the Numbers

My thoughs on the numbers.
The federal debt is divided into two part, that held by the government and that held by the public. Government debt is an internal matter, as when the government takes money from unspent social security taxes to use for non social security functions. This debt only affect the future when it has to be paid. If social security intake exceeds that of intake, this repayment can be put off. As far as i know this debt to social security is not being repaid at the moment. The second part of the federal debt is referred to as public debt. This exists in the form of treasury bills primarily, in essence an IOU by the government to the holder of the bills.
As of 2004 the total deficit is 7.379 trillions, 3.072 of which is held by the government and 4.307 of which is held by the public. The feds have had a deficit since 1835.
Lets look at the concern regarding federal debt own by (not owed by) the public. By public it also includes banks, corporations, state and local governments, and the average citizen investors. The concern here is that instead of spending money on ways to stimulate the economy, the money is "locked" into the deficit. However, lets consider that many, individuals as well as financial investment companies, treat this as the preferred investment; the guaranteed of future return is thus very safe and reassuring. This money would not have gone into the general economy as it was not heading that way anyway. In addition about 20-25% of the "public" debt is held by foreign entities and they do so also because of reliability of a future return. Would they have invested in US companies instead? Why didn't they do so to begin with?

Certainly it would be better to opperate without a deficit. But as to its actual impact on the economy is still theoretical for the following reasons.
1. 180 years of deficit and we are still growing. As far as i know there has been little direct correlation between a high deficit and poor economic growth. Most periods of high deficits were during wars, the civil war, ww1, the depression, ww2, vietnam, WoT.
2. Would the public actually put money into the economy instead, rather than say precious metals or beneath the mattress? Theoretical at best.

It is interesting that by "privatizing" social security, even a portion of it, more money is directed to the economy and less is available for the government to "borrow/steal" from.