THE UNITED STATES NATIONAL DEBT

The United States national debt is the total amount of money the federal government owes to creditors. This debt accumulates when the government borrows funds to cover budget deficits, often through issuing bonds. It can be held by domestic or foreign investors, and it includes both public debt (owed to external entities) and intragovernmental debt (owed to government accounts).

The subject of the National Debt has been a “political football” for decades between both major political parties. It has been a political issue that is continually debated but left unresolved – and few politicians from either party comprehend or have the knowledge to explain it, intelligently, to their constituents. Every political election, members of both parties attempt to use the topic of national debt as a fear factor against the other – the “Gloom and Doom” approach.

As of 2025, the total money owed by the U.S. federal government to creditors stands at more than $38 trillion, a number so large it can be challenging to comprehend. It is important to note that the debt is not just from one administration or Congress. It is the result of decades of financial decisions made by both political parties.

Approximately 80% of the debt consists of U.S. Treasury bonds owned by investors worldwide. The balance, approximately 20% of the debt, is owed to Intragovernmental Debt.

To finance this debt, the United States Treasury issues various types of securities including the following:

• Treasury Bills (T-bills) – Short-term debt instruments that mature in one year or less.
• Treasury Notes – Medium-term securities that mature in two to 10 years.
• Treasury Bonds – Long-term investments that mature in 20 to 30 years.

Foreign countries hold a significant portion of the American national debt. The following countries are among the largest foreign holders:

• Japan – the largest foreign holder with over $1 trillion in U.S. Treasury securities.
• China – holding around $1 trillion.
• United Kingdom – holding around $700 billion.
• Canada – holding over $300 billion.
• Ireland – holding over $300 billion.
• Luxembourg – holding around $300 billion.

The largest holders of the American National Debt (50%) are domestic Pension Funds and domestic Mutual Funds.

• Domestic Pension Funds – Approximately 25% of U.S. government debt is owned by domestic pension funds. This includes both private and public pension plans, which invest in U.S. Treasury securities as a stable asset for their portfolios. The exact percentage can fluctuate based on market conditions and investment strategies. Pension funds are significant holders of government debt, contributing to the overall stability of the finance system.

• Domestic Mutual Funds – Approximately 25% of U.S. government debt is owned by domestic mutual funds. This figure can fluctuate based on market conditions and investment strategies. Mutual funds invest in various types of debt, including Treasury securities, which are a significant part of the U.S. debt market.

Intragovernment Debt: Intragovernmental debt is primarily composed of obligations the federal government owes to various American trust funds and accounts.

(Congress’s creative way of “stealing” funds from American public programs, without providing a credible plan of repayment!)

The main federal programs contributing to Intragovernment Debt include IOUs owed to programs like:

•  Social Security Trust Fund – holds surplus funds from payroll taxes to pay future benefits.
•  Medicare Trust Fund – Contains funds for Medicare Services, funded by payroll taxes and premiums.
•  Federal Employees Retirement System (FERS) – Manages retirement benefits for federal employees.
•  Military Retirement Fund – Provides retirement benefits for military personnel.
•  Unemployment Insurance Trust Fund – Supports unemployment benefits for eligible workers.

***A special note for LOANERS on the National Debt. Loaners cannot demand immediate payment. National debt is typically structured as long-term obligations, meaning that the government repays these loans over time according to the terms of the bonds or securities issued. Some points to consider:

• Nature of Debt – the national debt consists of bonds issued by the government, which have specific maturity dates.
• Legal Framework – The terms of repayment are governed by contracts and bondholders cannot demand payment before maturity unless the government defaults.
• Default Risks – if the government fails to meet its obligations, bondholders may face losses, but they cannot unilaterally demand payment outside of agreed terms.

In summary, while bondholders have a claim on future payments, they cannot demand immediate repayment of the national debt.

Over many decades, both political parties, when in power, have been “stealing” funds from the American public without providing a realistic or credible plan of repayment.

Example: This practice has put in doubt the viability of the Social Security Program and other public programs.

Potential help from the government’s aggressive Tariff Program. The worldwide tariff program, implemented by the Trump Administration, has produced significant revenue for the federal government.

The Tax Foundation projected President Trump’s tariffs would raise about $2.5 trillion over the next decade. The Committee for a Responsible Federal Budget, a public policy nonprofit, expects Trump’s tariffs to generate $2.8 trillion to the U.S. gross domestic product by fiscal year 2034 if they continue.

President Trump stated that his administration would “consider” sending checks to taxpayers, based on the revenue his tariffs have generated. Senator Josh Hawley, R-Mo., introduced a bill after the President signaled interest in a rebate check, which would send at least $600 to each eligible adult and dependent child this year. A larger rebate check would be issued if tariff revenue exceeds projections.

One creative solution would be to use the federal government’s tariff income to return funds “stolen” from the Social Security Trust Fund, Medicare Trust Fund, Federal Employees Retirement System, Military Retirement Fund and the Unemployment Insurance Trust Fund. This solution could provide repayment to these programs and end the “stealing” of public funds. The tariff repayment program could be paid out monthly – starting Now.

James Peifer