text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Foreign-Held Debt Transparency and 
  Threat Assessment Act''.
  
  SEC. 2. DEFINITIONS.
  
      In this Act:
              (1) Appropriate congressional committees.--The term 
          ``appropriate congressional committees'' means the following:
                      (A) The Committee on Armed Services, the Committee 
                  on Foreign Relations, the Committee on Finance, and the 
                  Committee on the Budget of the Senate.
                      (B) The Committee on Armed Services, the Committee 
                  on Foreign Affairs, the Committee on Ways and Means, 
                  and the Committee on the Budget of the House of 
                  Representatives.
              (2) Debt instruments of the united states.--The term ``debt 
          instruments of the United States'' means all bills, notes, and 
          bonds issued or guaranteed by the United States or by an entity 
          of the United States Government, including any Government-
          sponsored enterprise.
  
  SEC. 3. FINDINGS.
  
      Congress makes the following findings:
              (1) On March 16, 2006, the United States Senate debated and 
          then narrowly passed legislation, H.J. Res. 47, to increase the 
          statutory limit on the public debt of the United States. In a 
          statement published in the Congressional Record, then-Senator 
          Barack Obama opposed the legislation and stated, ``The fact 
          that we are here today to debate raising America's debt limit 
          is a sign of leadership failure. It is a sign that the U.S. 
          Government can't pay its own bills. It is a sign that we now 
          depend on ongoing financial assistance from foreign countries 
          to finance our Government's reckless fiscal policies.''. Then-
          Senator Obama went on to say that ``Increasing America's debt 
          weakens us domestically and internationally. Leadership means 
          that `the buck stops here'. Instead, Washington is shifting the 
          burden of bad choices today onto the backs of our children and 
          grandchildren. America has a debt problem and a failure of 
          leadership. Americans deserve better.''.
              (2) On February 25, 2010, United States Secretary of State, 
          Hillary Rodham Clinton, urged members of Congress to address 
          the Federal budget deficit: ``We have to address this deficit 
          and the debt of the United States as a matter of national 
          security, not only as a matter of economics. I do not like to 
          be in a position where the United States is a debtor nation to 
          the extent that we are.''. The Secretary went on to say that 
          reliance on foreign creditors has hit the United States 
          ``ability to protect our security, to manage difficult problems 
          and to show the leadership that we deserve.''.
              (3) On February 16, 2011, Admiral Mike Mullen, Chairman of 
          the Joint Chiefs of Staff, testified before the Committee on 
          Armed Services of the Senate: ``Indeed, I believe that our debt 
          is the greatest threat to our national security. If we as a 
          country do not address our fiscal imbalances in the near-term, 
          our national power will erode, and the costs to our ability to 
          maintain and sustain influence could be great.''.
              (4) The Department of the Treasury borrows from the private 
          economy by selling securities, including Treasury bills, notes, 
          and bonds, in order to finance the Federal budget deficit. This 
          additional borrowing to finance the deficit adds to the Federal 
          debt.
              (5) The Federal debt stands at more than 
          $14,345,000,000,000.
              (6) According to a report issued by the Department of the 
          Treasury on May 16, 2011, entitled ``Major Foreign Holders of 
          Treasury Securities'', foreign holdings of United States 
          Treasury securities stood at more than $3,175,000,000,000 at 
          the end of March 2011. The People's Republic of China was the 
          single largest holder with holdings of more than 
          $1,144,000,000,000.
              (7) Despite efforts by the Department of the Treasury to 
          identify the nationality of the ultimate holders of United 
          States securities, including United States Treasury securities, 
          data pertaining to foreign holders of these securities may 
          still fail to reflect the true nationality of the foreign 
          entities involved. For example, another Department of the 
          Treasury report, issued on February 28, 2011, entitled 
          ``Preliminary Report on Foreign Holdings of U.S. Securities At 
          End-June 2010'', assigns $732,000,000,000 worth of United 
          States securities to the Cayman Islands, a British overseas 
          territory with a population of only 55,000 people. The Cayman 
          Islands is not itself a large investor in United States 
          securities; rather, it is a major international financial 
          center and is routinely used as a place to invest funds from 
          elsewhere.
              (8) On February 25, 2010, Simon Johnson, an economics 
          professor at the Massachusetts Institute of Technology and a 
          former chief economist for the International Monetary Fund, 
          testified before the U.S.-China Economic and Security Review 
          Commission that United States Treasury data understate Chinese 
          holdings of United States Government debt and ``do not reveal 
          the ultimate country of ownership when debt instruments are 
          held through an intermediary in another jurisdiction.''. He 
          stated that ``a great deal'' of the United Kingdom's increase 
          in United States Treasury securities last year ``may be due to 
          China placing offshore dollars in London-based banks'', which 
          are then used to purchase United States Treasury securities.
              (9) On February 25, 2010, Dr. Eswar Prasad, an economist at 
          Cornell University, testified before the U.S.-China Economic 
          and Security Review Commission that the amount of United States 
          debt held by the People's Republic of China is much higher than 
          United States Treasury data indicate. In his revised testimony, 
          Dr. Prasad went on to explain that China is probably currently 
          holding more than $1,300,000,000,000 in United States Treasury 
          securities.
              (10) According to a February 3, 2009, report by the 
          Heritage Foundation, entitled ``Chinese Foreign Investment: 
          Insist on Transparency'', the State Administration of Foreign 
          Exchange (SAFE) of the People's Republic of China, the 
          government body that purchases foreign securities, is the 
          single largest global investor and the largest foreign investor 
          in the United States.
              (11) According to a September 2008 Council on Foreign 
          Relations report entitled ``Sovereign Wealth and Sovereign 
          Power,'' ``. . . political might is often linked to financial 
          might, and a debtor's capacity to project military power hinges 
          on the support of its creditors . . . The United States' main 
          sources of financing are not allies.''. The report goes on to 
          argue that, ``the United States' current reliance on other 
          governments for financing represents an underappreciated 
          strategic vulnerability.''.
              (12) In recent years, Chinese military officials have 
          publicized the potential use of United States Treasury 
          securities as a means of influencing United States policy and 
          deterring specific United States actions. On February 8, 2010, 
          retired People's Liberation Army (PLA) Major General Luo Yuan, 
          from the PLA Academy of Military Science, stated in an 
          interview with state-controlled media that China could attack 
          the United States ``by oblique means and stealthy feints'', in 
          retaliation for United States arms sales to Taiwan. He went on 
          to say, ``Our retaliation should not be restricted to merely 
          military matters, and we should adopt a strategic package of 
          counterpunches covering politics, military affairs, diplomacy 
          and economics to treat both the symptoms and root cause of this 
          disease. For example, we could sanction them using economic 
          means, such as dumping some U.S. government bonds.''.
              (13) The PLA has also referenced the concept of nonmilitary 
          aspects of deterrence in written statements. A PLA textbook, 
          ``The Science of Military Strategy'', observes that there are 
          various forms of deterrence, including economic and 
          technological, all of which need to be developed and 
          consciously strengthened in order to maximize effect. These 
          forms will only work ``with the determination and volition of 
          employment of the force, and by dangling the word of deterrence 
          over the rival's head in case of necessity.''.
              (14) According to a May 16, 2011, report by ABC News, a 
          congressional delegation of 10 United States Senators visited 
          China in April 2011, and met with Chinese government officials. 
          The news report indicates that, during one meeting, the 
          Senators were reprimanded by a Chinese official regarding the 
          mounting United States Federal debt.
              (15) A February 7, 2010, report by Defense News suggests 
          that China's extensive holdings of United States Government 
          securities have already directly influenced United States 
          national security policy. According to an unnamed Pentagon 
          official, Obama Administration officials softened a draft of a 
          key national security document in order to avoid ``harsh 
          words'' that ``might upset Chinese officials at a time when the 
          United States and China are economically intertwined.''. The 
          news report indicates that these officials ``deleted several 
          passages and softened others about China's military buildup''. 
          This critical document, the 2010 Quadrennial Defense Review, 
          provides an assessment of long-term threats and challenges for 
          the Nation and is intended to guide military programs, plans, 
          and budgets in the coming decades.
              (16) The United States Government pays China a substantial 
          amount of interest on China's $1,144,000,000,000 in holdings of 
          United States Government debt, and this enhances China's 
          ability to fund its own military programs.
              (17) According to a March 4, 2011, report by Xinhua, the 
          official press agency of the government of the People's 
          Republic of China, China plans to increase its 2011 military 
          budget by 12.7 percent to 601,000,000,000 yuan (the equivalent 
          of $91,500,000,000). This increase is in addition to China's 
          2010 increase in its military budget of 7.5 percent.
              (18) According to the Department of Defense's (DoD) 2010 
          report entitled ``Military and Security Developments Involving 
          the People's Republic of China,'' the DoD estimates China's 
          actual total military-related spending for 2009 to be over 
          $150,000,000,000.
  
  SEC. 4. SENSE OF CONGRESS.
  
      It is the sense of Congress that--
              (1) the growing Federal debt of the United States has the 
          potential to jeopardize the national security and economic 
          stability of the United States;
              (2) the increasing dependence of the United States on 
          foreign creditors has the potential to make the United States 
          vulnerable to undue influence by certain foreign creditors in 
          national security and economic policymaking;
              (3) the People's Republic of China is the largest foreign 
          creditor of the United States, in terms of its overall holdings 
          of debt instruments of the United States;
              (4) the current level of transparency in the scope and 
          extent of foreign holdings of debt instruments of the United 
          States is inadequate and needs to be improved, particularly 
          regarding the holdings of the People's Republic of China;
              (5) through the People's Republic of China's large holdings 
          of debt instruments of the United States, China has become a 
          super creditor of the United States;
              (6) under certain circumstances, the holdings of the 
          People's Republic of China could give China a tool with which 
          China can try to manipulate the domestic and foreign 
          policymaking of the United States, including the United States 
          relationship with Taiwan;
              (7) under certain circumstances, if the People's Republic 
          of China were to be displeased with a given United States 
          policy or action, China could attempt to destabilize the United 
          States economy by rapidly divesting large portions of China's 
          holdings of debt instruments of the United States; and
              (8) the People's Republic of China's expansive holdings of 
          such debt instruments of the United States could potentially 
          pose a direct threat to the United States economy and to United 
          States national security. This potential threat is a 
          significant issue that warrants further analysis and 
          evaluation.
  
  SEC. 5. QUARTERLY REPORT ON RISKS POSED BY FOREIGN HOLDINGS OF DEBT 
                INSTRUMENTS OF THE UNITED STATES.
  
      (a) Quarterly Report.--Not later than March 31, June 30, September 
  30, and December 31 of each year, the President shall submit to the 
  appropriate congressional committees a report on the risks posed by 
  foreign holdings of debt instruments of the United States, in both 
  classified and unclassified form.
      (b) Matters To Be Included.--Each report submitted under this 
  section shall include the following:
              (1) The most recent data available on foreign holdings of 
          debt instruments of the United States, which data shall not be 
          older than the date that is 7 months preceding the date of the 
          report.
              (2) The country of domicile of all foreign creditors who 
          hold debt instruments of the United States.
              (3) The total amount of debt instruments of the United 
          States that are held by the foreign creditors, broken out by 
          the creditors' country of domicile and by public, quasi-public, 
          and private creditors.
              (4) For each foreign country listed in paragraph (2)--
                      (A) an analysis of the country's purpose in holding 
                  debt instruments of the United States and long-term 
                  intentions with regard to such debt instruments;
                      (B) an analysis of the current and foreseeable 
                  risks to the long-term national security and economic 
                  stability of the United States posed by each country's 
                  holdings of debt instruments of the United States; and
                      (C) a specific determination of whether the level 
                  of risk identified under subparagraph (B) is acceptable 
                  or unacceptable.
      (c) Public Availability.--The President shall make each report 
  required by subsection (a) available, in its unclassified form, to the 
  public by posting it on the Internet in a conspicuous manner and 
  location.
  
  SEC. 6. ANNUAL REPORT ON RISKS POSED BY THE FEDERAL DEBT OF THE UNITED 
                STATES.
  
      (a) In General.--Not later than December 31 of each year, the 
  Comptroller General of the United States shall submit to the 
  appropriate congressional committees a report on the risks to the 
  United States posed by the Federal debt of the United States.
      (b) Content of Report.--Each report submitted under this section 
  shall include the following:
              (1) An analysis of the current and foreseeable risks to the 
          long-term national security and economic stability of the 
          United States posed by the Federal debt of the United States.
              (2) A specific determination of whether the levels of risk 
          identified under paragraph (1) are sustainable.
              (3) If the determination under paragraph (2) is that the 
          levels of risk are unsustainable, specific recommendations for 
          reducing the levels of risk to sustainable levels, in a manner 
          that results in a reduction in Federal spending.
  
  SEC. 7. CORRECTIVE ACTION TO ADDRESS UNACCEPTABLE AND UNSUSTAINABLE 
                RISKS TO UNITED STATES NATIONAL SECURITY AND ECONOMIC 
                STABILITY.
  
      In any case in which the President determines under section 
  5(b)(4)(C) that a foreign country's holdings of debt instruments of the 
  United States pose an unacceptable risk to the long-term national 
  security or economic stability of the United States, the President 
  shall, within 30 days of the determination--
              (1) formulate a plan of action to reduce the risk level to 
          an acceptable and sustainable level, in a manner that results 
          in a reduction in Federal spending;
              (2) submit to the appropriate congressional committees a 
          report on the plan of action that includes a timeline for the 
          implementation of the plan and recommendations for any 
          legislative action that would be required to fully implement 
          the plan; and
              (3) move expeditiously to implement the plan in order to 
          protect the long-term national security and economic stability 
          of the United States.
target: Foreign-Held Debt Transparency and Threat Assessment Act - Expresses the sense of Congress about the growing federal debt of the United States, the increasing U.S. dependence on foreign creditors like the People's Republic of China, whose holdings could give China a tool with which to manipulate U.S. policymaking (including with respect to Taiwan) and pose a direct threat to the national economy and national security.
  
  Directs the President to report quarterly to certain congressional committees on the risks posed by foreign holdings of U.S. debt instruments, and make such report public on the Internet.
  
  Directs the President to formulate, report to the appropriate congressional committees, and implement a plan of action to reduce an unsustainable level of risk to an acceptable and sustainable level, in a manner that results in a reduction in federal spending, in any case in which the President makes specified determinations that a foreign country's holdings of U.S. debt instruments pose an unacceptable risk to long-term national security or economic stability of the United States.
feat_title: A bill to increase transparency regarding debt instruments of the United States held by foreign governments, to assess the risks to the United States of such holdings, and for other purposes.