Presenting the 60/40 Rule: NO MORE China buying U.S. Treasury Notes

Mitt Romney, during the first Presidential Debate of 2012, said, “I’m sorry, Jim. I’m going to stop the subsidy to PBS. I’m going to stop other things. I like PBS. I love Big Bird. I actually like you too. But I’m not going to — I’m not going to keep on spending money on things to borrow money from China to pay for it. That’s number one.”

In a previous post I opined how his plan is asinine, because it represents only 0.0012% of the budget.

In a separate post in a different forum, in a thread in response to the topic of cutting PBS, someone wrote that no one (agency) wanted to take a cut, and that Mr. Romney had a valid point about borrowing from China.

That is a concern, and a valid point with which I share similar sentiment, that not only is it bad fiscal policy to borrow, but it is even more dangerous to allow a majority share of any nation’s debt to be held by foreign nations, multinational corporations and others not loyal to the United States. It is a matter of national security, with which the Joint Forces Command – which issues one of the foundational documents for the entire defense planning process – came out with its joint operating environment document in 2009 and identified one of the top security threats to the United States as our debt. If our nation doesn’t resolve this problem – though I am certain we can – the cost of paying of interest on debt will crowd out the space for defense spending in the longer term.

My thoughts are that a new Congress – NOT this DO NOTHING Congress (about which I have written) – would be necessary before any advancement were made.

However, the idea is this: Congress should pass a law that specifically limits the value of Treasury Notes sold to foreign nations (that would be all nations), to Multi-National Corporations, and other entities whose holdings are predominately foreign-held.

For example, if by law, the value of Treasury Notes sold in one year to foreign nations and Multinational corporations was limited to be at, or under 40%, and that the total outstanding value of all Treasury Notes was similarly limited to be at, or under 40%, the remaining 60% would be held by domestic entities, which would also be required to have a majority share domestic holdings or ownership.

“How about instead, passing a law that we had to limit the sale of to a minority percentage of all annual sales, and all outstanding notes, that could NOT be sold to foreign, or foreign-controlled entities?

That would make better sense.

It’d be kinda’ like a bartender cutting off an obviously intoxicated patron.

We do that already, not only for their welfare, but for others’.