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Could CA And U.S. Debt Be A Security Risk?
KFSN/ABC
By David Louie
January 24, 2007

Jan. 24 - KGO - The growing state and federal debt came under sharp attack today by Governor Schwarzenegger former budget director, Tom Campbell. The former South Bay congressman says our huge debt is a national security concern.

Governor Schwarzenegger today signed an executive order to make spending of bond money more transparent. The order covers the $43 billion in bonds voters approved in November to pay for highways, schools and levees.

Governor Arnold Schwarzenegger: "We have to now make sure that we follow through and be as fiscally responsible as possible."

However, bond debt and deficit budgets alarm Haas Business School Dean Tom Campbell. He told the Commonwealth Club today that the federal debt is now $6.3 trillion dollars and California's debt is $63 billion dollars. What that means is that for every $10 dollars in the federal and state budgets, $6 dollars goes toward debt payments and social programs -- fixed expenses -- leaving only $4 dollars to pay for everything else.

The federal and state debt figures are staggering and difficult to comprehend. But to make it more understandable, let's put it this way: to retire the federal debt would take 303 years, the California debt, 84 years.

So who owns our federal debt? Just over half of federal debt is owned by foreign countries:

-- 16 percent is held by Japan
-- 10 percent by China
-- 9 percent by the United Kingdom
-- 15 percent by other nations

Tom Campbell, Ph.D., J.D. Haas Business School Dean: "Is it possible that if the United States in its foreign policy would recognize Taiwan, then China might say, you do that, and we will sell all American debt on the market at one time -- and watch interest rates in America skyrocket."

Campbell says he's not exaggerating that such a move by China would double U.S. interest rates in less than a month. He says lawmakers must curb spending.

Tom Campbell: "No new or increased spending without identifying at the exact same time, and in the same legislation, the new revenue source or cutting somewhere else."

Copyright 2007, ABC7/KGO-TV/DT.

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