Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, July 2, 1990 TAG: 9007020227
SECTION: NATIONAL/INTERNATIONAL PAGE: A/1 EDITION: EVENING
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The new assessment, based on data supplied today by the Commerce Department, showed that the United States increased its lead as the world's largest debtor country.
Unlike past years, the department did not publish the actual net debtor position of the United States although it did supply enough information on the component parts that simple math allowed the number to be derived.
The department defended its change by saying that the debtor figures as presently compiled were unreliable. Critics charged that the move was prompted by a desire to avoid publishing a report that has become a political embarrassment.
The Commerce Department report showed that U.S. holdings of overseas assets rose by $146.9 billion last year to $1.412 trillion, a gain of 11.6 percent.
But foreign holdings in the United States climbed at an even faster pace of 15.6 percent, rising by $279.6 billion to $2.076 trillion.
The net debtor position is the difference between America's assets abroad and foreign assets in the United States.
That difference grew to $663.75 billion last year, up from $531.08 billion in 1988. Some economists believe that debt total could surpass $1 trillion sometime in the next few years, a stunning reversal for a country that began the 1980s as the world's largest creditor nation.
As recently as 1983, the United States held the title of largest creditor, when it had an investment surplus of $89 billion. That surplus fell to $3.3 billion in 1984 and disappeared altogether in 1985, the year the country became a net debtor for the first time in 71 years.
The surplus was erased by the huge merchandise trade deficits the United States piled up during the 1980s as Americans transferred billions of dollars into the hands of foreigners to pay for imported cars and television sets.
Those dollars, now in foreign hands, have been reinvested in the United States in everything from U.S. Treasury bills to Los Angeles office buildings, setting off cries that America was transferring control of its economic destiny to foreigners.
Allan Young of the Commerce Department said there was no pressure from the Bush administration to halt publication of the net debtor figure. He said he took the action because of concern that the report understated the value of U.S. assets overseas by measuring those assets at their historical purchase price.
That undervalued the worth of U.S. assets in foreign countries, many of which were purchased decades ago, in comparison to foreign holdings in the United States, many purchased in the 1980s.
Young said the Commerce Department was working to produce a report that would give an up-to-date value on all assets, both foreign and U.S. holdings, and hoped to have that report ready in a year. If it is, the department will resume publishing a bottom-line figure, he said.
But private economists said they believed the final results still would show the United States as a net debtor.
Fred Bergsten, head of the Institute for International Economics, said that while the current report does understate the value of America's holdings overseas, it also understates foreign holdings in the United States because of errors in gathering data on foreign ownership.
by CNB