Stupid, Drunk or Both

In China, Biden bungles numbers regarding the U.S. debt


Vice President Biden mistakenly claimed Americans own 85% of U.S. Treasury securities during his visit to China. Americans own 54% of the U.S. public debt — that is, the amount of debt held by the public. They own 69% of the total debt, which includes money the U.S. government owes itself.



At several stops in China, Vice President Biden sought to reassure the Chinese that their investments in U.S. treasuries are safe. Biden's reassurances — including his mistaken claim about how much of the Treasuries are owned by Americans — had been widely reported in the news media.

At a news conference Friday, Biden told Chinese Premier Wen Jiabao that the U.S. has good reason to "take care" of its debt. "I'm anxious to talk to you about both our economies and how we can work together," Biden said. "But I point out U.S. treasuries, we're going to — we're going to take care of very closely not merely because China owns 8% of them, but because the Americans own 85%.

When asked for an explanation, Biden's office acknowledged he transposed some numbers. His office said Americans hold 87% of all U.S. financial assets — including stocks, bonds and bank loans — and Biden was thinking of that number. But Biden offered his reassurances about U.S. Treasuries, not stock holdings and bank loans, in response to a recent downgrade of the country's credit rating.

Biden was right when he said the Chinese hold 8% of U.S. Treasuries — nearly $1.2 trillion— measured as a percentage of the $14.3 trillion total debt (as of the end of June, the most recent figures available for foreign holdings of U.S. treasuries).

The total debt includes $4.6 trillion that the federal government owes itself. The most relevant standard for comparison here is the debt held by the public, which was $9.7 trillion. That's the total amount of Treasury securities owned by banks and others outside the government. Of the public debt, China owns 12%. Overall, foreigners own about 46% of the public debt, which means Americans own 54% of it — substantially less than Biden stated.

Biden got it right on the last stop of his four-day trip to China, during a speech to students at Sichuan University. "Please understand that no one cares more about this than we do," he said Sunday, "since Americans own 87% of all our financial assets and 69% of all our Treasury bonds, while China owns 1% of our financial assets and 8% of our Treasury bills."

Even so, later in that same speech, the vice president once again bungled his talking point: "In order for us not to make good on China's debt, we would have to disappoint tens of millions of Americans who own 85% of that debt. And just in pure political terms, no politician wants to do that. You're safe."