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Huge US debt - Americans no longer owe it just to themselves

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It used to be said that Americans should not be too concerned about the huge federal debt because they owe it to themselves. That's no longer so true. Last year foreigners owned $160.2 billion - or 14 percent - of the total $1.141 trillion federal debt held by the public.

''This is not something that we relish,'' said Treasury Secretary Donald Regan in an interview. ''But it is not a matter of concern at this point. If it goes on year after year, yes.''

In other words, should a greater proportion of a growing national debt be held by foreigners, it could become a more serious international payments burden for the United States.

Last year, the US paid $17.9 billion in interest to foreigners holding Treasury debts. Total interest paid on debt held by the public was $107.9 billion.

''That is no big problem,'' commented Martin Feldstein, chairman of the President's Council of Economic Advisers.

For most of American history, federal debt was held almost entirely by individuals and institutions within the US. In 1946, for instance, the debt held by foreigners was about $2 billion, or less than 1 percent of the total debt held by the public. Much of that was held in the official reserves of foreign central banks. By the late 1960s, foreigners held just over $10 billion, still less than 5 percent of the total. Interest paid to foreign nationals, of course, was also a small proportion of the total interest paid on debt held by the public.

Foreign holdings, notes an analysis by the Office of Management and Budget (OMB), began to grow much faster starting in 1970. For a time, West European nations were trying to maintain the price of the dollar by buying dollars on the foreign-exchange markets. These were piled up in their international monetary reserves and invested to a large extent in Treasury securities, described by the OMB study as ''the safest and one of the most liquid forms of holding dollar assets.''

After OPEC tripled the price of oil in 1973-74, several of its member nations had large amounts of surplus dollars to invest in US federal debt.

In more recent years, the OPEC nations as a group have gone into the red in their international payments balance, and have unloaded some of their purchases from the US Treasury. With the dollar so strong, some European and other governments were selling their dollar assets to support their own currencies on the foreign-exchange markets.


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