................................................. 7
Acknowledgments ........................................................................................................................... 7

Congressional Research Service

 Foreign Holdings of Federal Debt

Selected Statistics on Foreign Holdings of
Federal Debt

  
    Selected Statistics on Foreign Holdings of Federal Debt
    Federal debt represents, in large measure, the accumulated balance of federal borrowing of the
 U.S. government. The portion of gross federal debt held by the public consists primarily of
 investment in marketable U.S. Treasury securities.11 Investors in the United States and abroad
 include official institutions, such as the U.S. Federal Reserve; financial institutions, such as
 public banks; and private individual investors.

    Table 1 provides December 20142015 data, available as of May 2015March 2016, on estimated ownership of U.S.
 Treasury securities by type of investment and the percentage of that investment attributable to
 foreign investors.2
As the table shows, during the five years2
    The table shows that from December 20102011 to December 20142015, foreign
 holdings of debt increased by $2.51.1 trillion to approximately $6.21 trillion. During the same period,
 total publicly held debt increased by approximately $5.23.5 trillion to $1315.1 trillion. Because the total
 debt has increased at about the same pace as the debt held by foreigners, the share of federal debt
 held by foreigners has been relatively steady. In December 20142015, foreigners held 47.540% of the
 publicly held debt.3 3 Interest on the debt paid to foreigners in 2014 was $105.8 billion.4
Table 1. Estimated Ownership of U.S.Treasury Securities
(in billions of dollars)
End of
Month

Total Publicly Held
Debt

Foreign Holdings of
Publicly Held Debt

Foreign Holdings as a
Share of Total Publicly
Held Debt

Dec. 2014

$12,995.6

$6,169.2

48%

Dec. 2013

$12,328.3

$5,794.9

47%

Dec. 2012

$11,568.9

$5,571.5

48%

1

Figures on federal debt held by the public are available on the Department of Treasury Bureau of Public Debt website,
“The Debt to the Penny and Who Holds It,” at http://www.treasurydirect.gov/NP/BPDLogin?application=np. The gross
debt is composed of debt held by the public and intragovernmental debt held by federal trust funds. Although gross
federal debt is the broadest measure of the debt, the debt measure that is relevant in an economic sense is debt held by
the public. This is the measure of debt that has actually been sold in credit markets and has influenced interest rates and
private investment decisions. Intragovernmental debt, by contrast, is both an asset and a liability to the federal
government. See CRS Report RL31590, The Federal Government Debt: Its Size and Economic Significance, by Brian
W. Cashell.
2
This report discusses foreign holdings of U.S. federal debt. Foreign investors also hold U.S. private securities. For
data on foreign holdings of U.S. private securities, see “Foreign Portfolio Holdings of U.S. Securities,” at
http://www.treasury.gov/resource-center/data-chart-center/tic/Pages/fpis.aspx, produced by the Treasury Department
International Capital System.
3
Data are excerpted from the Federal Reserve Board of Governors Flow of Funds data, Table L209. State, local, and
foreign holdings include special issues of nonmarketable securities to municipal entities and foreign official accounts.
They also include municipal, foreign official, and private holdings of marketable Treasury securities.
4
Bureau of Economic Analysis, International Transactions, Table 4.3, line 39, http://bea.gov/iTable/index_ita.cfm.
There is no data available on interest on the debt paid to individual countries.

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1

 Foreign Holdings of Federal Debt

End of
Month

Total Publicly Held
Debt

Foreign Holdings of
Publicly Held Debt

Foreign Holdings as a
Share of Total Publicly
Held Debt

Dec. 2011

$10,428.3

$5,004.4

48%

Dec. 2010

$9,361.5

$4,458.8

48%

Source: Federal Reserve Board of Governors Flow of Funds, Table L.209 Treasury Securities, May 22, 2015
available at 2015 was $94.9 billion.4 Although 2015 was the first time in the past 10 years that foreign holdings declined, it is too soon to say whether this is a turning point in the heretofore upward trend.
    
      
        Table 1. Estimated Ownership of U.S. Treasury Securities
        (in billions of dollars)

      
      
        
          
            End of Month
          
          
            Total Publicly Held Debt
Foreign Holdings of Publicly Held Debt
Foreign Holdings as a Share of Total Publicly Held Debt
Dec. 2015
$15,141.1
$6,118.0
40%
Dec. 2014
$14,416.7
$6,156.2
43%
Dec. 2013
$13,680.6
$5,793.8
43%

          
        
        
          
            Dec. 2012
          
          
            $12,822.9
$5,571.5
44%

          
        
        
          
            Dec. 2011
          
          
            $11,642.0
$5,004.4
43%
Source: Federal Reserve Board of Governors Flow of Funds, Table L.210 Treasury Securities, March 28, 2016 available at http://www.federalreserve.gov/releases/z1/.
      
    
    z1/.

Data on major foreign holders of federal debt by country are provided in Table 2. According to
 the data, the top three estimated foreign holders of federal debt by country, ranked in descending
 order as of December 20142015, are China ($1,244.3246.1 billion), Japan ($1,230.9122.6 billion), Belgium
($335.4and Caribbean Banking Centers5 ($351.7 billion). Based on these estimates, China holds approximately 20.23% of all foreign
 investment in U.S. privately held federal debt; Japan holds approximately 20.018.3%; and Belgium
Caribbean Banking Centers holds approximately 5.5%.5
Table 2. The 7%.6 
    
      
        Table 2. Top 10 Foreign Holders of Federal Debt, by Country
(data current as of May 22, 2015)

Country

As of December 2014

As of December 2010

Percentage of all
Amount Held foreign holdings
($ billions)
in federal debt

Percentage of all
Amount Held foreign holdings
($ billions)
in federal debt

Country

Mainland China

$1,244.3

20.2%

Mainland China

$1,160.1

26.2%

Japan

$1,230.9

20.0%

Japan

$882.3

19.9%

Belgium

$335.4

5.5%

United Kingdom

$270.4

6.1%

Oil Exporters
Caribbean Banking
Centers

$285.9

4.6%

Oil Exporters

$211.9

4.8%

$272.4

4.4%

Brazil

$186.1

3.8%

Brazil

$255.8

4.2%

$168.4

3.8%

Ireland

$202.0

3.3%

Caribbean Banking
Centers
Taiwan

$155.1

3.5%

Switzerland

$190.1

3.1%

Russia

$151.0

3.4%

United Kingdom

$188.9

3.1%

Hong Kong

$134.2

3.0%

Taiwan
Total Top 10
Countries of
Foreign Investors
in Federal Debt

$174.4

2.8%

Switzerland

$106.8

2.4%

$4,380.1

71.2%

Total Top 10
Countries of
Foreign Investors in
Federal Debt

$3,426.3

77.3%

$6,156.0

100%

Total All Foreign
Investment in
Federal Debt

$4,435.6

100%

Total All Foreign
Investment in
Federal Debt

5
Foreign holdings are estimated by the Treasury Department based on the location of the holdings, not the nationality
of the holder. For certain countries, such as the Caribbean Banking Centers, many of the holdings are likely owned by
third country citizens.

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 Foreign Holdings of Federal Debt

Source: (data current as of March 28, 2016)
As of December 2015
As of December 2011
Country

          
          
            Amount Held ($ billions)
          
          
            Percentage of all foreign holdings in federal debt
Country

          
          
            Amount Held ($ billions)
          
          
            Percentage of all foreign holdings in federal debt

          
        
        
          
            Mainland China
          
          
            $1,246.1
20.27%
Mainland China
$1,151.9
23.01%
Japan
$1,122.6
18.26%
Japan
$1,058.1
21.13%
Caribbean Banking Centers
$351.7
5.72%
Oil Exporters
$260.8
5.21%
Oil Exporters
$292.5
4.76%
Caribbean Banking Centers
$227.2
4.54%
Ireland
$265.1
4.31%
Brazil
$226.9
3.54%
Brazil
$254.8
4.14%
Taiwan 
$177.3
3.54%
Switzerland
$231.9
3.77%
Russia 
$149.5
2.99%
United Kingdom
$218.3
3.55%
Luxembourg 
$147.6
2.95%
Luxembourg 
$200.5
3.26%
Switzerland
$142.4
2.84%
Hong Kong
$200.2
3.26%
Belgium
$135.2
2.70%
Total Top 10 Countries of Foreign Investors in Federal Debt
$4,383.7
71.30%
Total Top 10 Countries of Foreign Investors in Federal Debt
$3,676.9
73.44%
Total All Foreign Investment in Federal Debt
$6,148.1
100%
Total All Foreign Investment in Federal Debt
$5,006.9
100%
Source: Treasury Department International Capital System (TIC), at http://www.treasury.gov/resource-center/
data-chart-center/tic/Documents/mfhhis01.txt.
Notes: . 
        Notes: Data, including estimated foreign holders of federal debt historically by month, in these Treasury
 Department tables are periodically adjusted. Current monthly estimates are available at http://www.treas.gov/tic/
mfh.txt. Aggregate data totals in Table 1  vary slightly from aggregate data totals in Table 2  because of minor
 technical differences between the two sources. Percentage approximations calculated by CRS. Percentages may
 not sum to 100% due to rounding.


      
    
    Foreign holdings as estimated by the Treasury Department can be divided into official
 (governmental investment) and private sources. Figure 1 provides data on the current breakdown
 of estimated foreign holdings in U.S. federal debt. As the figure shows, 66.86% ($4,113.1094.6 billion)
 of foreign holdings in U.S. federal debt are held by governmental sources. Private investors hold
 the other 33.24% ($2,042.9053.5 billion).
 After increasing for several years, overall foreign holdings have been relatively flat since 2013.
    
      
Figure 1. Breakdown of Official vs. Private Foreign Holdings of U.S. Federal Debt

Source: 
          
        
        
          
        
        
          
            Source: Treasury Department International Capital System, http://www.treasury.gov/resource-center/datachartdata-chart-center/tic/Documents/mfhhis01.txt.
Notes: .
            Notes: Data in the chart represent estimated December 20142015 figures and are current as of May 22, 2015.
March 28, 2016. Figures are in billions of dollars. Data in the Treasury Department tables are periodically adjusted. For the most
 current estimates, click on the URL address listed above.

            The estimated combined total of all foreign holdings for December 20142015 was $6,156.0148.1 billion. Data consist of
 reported December 20142015 figures from the TIC tabletable listed above. The breakdown between estimated official and
 private holdings is not publicly available on a country-by-country basis. Approximate percentages calculated by
 CRS.


          
        
      
    
    Foreign Investment in U.S. Federal Debt:
Why Is It an Issue of Concern?

    From an economic perspective, foreign holdings of federal debt can be viewed in the broader
 context of U.S. savings, investment, and borrowing from abroad. For decades, the United States
 has saved less than it invests. Domestic saving is composed of saving by U.S. households,

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 Foreign Holdings of Federal Debt

 businesses, and governments; by accounting identity,67 when government runs budget deficits, it
 reduces domestic saving. By the same accounting identity, the shortfall between U.S. saving and
 physical investment is met by borrowing from abroad. When the deficit rises (i.e., public saving
 falls), U.S. investment must fall (referred to as the deficit “"crowding out”" investment) or
 borrowing from abroad must rise. If capital were fully mobile and unlimited, a larger deficit
 would be fully matched by greater borrowing from abroad, and there would be no crowding out
 of domestic investment. To be a net borrower from abroad, the United States must run a trade
 deficit (it must buy more imports from foreigners than it sells in exports to foreigners).8 Since
 2000, U.S. borrowing from abroad and the trade deficit each have exceeded $300 billion each
 year. Borrowing from abroad peaked at $800 billion in 2006 and was $411484 billion in 2014.
2015. Borrowing from abroad has occurred through foreign purchases of both U.S. government and
 U.S. private securities and other assets.

    As a result of foreign purchases of Treasury securities, the federal government must send U.S.
 income abroad to foreigners. If the overall economy is larger as a result of federal borrowing
 (because the borrowing stimulated economic recovery7recovery9 or was used to productively add to the
 U.S. capital stock, for example), then this outcome may leave the United States better off overall
 on net despite the transfer of income abroad. In other words, without foreign borrowing, U.S.
 income would be lower than it currently is net of foreign interest payments in this scenario. From
 2008 to 2014, the output gap (the difference between actual gross domestic product [GDP] and
 potential GDP) was large, making the potential for government budget deficits to stimulate the
economy, putting idle capital and labor resources back to work, and increase total income greater
than usualmeaning the economy had significant idle capital and labor resources. In the presence of a large output gap, government budget deficits have a greater potential than usual to stimulate the economy and increase total income. As the economy gets closer to full employment, the scope for deficits to stimulate the
 economy diminishes. Because the federal government has run deficits almost every year since the
 1960s, the mainstream economic view is that these budget deficits have not led to a larger
 economy on net over the long run for two reasons. First, the government has run deficits in many
 years when the economy was near or at full employment, precluding the role of deficit stimulus.
 Second, federal spending on capital is small8small10 relative to the overall budget.
 
    It can be argued that the underlying long-term economic problem is the budget deficit itself, and
 not that the deficit is financed in part by foreigners. This can be illustrated by the
 counterfactual—assume the same budget deficits and U.S. saving rates without the possibility of
 foreign borrowing. In this case, budget deficits would have had a much greater “"crowding out”
" effect on U.S. private investment, because only domestic saving would have been available to
 finance both. The pressures the deficit has placed on domestic saving would have pushed up
 interest rates throughout the economy and caused fewer private investment projects to be
 profitably undertaken. With fewer private investment projects, overall GDP would have been
 lower over time relative to what it would have been. The ability to borrow from foreigners avoids
 the deleterious effects on U.S. interest rates, private investment, and GDP, to an extent, even if it
 means that the returns on some of this investment now flow to foreigners instead of Americans. In
 other words, all else equal, foreign purchases of Treasury securities reduce the federal
government’ government's borrowing costs and reduce the costs the deficit imposes on the broader economy.
6
The accounting identity is (household saving + business saving + government saving) + (borrowing from abroad –
lending to abroad) = (public investment + private investment).
7
For a discussion of how government deficits can stimulate the economy, see CRS Report R41578, Unemployment:
Issues in the 113th Congress, by Jane G. Gravelle.
8
In 2014, non-defense capital investment was $37 billion and grants for capital investment were $78 billion. Source:
Office of Management and Budget, FY 2016 Budget of the United States Government, Historical Tables, March 2014,
Table 9.2.

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 Foreign Holdings of Federal Debt


    The burden of a foreign-financed deficit is borne by exporters and import-competing businesses,
 because borrowing from abroad necessitates a trade deficit. It is also borne by future generations,
 because future interest payments will require income transfers to foreigners.911 To the extent that
 the deficit crowds out private investment rather than is financed through foreign borrowing, its
 burden is also borne by future generations through an otherwise smaller GDP. Because interest
 rates are at historically low levels, this burden has not grown significantly given the increase in
 borrowing. Were rates to rise, however, the burden would rise with some lag as new borrowing
 was made at the new higher rates and old borrowing matured and “"rolled over”" into new debt
 instruments with higher rates.10
12 
    Thus far, this report has considered the U.S. determinants of the market for U.S. Treasury
securities, namely the government’impact of the government's budget deficit and the low U.S. saving rate on U.S. Treasury yields, but not investor
 demand. Since interest rates fell to historic lows at a time when the supply of Treasury securities
 rose to historic heights, it follows that Treasury rates have been driven mainly by increased
 investor demand in recent years. In the wake of the 2008 financial crisis, investor demand for
 Treasury securities increased as investors undertook a “"flight to safety.”" Treasury securities are
 perceived as a “"safe haven”" compared with other assets because of low perceived default risk and
 greater liquidity (i.e., the ability to sell quickly and at low cost) than virtually any alternative
 asset. For foreign investors, their behavior also implies that they view the risk from exchange rate
 changes of holding dollar-denominated assets to be lower than alternative assets denominated in
 other currencies. The reasons for this flight to safety are varied. For example, investors who had
 previously held more risky assets may now be more averse to risk and are seeking to minimize
 their loss exposure; investors may not currently see profitable private investment opportunities
 and are holding their wealth in Treasury securities as a “"store of value”" until those opportunities
 arise; or investors may now need Treasury securities to post as collateral for certain types of
 transactions (such as repurchase agreements) where previously other types of collateral could be
 used (or used at low cost). 
    Flight-to-safety considerations are likely to subside if economic
 conditions continue to normalize, reducing the incentive for foreigners to buy Treasuries and
 raising their yields, all else equal. More normal economic conditions would also be expected to
 increase domestic investment demand, which would either push up domestic interest rates or lead
 to more foreign borrowing.
 Recently, relatively stronger economic growth in the United States compared with other advanced economies has led U.S. interest rates to begin to rise relative to foreign rates. This relative movement in rates could attract additional foreign capital inflows.
    Finally, any discussion of foreign holdings of Treasuries would be incomplete without a
 discussion of the large holdings of foreign governments (referred to as “"foreign official holdings”
" in Figure 1).13).11 Foreign official holdings are motivated primarily by a desire for a liquid and stable
 store of value for foreign reserves; relatively few assets besides U.S. Treasury securities fill this
 role well. Depending on the country, foreign reserves may be accumulated as a result of a
country’ country's exchange rate policy, the desire to reinvest export proceeds, or the desire to build a “war
chest”"war chest" to fend off speculation against the country’'s exchange rate and securities. If motivated by
 any of these factors, rate of return may be a lesser consideration for foreign governments than it is
for a private investor.

9

See CRS Report RL30520, The National Debt: Who Bears Its Burden?, by Marc Labonte. Income transfers to
domestic debt holders have no net cost on the United States because they transfer income from one group of Americans
(taxpayers) to another (bond holders).
10
The average maturity length of the outstanding debt is about five years.
11
U.S. Treasury, Major Foreign Holders of Treasury Securities, http://www.treasury.gov/resource-center/data-chartcenter/tic/Documents/mfh.txt.

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 Foreign Holdings of Federal Debt

 for a private investor. Although large, foreign official holdings have not been significantly increasing since 2013, after more than a decade of rapid growth before then.
    Since 1986, the United States has had a net foreign debt, and that debt grew to $6.97 trillion in
 2014. The growth in net foreign debt is unsustainable in the long run, meaning that it cannot
 continuously grow faster than GDP, as it has generally done in recent decades. This net foreign
 debt has not imposed any burden on Americans thus far, however, because the United States has
 consistently earned more income on its foreign assets than it has paid on its foreign debt, even
 though foreigners owned more U.S. assets than Americans owned foreign assets. Although it is
 likely that the United States would begin to make net debt payments to foreigners at some point if
 the net foreign debt were to continue to grow, it has not been a cause for concern yet. To date, the
 primary drawback is the risk that its unsustainable growth poses, albeit slight in the short run.
 Unsustainable growth in the net foreign debt could lead to foreigners at some point reevaluating
 and reducing their U.S. asset holdings. If this happened suddenly, it could lead to financial
 instability and a sharp decline in the value of the dollar. Alternatively, were the growth in the debt
 to decline gradually, it is unlikely to be destabilizing.12
14
    A related concern is whether the major role of foreigners in Treasury markets adds more risk to
 financial stability. In other words, would financial stability be less at risk if the United States
 borrowed the same amount from foreigners, but foreigners invested exclusively in private
 securities instead of U.S. Treasury securities? Empirical evidence does not shed much light on
 this question, although the fact that some foreign crisis countries, such as Ireland, had
 accumulated mainly private, not government, debt might suggest that avoiding foreign ownership
 of government debt is not a panacea. Although countries like Greece with large foreign holdings
 of government debt have experienced financing problems, a large share of Italy’'s large
 government debt was held domestically, and it has nevertheless faced financing problems. The
 major role of foreign governments as holders of U.S. Treasuries could reduce financial instability
 if foreign governments are less motivated by rate of return concerns because that implies they
 would be less likely to sell their holdings if prices started to fall. Finally, foreign official holdings
 of U.S. debt may have foreign policy (as opposed to economic) implications that are beyond the
 scope of this report.

    What policy options exist if policy makerspolicymakers decided foreign ownership of federal debt was
 undesirable? Absent strict capital controls, it is unlikely that foreigners could effectively be
 prevented from buying Treasury securities. After Treasury securities are initially auctioned by
 Treasury, they are traded on diffused and international secondary markets, and turnover is much
 higher on secondary markets than initial auctions. A foreign ban on secondary markets would be
 hard to enforce because secondary market activity could shift overseas, and even if it could be
 enforced, the U.S. saving-investment imbalance would likely shift foreign investment into other
 U.S. securities—perhaps even newly created financial products that allowed foreigners to
 indirectly invest in Treasury securities. Thus, a ban would not address the underlying economic
 factors driving foreign purchases. Economically, the only way government could reduce its
 reliance on foreign borrowing is by raising the U.S. saving rate, which could be done most
 directly by reducing budget deficits.

12
The “safe haven” role of Treasuries and “reserve currency” role of the dollar have led to counterintuitive outcomes—
lower Treasury yields in response to U.S. events with systemic risk potential, such as the subprime mortgage crisis and
the federal debt downgrade. These counterintuitive outcomes make it even harder to accurately predict when the debt
might become unsustainable and perhaps make a destabilizing reversal of capital flows less likely compared with other
countries.

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 Foreign Holdings of Federal Debt

Author Contact Information
Marc Labonte
Specialist in Macroeconomic Policy
mlabonte@crs.loc.gov, 7-0640

Jared C. Nagel
Information Research Specialist
jnagel@crs.loc.gov, 7-2468

Acknowledgments
Previous versions of this report were coauthored by Justin Murray, information research specialist.

Congressional Research Service

7

 Author Contact Information
[author name scrubbed], Specialist in Macroeconomic Policy
        ([email address scrubbed], [phone number scrubbed])
      
[author name scrubbed], Information Research Specialist
        ([email address scrubbed], [phone number scrubbed])
      
Acknowledgments
Previous versions of this report were coauthored by [author name scrubbed], information research specialist.

    Footnotes
    
      
        1.
            
         Figures on federal debt held by the public are available on the Department of Treasury Bureau of Public Debt website, "The Debt to the Penny and Who Holds It," at http://www.treasurydirect.gov/NP/BPDLogin?application=np. The gross debt is composed of debt held by the public and intragovernmental debt held by federal trust funds. Although gross federal debt is the broadest measure of the debt, the debt measure that is relevant in an economic sense is debt held by the public. This is the measure of debt that has actually been sold in credit markets and has influenced interest rates and private investment decisions. Intragovernmental debt, by contrast, is both an asset and a liability to the federal government. See CRS Report R44383, Deficits and Debt: Economic Effects and Other Issues, by [author name scrubbed].

      

        2.
            
         This report discusses foreign holdings of U.S. federal debt. Foreign investors also hold U.S. private securities. For data on foreign holdings of U.S. private securities, see "Foreign Portfolio Holdings of U.S. Securities," at http://www.treasury.gov/resource-center/data-chart-center/tic/Pages/fpis.aspx, produced by the Treasury Department International Capital System.

      

        3.
            
         Data are excerpted from the Federal Reserve Board of Governors Flow of Funds data, Table L209. State, local, and foreign holdings include special issues of nonmarketable securities to municipal entities and foreign official accounts. They also include municipal, foreign official, and private holdings of marketable Treasury securities.

      

        4.
            
         Bureau of Economic Analysis, International Transactions, Table 4.3, line 39, at http://bea.gov/iTable/index_ita.cfm. There is no data available on interest on the debt paid to individual countries.

      

        5.
            
         Treasury's definition of Caribbean Banking Centers includes Bahamas, Bermuda, Cayman Islands, Netherlands Antilles, British Virgin Islands, and Panama.

      

        6.
            
         Foreign holdings are estimated by the Treasury Department based on the location of the holdings, not the nationality of the holder. For certain countries, such as the Caribbean Banking Centers, many of the holdings are likely owned by third country citizens.

      

        7.
            
         The accounting identity is (household saving + business saving + government saving) + (borrowing from abroad – lending to abroad) = (public investment + private investment).

      

        8.
            
         By accounting identity, borrowing from abroad is equal to the current account deficit. The trade deficit is the largest component of the trade deficit.

      

        9.
            
         For a discussion of how government deficits can stimulate the economy, see CRS Report R41578, Unemployment: Issues in the 113th Congress, by [author name scrubbed].

      

        10.
            
         In 2015, non-defense capital investment was $40 billion and grants for capital investment were $77 billion. Source: Office of Management and Budget, FY 2017 Budget of the United States Government, Historical Tables, March 2014, Table 9.2.

      

        11.
            
         See CRS Report RL30520, The National Debt: Who Bears Its Burden?, by [author name scrubbed]. Income transfers to domestic debt holders have no net cost on the United States because they transfer income from one group of Americans (taxpayers) to another (bond holders).

      

        12.
            
         The average maturity length of the outstanding debt is about five years.

      

        13.
            
         U.S. Treasury, Major Foreign Holders of Treasury Securities, at http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt.

      

        14.
            
         The "safe haven" role of Treasuries and "reserve currency" role of the dollar have led to counterintuitive outcomes—lower Treasury yields in response to U.S. events with systemic risk potential, such as the subprime mortgage crisis and the federal debt downgrade. These counterintuitive outcomes make it even harder to accurately predict when the debt might become unsustainable and perhaps make a destabilizing reversal of capital flows less likely compared with other countries.

      

  

1.	Figures on federal debt held by the public are available on the Department of Treasury Bureau of Public Debt website, "The Debt to the Penny and Who Holds It," at http://www.treasurydirect.gov/NP/BPDLogin?application=np. The gross debt is composed of debt held by the public and intragovernmental debt held by federal trust funds. Although gross federal debt is the broadest measure of the debt, the debt measure that is relevant in an economic sense is debt held by the public. This is the measure of debt that has actually been sold in credit markets and has influenced interest rates and private investment decisions. Intragovernmental debt, by contrast, is both an asset and a liability to the federal government. See CRS Report R44383, Deficits and Debt: Economic Effects and Other Issues, by [author name scrubbed].
2.	This report discusses foreign holdings of U.S. federal debt. Foreign investors also hold U.S. private securities. For data on foreign holdings of U.S. private securities, see "Foreign Portfolio Holdings of U.S. Securities," at http://www.treasury.gov/resource-center/data-chart-center/tic/Pages/fpis.aspx, produced by the Treasury Department International Capital System.
3.	Data are excerpted from the Federal Reserve Board of Governors Flow of Funds data, Table L209. State, local, and foreign holdings include special issues of nonmarketable securities to municipal entities and foreign official accounts. They also include municipal, foreign official, and private holdings of marketable Treasury securities.
4.	Bureau of Economic Analysis, International Transactions, Table 4.3, line 39, at http://bea.gov/iTable/index_ita.cfm. There is no data available on interest on the debt paid to individual countries.
5.	Treasury's definition of Caribbean Banking Centers includes Bahamas, Bermuda, Cayman Islands, Netherlands Antilles, British Virgin Islands, and Panama.
6.	Foreign holdings are estimated by the Treasury Department based on the location of the holdings, not the nationality of the holder. For certain countries, such as the Caribbean Banking Centers, many of the holdings are likely owned by third country citizens.
7.	The accounting identity is (household saving + business saving + government saving) + (borrowing from abroad – lending to abroad) = (public investment + private investment).
8.	By accounting identity, borrowing from abroad is equal to the current account deficit. The trade deficit is the largest component of the trade deficit.
9.	For a discussion of how government deficits can stimulate the economy, see CRS Report R41578, Unemployment: Issues in the 113th Congress, by [author name scrubbed].
10.	In 2015, non-defense capital investment was $40 billion and grants for capital investment were $77 billion. Source: Office of Management and Budget, FY 2017 Budget of the United States Government, Historical Tables, March 2014, Table 9.2.
11.	See CRS Report RL30520, The National Debt: Who Bears Its Burden?, by [author name scrubbed]. Income transfers to domestic debt holders have no net cost on the United States because they transfer income from one group of Americans (taxpayers) to another (bond holders).
12.	The average maturity length of the outstanding debt is about five years.
13.	U.S. Treasury, Major Foreign Holders of Treasury Securities, at http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt.
14.	The "safe haven" role of Treasuries and "reserve currency" role of the dollar have led to counterintuitive outcomes—lower Treasury yields in response to U.S. events with systemic risk potential, such as the subprime mortgage crisis and the federal debt downgrade. These counterintuitive outcomes make it even harder to accurately predict when the debt might become unsustainable and perhaps make a destabilizing reversal of capital flows less likely compared with other countries.