One of the top challenges before Congress these days is how to deal with our staggering national debt.
The size of the debt alone is an enormous problem for our country. At $14 trillion, the national debt now constitutes a $45,000 burden for every man, woman and child across America. And, at about 96 percent of the nation's gross domestic product, it is at its highest relative level since the Roosevelt administration and World War II.
The magnitude of our nation's debt is an important subject for domestic political debate. We need to have a serious conversation about our spending levels and the appropriate size of government. But there is an even bigger problem with the national debt that needs to be addressed soon, and it relates to the way our debt is held.
About $4.5 trillion of our national debt is held by foreign countries, which works out to roughly one-third of the total debt. Of these foreign countries, China and Japan account for roughly 40 percent of the foreign-held share. The People's Republic of China alone is owed about $900 billion by the United States.
As the old saying goes, "money talks." And, with so much national debt being held by foreign nations, our national debt is quickly becoming a foreign policy quagmire for the United States.
Any publicly-traded company would start to take notice if any individual investor started to accumulate a large holding in the company - and they would start to take precautions if the investor was not necessarily in agreement with the company's basic philosophy. Should the situation be any different when one of America's leading foreign investors - China - has a history spotted with human rights violations against its own people?
Congress is in the middle of discussions right now about whether our national debt ceiling should be raised so our mounting debt does not cause us to default on our obligations. We think the discussion should also include the imposition of new safeguards to make sure that no single foreign country is allowed to accumulate more than a certain small percentage of our overall national debt, and that no single foreign country is allowed to hold a total amount of debt worth more than a certain small percentage of our gross domestic product.
We understand that allowing foreign countries to accumulate a share of our national debt is a necessary financial move, and trusting them with such investment is also wise politically. But allowing any single nation to own too large a stake in our nation permits them to hold our debt over our head and to use it as a potent weapon of international diplomacy. Our diplomatic power and independence rely on us making sure that does not happen.
While I agree with you on capping foreign debt, it may be a long term strategy vs. a short term item. However, we should also look very hard at capping/reducing substantially our foreign aid. We need to look long and hard at many countries and see of our expenditures are really effective. Due to the debt issues, I suggest a total reduction of 50% for each of the next five years, reallocate the dollars.....and then lets re-look at things.
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