Snap Fact #351
Another Economic Myth Exploded; Interest Payments on National Debt Under President Obama is Near 40 Year Low!

With another tip of the hat to the Motley Fool for pointing this out, today’s SNAP-CAP will examine one of the lesser known aspects of today’s steadily across-the-board growing economy. Among the ocean of red herrings that the Republican opposition keeps fishing for, is their self-created myth that the interest payments on our national debt is breaking the bank.

The truth is that although China is a substantial investor in America, they are a relatively minor player in the scheme of things, holding about 7.5% of our National Debt. In 2009 the total percentage of U.S. debt held by china was about 8%. It has come even further down since, reaching about 7.5% last year and approximately 7.1% in 2012.
Probably 1 out of 100 people are aware of these statistics. Many of us have been led to believe that the Chinese hold 30% – 40% - even 50% or more of our debt. Along with all the other myths and lies the opposition has scared the public with, so loud and for so long, that we all feel the hair on our necks rise when anyone talks about how much of America the Chinese own.

Republican candidates, Super Pac ads, and the entire right wing publicity machine keep repeating that our borrowing from China is funding US deficit spending. The perpetrators know better, but they understand that if they demagogue this issue it creates mob flop sweat and that turns into votes.

The biggest holders of US debt are American individuals, institutions, and Social Security. We own more than 2 out of every 3 dollars of US debt — about over 67%. Hence, we depend far less on the kindness of strangers than you might imagine….

The chart below is from last year but if anything the Chinese have been net redeeming their holdings and their share is a bit lower today.