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California's debt ready to swallow the nation
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.