To start paying down the national debt, the US could implement a combination of spending cuts and revenue increases. On the spending side, the government could prioritize reducing wasteful expenditures and reforming entitlement programs like Social Security and Medicare to ensure their long-term sustainability.
(In 1835, the $17.9 million budget surplus was greater than the total government expenses for that year.) By January of 1835, for the first and only time, all of the government's interest-bearing debt was paid off.
Who owns the most U.S. debt? Around 70 percent of U.S. debt is held by domestic financial actors and institutions in the United States. U.S. Treasuries represent a convenient, liquid, low-risk store of value.
Since the U.S. dollar has a variable exchange rate, however, any sale by any nation holding huge U.S. debt or dollar reserves will trigger the adjustment of the trade balance at the international level. The offloaded U.S. reserves by China will either end up with another nation or will return to the U.S.
Today, our deficits are caused mainly by predictable structural factors: our aging baby-boom generation, rising healthcare costs, and a tax system that does not bring in enough money to pay for what the government has promised its citizens. And the more we borrow, the more we pay in interest on that debt.
In fact, his administration paid off all the interest-bearing debt on January 1, 1835. Historian Ann Daly lists three reasons for this to happen. The federal government collected many millions in tariffs, sold massive amounts of public land, and President Jackson vetoed spending bills left and right.
Once the debt limit is reached, the Treasury can't sell any more bonds and other securities to pay off the debt from previous deficits. Put simply: it can't get cash to pay off bills the government has already accumulated. If the U.S. can't pay those bills, then it defaults on the national debt.
Key Drivers of the National Debt. What is causing the growth of our national debt? There are three primary drivers of the overall growth in spending: America's aging population, rising healthcare costs, and rapidly escalating interest costs.
America owes China about $1 trillion dollars. Until we balance the US budget and pay down our debt, China's ownership of 7 percent of the national debt will continue to give it a vested interest in America's prosperity, not leverage to do us harm.
A nation saddled with debt will have less to invest in its own future. Rising debt means fewer economic opportunities for Americans. Rising debt reduces business investment and slows economic growth. It also increases expectations of higher rates of inflation and erosion of confidence in the U.S. dollar.
Of course, just as with an individual or family, cutting spending and increasing revenue are smart first steps. Beyond that, the government considers things like new taxes, a higher retirement age, removing loopholes from the tax code, and more to reduce annual deficits and the national debt.
Japan and China have been the largest foreign holders of US debt for the last two decades. From 2000 to 2023, annual totals are based on data from December, while the 2024 data is updated through April. Inflation adjusted to the 2023 calendar year.
Currently, China's total debt stands at around $47.5 trillion, which is less than the US's near $70 trillion. Notably, China holds the largest share of non-financial corporate debt globally, at 28%. Both China and the U.S. are among the countries with the highest debt-to-GDP ratios.
The financial position of the United States includes assets of at least $269 trillion (1576% of GDP) and debts of $145.8 trillion (852% of GDP) to produce a net worth of at least $123.8 trillion (723% of GDP).
Around 70% of Japanese government bonds are purchased by the Bank of Japan, and much of the remainder is purchased by Japanese banks and trust funds, which largely insulates the prices and yields of such bonds from the effects of the global bond market and reduces their sensitivity to credit rating changes.
As a result, the U.S. actually did become debt free, for the first and only time, at the beginning of 1835 and stayed that way until 1837. It remains the only time that a major country was without debt.
China owns 384,000 acres of American agricultural land. That's a 30% increase just since 2019. And on top of that, they own land near an air force base in North Dakota.
Which country owes the most debt to China? Pakistan owes the most debt to China, totaling $26.6 billion. This debt primarily funds infrastructure and energy projects, making repayment particularly challenging due to commercial interest rates.
However, China doesn't own the most farmland in the U.S., according to a new USDA report. It's actually Canada, which accounts for 32%, or 14.2 million acres. Rounding out the top five are the Netherlands at 12%, Italy at 6%, the United Kingdom at 6% and Germany at 5%.