Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, July 5, 1990 TAG: 9007050021
SECTION: BUSINESS PAGE: B-4 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The statistic in question is the annual assessment of America's global investment standing, which in the past few years has shown that the United States has gone from being the world's largest creditor nation to being the largest debtor nation.
The government says the figure is no longer reliable. Critics say the Bush administration is playing politics by not releasing it.
The report for 1989 - the "U.S. Net International Investment Position" - was scheduled to be released Monday. But last week, the government said that because of concern over the data, the report would not be released this year.
The Commerce Department's Bureau of Economic Analysis made public a scaled-down version of the investment flows but without the key bottom-line figure.
However, the component parts of the report made it possible by simple mathematics to determine that America's foreign debt burden last year surged 25 percent to $663.7 billion. The figure reflected the imbalance between what Americans owned overseas and what foreigners owned in this country.
At the end of 1988, the U.S. debt burden stood at $532.5 billion, up 41 percent from the previous year, the BEA reported last year.
But the BEA release this week did not have a figure on America's net debtor position.
The BEA reasoning: the net debtor number as presently calculated has so many flaws that it is no longer reliable.
BEA officials said they hoped to have a revamped report with more accurate figures ready for release in a year.
Some critics aren't persuaded.
"The reason they are not publishing the number is that it shows the United States in an unfavorable light," said Jeff Faux, head of the Economic Policy Institute, a labor-backed think tank.
The United States was the world's largest creditor country as recently as 1983, 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 plunge from largest creditor to largest debtor was caused 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 such things as imported cars and television sets.
Foreigners now have reinvested those dollars in the United States in everything from corporate stock and U.S. Treasury bills to Hollywood movie studios and Iowa farmland.
That has set off alarm bells from city hall to Congress over the "buying of America."
There have been complaints for a number of years that America's debtor position was being overstated because the report measured many of the assets at the historical purchase price.
That undervalued the worth of U.S. assets in foreign countries, many of which were purchased decades ago, in comparison with foreign holdings in the United States, many purchased in the 1980s.
The BEA is working to produce a report that will give an up-to-date current value on all assets, both foreign and U.S. holdings.
While applauding this effort at statistical consistency, private economists said they believed the final result will still show the United States as a net debtor with the amount of debt growing at an alarming rate.
by CNB