Intragovernmental Holdings -
Nearly 30% of the Federal debt is owed to 230
other Federal agencies. Why would the government owe money to itself? Some agencies, like the Social Security Trust Fund, take in more revenue from taxes than they need right now. Rather than stick this cash under a giant mattress, they buy U.S. Treasuries with it.
By owning Treasuries, they transfer their excess cash to the general fund, where it is spent. Of course, one day they will redeem their Treasury notes for cash. The Federal government will either need to raise taxes or issue more debt, to give the agencies the money they will need.
Which agencies own the most Treasuries? Social Security, by a long shot. Here's the detailed breakdown (as of December 31, 2015):
Social Security (Social Security Trust Fund and Federal Disability Insurance Trust Fund) - $2.786 trillion
Office of Personnel Management Retirement - $873 billion
Military Retirement Fund - $601 billion
Medicare (Federal Hospital Insurance Trust Fund, Federal Supplementary Medical Insurance Trust Fund) - $267 billion
All Other Retirement Funds - $187 billion
Cash on Hand to Fund Federal Government Operations - $508 billion.
(Source: Treasury Bulletin, Monthly Treasury Statement, Table 6. Schedule D-Investments of Federal Government Accounts in Federal Securities, December 2015)
Debt Held by the Public -
Foreign governments and investors hold nearly half of the nation's public debt. One-fourth is held by other governmental entities, like the Federal Reserve, and state and local governments. Fifteen percent is held by mutual funds, private pension funds, savings bonds or individual Treasury notes. The rest is owned by businesses, like banks and insurance companies, and an assortment of trusts, companies, and investors. Here's the breakout:
Foreign - $6.175 trillion
Federal Reserve - $2.461 trillion
Mutual Funds - $1.056 trillion
State and Local Government, including their pension funds - $803 billion
Private Pension Funds - $403 billion
Banks - $515 billion
Insurance Companies - $293 billion
U.S. Savings Bonds - $174 billion
Other (individuals, government-sponsored enterprises, brokers and dealers, bank personal trusts and estates, corporate and non-corporate businesses, and other investors) - $1.198 trillion.
(Sources: Federal Reserve, Factors Affecting Reserve Balance, February 3, 2016. Treasury Bulletin, Ownership of Federal Securities, Table OFS-2, as of June 2015)
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