In other words, there are a lot
of countries looking for investors to finance their spending.
WHO BUYS DEBT? There is a perception that other countries are the primary buyers of U.S. debt. Not true. Americans — individuals, com-
panies, pension funds — own about 80% of U.S. debt. Foreign countries finance the rest. China used to be the largest hold- er of U.S. debt, but it is intentionally scaling down, with the government reportedly telling Chinese banks to reduce their holdings, reports Bloomberg News. According to the Treasury Depart-
ment, at $1.185 trillion, Japan was the primary foreign holder of U.S. debt at the end of 2025, followed by the United Kingdom ($866 billion), China ($683 billion), Belgium ($477 billion), and Canada ($468). However, the Treasury lists Hong
Kong’s $268 billion separately from Mainland China. Add it to China’s holdings and it totals $951 billion, which together would put China in second place. Will other countries continue
buying U.S. debt? Probably, but clouds are forming. The New York Times writes, “Investors are increasingly souring on the United States, as illustrated by the declining dollar, the stalled stock market and rising government borrowing costs.” That souring trend is referred to
as “Sell America,” meaning inves- tors are considering switching to foreign stocks and bonds. What happens if there is little
interest in buying U.S. debt? The Treasury Department must push up interest rates to attract buyers, which makes the national debt prob- lem worse. Annual interest on the national debt just passed $1 trillion. The good news is that foreigners
are still buying U.S. debt — at least for now — with Bloomberg report-
“Investors are increasingly souring on the United States, as illustrated by the declining dollar, the stalled stock market and rising government borrowing costs.” — The New York Times
ing at the end of February that U.S. bonds had their biggest monthly rally in a year.
COMPETITION FOR INVESTMENT DOLLARS The U.S. Treasury is facing another competitor for investors’ funds: large tech companies. As CNBC reports, “Hyperscalers
are significantly ramping up their AI capex spending — and increasingly using credit markets to fund it.” How much spending are we talk-
ing about? Perhaps up to $770 bil- lion in 2026 on AI and building data centers. The plan is to go to debt mar-
kets to fund that spending. And that money could be tied up for years. For example, Amazon has just intro- duced a 100-year bond. That development has BlackRock
Inc., the world’s largest asset man- ager, warning: “The problem: rising corporate borrowing adds supply to bond markets struggling to digest large public deficits.” The real question is whether investors, both domestic and for- eign, begin to perceive the debt being offered by huge, financially stable, and solvent companies like Meta, Alphabet, and Amazon as safer than U.S. debt.
CAN WASHINGTON CONTROL SPENDING? Will investors continue buying U.S. debt? They have so far, and they may continue no matter how large the fed- eral debt is. But prudent political leaders need to
recognize the potential peril that would arise if investors decided to invest else-
where. To avoid that calamity, we need to reduce federal deficits. And we do that in two ways: spurring economic growth while cutting spending. We may not be able to grow our
way out of our debt crisis, but we can certainly reduce the debt-to-GDP ratio we have now. First, the country needs pro-growth economic policies. The One Big Beautiful Bill is just
such a policy — mostly. It provides tax cuts — like on tips and overtime — which is great for the people who can take advantage of those breaks, but they don’t spur economic growth. To do that, you need tax breaks that
encourage employers to invest and hire. The OBBB made permanent the corporate tax breaks passed in the Tax Cuts and Jobs Act of 2017. That was a very pro-growth step. Second, Congress needs to cut spending. Efforts to root out fraud in U.S. entitlement programs will help, but it won’t be enough to eliminate a nearly $2 billion annual deficit. Other changes will have to occur.
Voters will have to hold their elected representatives accountable. If political candidates campaign on
cutting spending, and most Repub- licans do, hold their feet to the fire. Tough choices will have to be made, but we won’t significantly reduce the budget deficit until Congress gets spending under control. And it must be done before it’s too
late. If investors decide the size of the U.S. debt is too large and therefore too risky, it will be hard for Washington to regain their confidence.
Merrill Matthews is the Texas state chair of Our Republican Legacy.
MAY 2026 | NEWSMAX 11
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