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California's debt ready to swallow the nation

Updated on June 21, 2012

China and Japan among major lenders helping California

California’s production of goods and services represents 13% of the nation’s economy. At the same time, California government’s $15.7 billion budget deficit represents about 29% of the total budget deficits of all states combined.

At least the state is not borrowing from China, or is it?

The budget deficit of California is usually discussed without reference to funds received from the federal government, yet California will get about $72.8 billion from Uncle Sam to add to the $92 billion or so the state plans to spend from state generated funds. That’s right; the real budget for California is closer to $165 billion when you add federal funds to the mix. Thus, 44% of the state’s expenditures are federally funded. About 16% of federal funding comes from foreign investors.

China is the top investor at $1.145 trillion, according to the U.S. Treasury department’s April, 2012 report. Rounding out the top three is Japan ($1.06 trillion) and certain oil exporting nations who loaned us a little over $252 million.

Of the $14.3 trillion in U.S. debt, about $5.15 trillion (36%) is held by foreign investors. The rest is held by U.S. investors. About 40 cents of every dollar spent by Washington D.C. is borrowed. Therefore, California is funded on debt, piled on debt, much of which is underwritten by foreign investors like China.


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      rickylicea 5 years ago

      I used to think this was a bad thing, but if the chinese are dumb enough to just give us money. Then why not take it and pay it back, - inflation that is.

      California is a different story, the unions control this state. They're supposed to care about the working class, but they rather have cuts to programs for the poor than for their own extravagant benefits.

    • ib radmasters profile image

      ib radmasters 5 years ago from Southern California


      I was wondering why my comment posted over 32 hours is nowhere to be found?

    • OCPerspective profile image

      OCPerspective 5 years ago from South Orange County California

      I agee that we are seeing the results of many years of selfish political leadership. I am working in my community to help get the facts out, and to inspire knowledgeable and capable people to get involved in politics. We can make a difference. A friend of mine who is very successful in business told me that the best way to complete a project is to get started. Let's get started on the balanced budget project.