Neither President Obama nor Speaker John Boehner have said a word about the hundreds of billions of dollars that China owes America. Don’t they know about it? They arm-wrestle over the budget, the deficit and the debt ceiling, but they ignore a quick fix: get communist China to pay its debt to American citizens and the U.S. Treasury. What Chinese debt, you ask?
From 1900 to 1938, the government of China, like many other governments including our own, took on sovereign debt and issued bonds based on their full faith and credit. The American Bondholders Foundation (ABF) has testified before Congress that thousands of American families bought and still hold those bonds, relying on the fact that the U.S. Treasury bought them too. But then, when Mao ran Chiang Kai-shek off to Taiwan in 1949, the communists refused to pay interest or principal on the bonds issued earlier by their enemy, the “reactionary” Kuomintang administration. For over 60 years, American families have been bilked by communist China.
In 2001, the ABF was founded by Jonna Bianco after the Department of State, the Treasury, and the National Security Council told her they had decided not to pursue China’s default on its sovereign debt since it was a “private citizen’s matter” and besides, they had more important things to do. But what about the Chinese bonds held by the U.S. Treasury? It is one thing for China to stiff 20,000 low- and middle-income U.S. citizens, and an entirely different thing to stiff 315 million Americans whose tax dollars were used to buy those sovereign bonds. What we are talking about, says Ms. Bianco, is $750 billion!
Nobody knows how many of those bonds are in U.S. Treasury vaults, so on March 13th, 10 members of Congress asked Mr. Gene Dodaro, the comptroller general of the United States, to conduct a survey and find out. Those signing the letter were Representatives Ken Calvert, Edward Royce, Lynn Westmoreland, Jeff Miller, Frank Wolf, Steve Pearce, Paul Gosar, Ann Marie Buerkle and Marsha Blackburn, plus Senator James Inhofe. Then on April 6th, Congressman Gary Miller wrote to Treasury Secretary Timothy Geithner to ask the same questions. No replies yet. Perhaps Mitt Romney should ask President Obama if he knows where those bonds are hidden.
Communist China, it appears, owes the United States three quarters of a trillion dollars. Unfortunately, these days the word “trillion” has become rather commonplace. How many citizens flinched on July 31st last year, when President Obama and Speaker Boehner raised the national debt ceiling by $2.4 trillion? The following Sunday, President Obama said, “We are not done yet,” and he is doing his best to make good on his promise.
After that, on August 5th, the vastly liberal economist Paul Krugman wrote in The New York Times, “… a couple of trillion more or less barely signifies in the long term.” He did not say what would happen in the short term.
Then this year, on June 7th, Senator Jim DeMint asked Federal Reserve Chairman Ben Bernanke about ballooning interest payments on the runaway national debt. Mr. Bernanke replied, “A trillion there, a trillion here … doesn’t make that much difference.”
Let’s put it in perspective. A trillion barrels of oil would fuel the whole world for over 30 years. One trillion seconds equals 32,000 years, which means if you spend a dollar every second, 24/7, for 30,000 years you still have $53 billion left. A trillion is a big number even to communist China, which holds $1.4 trillion in U.S. Treasuries. Unlike China, we have never defaulted on those Treasuries. So, since China has seen fit to officially say in August of last year that the U.S. “should cure its addiction to debts,” it seems fair for President Obama to ask the Chinese to help cure our addiction by paying their debts.
But what if communist China simply continues to refuse to honor its sovereign debt, and tells us to get lost? That attitude did not sit well with the British. (China did not just sell bonds to America. China sold bonds worldwide, and estimates put that total debt at several trillion dollars.) When the Brits asked the communist Chinese to honor their debts in 1987, they refused, of course. Then the British government made it clear that if payment was not forthcoming, China would be barred from British financial markets. China suddenly found it prudent to pay British bondholders. There are now rumors that China is making a deal with France, too.
Wouldn’t it be grand if President Obama asked the Security and Exchange Commission to suspend all Chinese companies listed on all U.S. exchanges pending an audit? Think that would have an effect on Beijing’s attitude? Remember, it is communist China, and most of those companies are owned by the Chinese government, one way or another.
And wouldn’t it be grand if Mitt Romney asked President Obama to do it?
Chet Nagle is a former Pentagon official and CIA agent, and is the author of Iran Covenant.