eli5: Who does the US owe almost 32 trillion dollars of debt too? If it’s the most powerful nation in the world, can’t it just get rid of it?
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Most of the debt is owed to the US government.
Medicare and Social Security collect payroll taxes from workers, which it will later pay back for medical care and pension payments. The money during the period between when it’s collected and paid out is held in US securities. Basically our Social Security and Medicare programs buy most of the federal debt. After that, other retirement funds and corporations buy a lot of that debt. Most of of the assets that Silicon Valley Bank held were government securities. Most of the cash that Apple holds is in US Treasuries.
Some is owned by individuals, and some is owned by other nations. US treasuries had been considered the safest investment in the world. After we had our debt rating downgraded the last time Republicans pulled this default stunt, that changed a bit.
One big question regarding a US default is who would and wouldn’t get paid. The concern being that the federal government would preferentially keep paying Medicare and Social Security, being part of the federal government, and not pay individuals, foreign countries, and corporations that hold that debt.
So could we get rid of it? Sure. The US would also alienate every ally it has on the planet in doing so. The economy would be destroyed. Better to carry the debt. It’s not really *that* much debt. The top 10% of the US population have total assets of about $100T. A small annual wealth tax would pay off the debt pretty damn fast.
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