Lots of Federal Debt is Held by the Federal Government

By Charlie Clarke

I am not sure it's generally appreciated that the debt ceiling is on gross debt and includes debt that the Federal Government itself holds.  Thus, the treasury issues a bond (an IOU) and then also buys the bond to hold in a government account.  This counts as outstanding debt, but it isn't the more meaningful "debt held by the public."  The debt ceiling constrains the somewhat meaningless gross debt.  Of the $16.8 trillion in total debt, $12 trillion is owed to the public and $4.8 trillion is held by the U.S. government.  Below I have a picture of where those government Treasuries end up.