Foreign-Held Debt

FOREIGN-HELD DEBT -- (House of Representatives - December 15, 2005)

Ms. KAPTUR. Madam Speaker, I ask unanimous consent to take my Special Order at this time.

The SPEAKER pro tempore. Is there objection to the request of the gentlewoman from Ohio?

There was no objection.

The SPEAKER pro tempore. Under a previous order of the House, the gentlewoman from Ohio (Ms. Kaptur) is recognized for 5 minutes.

Ms. KAPTUR. Madam Speaker, there are some things that Congress and the President can really do something about. And one of those is the management of our Federal accounts.

The news today reports in USA Today, Oil imports help push the trade gap to record highs. Every time I see the fact that we are importing more oil than finding ways to become more energy independent here at home, I say to myself, there is something that America really can do but is not doing.

The New York Times reported, and I include this in the RECORD, today that the U.S. trade deficit indeed has hit record highs, threatening U.S. growth. We are going deeper and deeper into debt every day with imports climbing much faster than exports. The American people know this. One can hardly find anything made in this country anymore. In fact, the trade deficit is so huge, it is now three-quarters of $1 trillion and rising and, with it, our foreign indebtedness. This widening gap is likely to reduce our overall growth as a country.

Now, our thirst for imported petroleum as a part of this increase rose 13 percent. And the Secretary of Treasury is living in another world when he says the reason that we are going into hock is because other nations are not growing fast enough, when, in fact, other nations are the very countries that are lending us money to make up this gap.

The New York Times says a growing number of economists worry that the United States has become locked into becoming the world's consumer of last resort, a role that is leading to ever higher levels of foreign indebtedness financed in large part by central banks of China, Japan and other Asian countries.

And not just Asian. As this chart illustrates, the amount of debt being held by foreigners is going up. Japan, over $100 billion over last year to a level of $681 billion. They are literally owning us, owning our debt.

Europe, $471.8 billion. And a lot of that, I think, comes through the London markets, particularly the oil markets. So this masks some of the buying that actually is occurring through the Middle East.

China, Hong Kong, at a level now of over $295 billion. And those kinds of ownership of our assets and debt means we owe them interest. And that level of interest is what I want to discuss tonight.

The proportion of our foreign-held debt is now nearly half of what we owe as a country. Nearly half. It has grown exponentially, and the interest we pay on that debt is one of the largest components of the Federal budget. In fact, in this coming fiscal year, the interest alone that Americans will pay to foreigners for their borrowings to us will be nearly $100 billion. Take the amount that we have to pay Hong Kong and China for what they have lent to us. We will pay them over $13 billion. How much is $13 billion? $13 billion is nearly equal to all of the money we spend as a Federal Government financing student loans in the Pell grant program to make post-secondary study a reality for thousands of students.

How about the $30 billion in interest that we will owe Japan, when you think that that amount is $6 billion more than we devote to funding the No Child Left Behind Act. And it is twice as much as we spend on funding employment training and unemployment services combined.

In Ohio, for example, this past week only one school in the northeastern part of Ohio got funds in order to do additional job training, though President Bush campaigned very hard on that issue in Ohio. Ohio did not get 15 grants or 20 grants, we got one.

Our money is going to pay interest to foreigners who are lending us money. We are cutting money for Head Start by more than $11 billion, and yet we are paying over $100 billion to foreign interests who are lending us money. We cannot afford to pay TRICARE for the needs of those in the Guard and Reserve, many of whom are returning home and finding their benefits are cut, and we have a shortfall in the veterans affairs budget. All of those accounts put together are a pittance compared to the interest that we are paying on our foreign-owned debt.

I have introduced, along with several of my colleagues on both sides of the aisle, H.R. 4405, The Trade Balancing Act of 2005, which will require that in cases in which the annual trade deficit, that is the trade gap, the difference between imports and exports, between the United States and another country is $10 billion a year for three consecutive years, the President must take the necessary steps to create a more balanced trading relationship with that country.

I am asking my colleagues to help communicate this message to the President, to our colleagues, before a foreclosure sign is posted on our Treasury building. There could be nothing more important that this Congress could do than to turn a sound economy over to the future.

Madam Speaker, I will place these additional articles in the RECORD. Let us put America back on an even keel.

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