Where Did the Seattle-PI Learn Math?

I don't normally get my finance and economics news from the Seattle-PI, but I happened across this while reading about the Seahawks, and this article shows why.

The CBO says Japan, China and the United Kingdom have the biggest holdings of U.S. debt instruments. And, it's worth noting, that the United Kingdom is more of a broker than a purchaser.

In all, the CBO says, "investors from other countries purchased about $235 billion in Treasury securities last year."

Another agency, the Congressional Research Service, wrote a year or so ago that the burden of debt "depends on whether the debt is internally or externally held."

"When the national debt is externally held, the payment of interest abroad is a transfer of income from Americans to foreigners," the CRS said.

This is huge. We Americans are stingy when it comes to foreign aid. We don't invest a lot (in relative terms) to help poor nations climb out of poverty. The total spending on foreign aid is less than $20 billion (depending on how you count).

Yet without debate, without fanfare, we willingly send $235 billion as a transfer payment -- to Japan, China and other cash-rich nations, businesses and individuals.

Sounds nice, but there is one problem, we aren't sending $235 billion as a transfer payment. In fact the article previously states that the $235 billion is the amount that foreigners invested in us, so it would actually be more accurate to say that foreigners send us $235 billion in transfer payments. I don't have an exact number in what we pay in interest to foreigners, but as the article correctly points out we paid $352 billion in interest last year. Since foreigners own about 1/4 of the total debt, then that would be approximately $85 billion.

Bogus numbers aside, this article is just filled with bad economics. He also makes the statement.

By any measure, the interest on the debt is headed in the wrong direction.

Oh really, "by any measure" Well how about this measure?

2005 $352,350,252,507.90
2004 $321,566,323,971.29
2003 $318,148,529,151.51
2002 $332,536,958,599.42
2001 $359,507,635,242.41
2000 $361,997,734,302.36
1999 $353,511,471,722.87
1998 $363,823,722,920.26

Now this is not to say I am in favor of a deficit, I am not, I think it should be cut, but if you are going to make an argument against it, at least back it up with good economics. In my opinion, the problem that is more threatening is the impending cost of social security and medicare, not a federal debt, which although large, is at about the same proportion of GDP as it was 20 years ago.

UPDATE: After I e-mailed him Mark Trahant, to his credit, issued this correction:

Yet without debate, without fanfare, we willingly send about $72 billion as a transfer payment -- to Japan, China and other cash-rich nations, businesses and individuals. [Editor's Note: The amount of money we send as a transfer payment has been changed since the original publication of this column.]