Holders of US Debt

Total Public Debt Outstanding of $20.5 Trillion at December 31, 2017 is divided into, and often reported under, two broad categories: 1) Intragovernmental Debt of $5.7 Trillion and 2) Debt Held by the Public of $14.8 Trillion. It should be noted, the government and media often use Debt Held by the Public, an amount lower than total debt, when quoting certain economic ratios. This results in making these ratios lower and appear better.

Intragovernmental Debt (Holdings or Obligations) – are government account series securities held by government Trust Funds, revolving funds and special funds. This debt is incurred when the government borrows from these accounts to fund government operations. The federal Trust Funds consist primarily of Social Security, Medicare, Civil Service, Military and Postal retirement and medical funds.  Using Social Security and Medicare as examples, after this money is deducted from taxpayer’s paychecks it is deposited into “Trust Funds.” The General Account of the government then borrows this cash in exchange for a government debt security. The Trust Funds now hold US Government Debt. The cash is transferred to the General Account and is used to operate the government with no securitization of assets or dedicated revenues to pay it back. It is only backed by the “full faith and credit of the United States” – also known as US, the taxpayers. At December 31, 2017 Intergovernmental Debt was approx. $5.7 Trillion or 28% of total Debt.

Debt Held by the Public – is money from a variety of Domestic and Foreign sources used to purchase government Debt for the operations of the government.  At December 31, 2017 Debt Held by the Public was $14.8 Trillion or 72% of total Debt.

Domestic – this category includes money received from both individuals and corporations representing retirement and non-retirement funds. It also includes money received from the Federal Reserve (the US central bank) when it authorizes the printing of money to magically expands the money supply. This new cash is given to the government for operations in exchange for Debt securities.

Foreign – this category includes money received from non-US individuals and corporations, and from governments of many countries. Foreigners are attracted to US Debt due to the US’s high credit rating, relatively stable currency and history of repaying its Debt. Despite recent scares that China holds $1.2 trillion of US debt they may sell (8% using Debt Held by the Public or 5% using Total Public Debt Outstanding), due to cross holdings and China’s interest in keeping US currency high for balance of trade reasons, it is unlikely they will sell all of their holdings.  At December 31, 2017 Foreign Debt was $6.3 Trillion or 31% of Total Public Debt Outstanding.

The following table shows either the exact amount (in the case of Foreign holders) or estimates of debt held by specific holders. Estimates are used since different sources within the government report at different times.

Holders of US Debt
Approximate (in $Billions)
December 31, 2017