Bill Boosts Transparency & Reporting On Debts to Foreign Governments
Texas Insider Report: WASHINGTON, D.C. – On the heels of the government reaching its $14.294 trillion debt limit, U.S. Senators John Cornyn (R-Texas) and Jon Kyl (R-Arizona) today introduced The Foreign-Held Debt Transparency and Threat Assessment Act of 2011, which requires the President to regularly assess the economic and national security risks associated with our nation’s mounting debt. It would also ensure policymakers and the American public are more clearly informed on the details and risks of our overall debt to foreign countries.
Senator Cornyn said, “The federal government’s reckless deficit spending has created a fiscal crisis and a growing national security vulnerability. A massive chunk of our debt is held by foreign governments such as Communist-led China, whose true motivations for doing so remain unclear. My hope is that this legislation will provide a reality check, help rein in the out of control spending, and make our nation safer.”
Senator Kyl said, “We have now reached the $14.3 trillion debt limit, which is a crushing amount of debt. Under the budget plan the President presented earlier this year, our public debt would double before the end of his four-year term and triple ten years from the day he took office. The fact that we now borrow 40 cents of every dollar the government spends, much of it from foreign interests, threatens both America’s solvency and sovereignty. This legislation will shed light on the risks of being beholden to foreign creditors. It also requires the development of a spending reduction plan to mitigate unacceptable risk.”
U.S. government spending has exacerbated the dependence of the U.S. on foreign creditors, such as the People’s Republic of China. Today, China is the largest foreign holder of U.S. government debt. Some Chinese government officials have scolded senior U.S. Government officials over the mounting debt, and others have publicly threatened to use China’s large U.S. debt holdings to retaliate against U.S. policies they oppose. In recent response to a U.S. decision to sell defensive weapons systems to Taiwan, an official of China’s People’s Liberation Army warned that China might sanction the U.S. by “dumping” U.S. government bonds. A rapid Chinese divestment of U.S. debt holdings would have a destabilizing effect on the U.S. economy.
The Cornyn-Kyl bill will require the President and the U.S. Government Accountability Office (GAO), the evaluation and auditing arm of Congress, to provide regular analysis of the national security and economic implications of the national debt. A previous version of this legislation passed the Senate last June as an amendment to an unemployment compensation bill. The legislation will:
1) improve transparency and reporting regarding overall foreign holdings of U.S. debt, equipping U.S. policymakers with a more accurate picture of which countries are financing U.S. deficit spending;
2) require the President to provide Congress with quarterly risk assessments—both classified and unclassified—on the national security and economic hazards posed by current levels of foreign holdings of U.S. Government “debt instruments”;
3) instruct the GAO to provide Congress with an annual risk assessment on national security and economic hazards posed by the national debt, as well as recommendations for reducing federal spending;
4) and require the President, in the event that any heightened risks are found to exist, to address those risks and implement a plan of action to reduce Federal spending.
Senator Cornyn serves on the Finance, Judiciary, Armed Services and Budget Committees. He serves as the top Republican on the Judiciary Committee’s Immigration, Refugees and Border Security subcommittee.