US DEBT AS OF 2006

March 2006
  The latest data from the US treasury shows that the total of American debt has risen to close to 9 trillion dollars. Not unexpectedly that has brought forward cries of alarm from critics of the American deficit strategy and the tax cuts initiated by the Bush administration in their first budgets.But as usual, while it is reasonable to debate the nature of the tax cuts, for example they ought to have been disproportionately directed at lower income Americans as opposed to higher income ones; the suggestion that the deficits the United states has been running are catastrophic or horribly harmful is very misleading.
The current debt outstanding of close to 9 trillion dollars is roughly 75 % of the American GDP. Most state budgets(in 2006) on the other hand are either in balance or running surpluses.
A significant proportion of the bonds which finance the debt is held as assets by various US departments of Government including the Federal Reserve and various pension plans and state and local authorities. A large proportion of the debt is held internally by American enterprises and tax paying individuals. Recently issued debt has been purchased by
Asian governments and individual savers including Japan and China but their total holdings are much less than that held by Americans. (In 2006 Japan held $640 billion of U.S. debt while China held $321 b.About another 1 billion was held by a long list of countries. American taxpayers held 2785 billion while the U.S. government and its agencies held 3499 billion ).
The Chines and Japanese purchases of the debt helped recycle American dollars which they have earned from exports to the United States.
By the end of the Second World War in 1945 the debt was 154 % of the National income of the US.
It had risen to that level from its value of 66 % in 1939. In 1929 it had been as low as 18.6 %.Did the US suffer catastrophic collapse after the war.
Absolutely not.
Can anyone argue that the US was materially worse off in the post-war years than what it was in 1929 ? That would be very difficult to claim since the National income was considerably larger. 
Some data to back up this argument is available from the US Treasury department and in particular their March 2006 Treasury bulletin.
As of December 2005 according to the latest data published in the bulletin there was a total of 8.194 trillion dollars of federal debt outstanding. Out of this total the public held 4.738 trillion dollars in the form of treasury bills, notes, bonds and treasury inflation protected securities. The average maturity date of these debt instruments which included 20 year plus bonds, T bills of 26 weeks, bonds of maturities varying from 2 years to 20 plus years was overall 4 years and nine months down from 6 years and 6 years and 1 month in 2001.
The total debt in 2001 was 5.834 trillion dollars.
Foreigners including foreign central banks and governments in Asia held 2.18 trillion dollars of the debt or roughly 25.4 % of the total debt. In other words 74.6 % of the debt was held by American individuals, corporations and the US government itself.
The federal reserve banks held 732 billion dollars of the debt or 8.93 % of the debt; the US Treasury held 234.4 billion or 2.9 % of the debt and significant proportions were held by various government agencies and pension funds.
The federal reserve and government accounts overall held 4.2 trillion dollars of the total public debt.(all data from the March 2006 bulletin of the US Treasury department)
Thus the actual picture is rather more complex and considerably less worrisome than the headlines would suggest.