The United States' foreign debt burden climbed to $368.2 billion in 1987, a sharp 36.8 percent rise over the previous year, as the country lengthened its lead as the world's largest debtor nation. The Commerce Department said the new debt total was $99 billion higher than the $269.2 billion in debt to foreigners that the United States owed at the end of 1986. The debt means that foreigners now own more in U.S. assets than Americans own abroad. For 1987, the government reported that foreign holdings in the United States increased to $1.54 trillion from $1.34 trillion at the end of 1986. American investments overseas totaled $1.17 trillion at the close of 1987, up from $1.07 trillion a year earlier. The difference between foreign investments in this country and American holdings overseas represents the $368.2 billion debt burden the country is carrying. The country now has a debt load greater than the combined total of Brazil, Mexico and Argentina, the Third World countries with the largest debt burdens. Critics have charged that the transformation of the United States from the world's largest creditor nation, a position it held as recently as 1983, to the world's biggest debtor is the chief failure of President Reagan's economic policies. Democrats, who hope to use the issue to their advantage in this year's presidential campaign, have charged that the burgeoning debt is eroding America's political and economic standing in the world. But the administration on Thursday sought to minimize the annual accounting of the country's investment position, contending that the figures were a sign of strength showing foreigners still believed America was an excellent place to invest. The United States had an investment surplus of $89.4 billion as recently as 1983. That surplus fell to $3.5 billion in 1984 and disappeared altogether in 1985, the year the country became a net debtor for the first time in 71 years with a debt of $110.7 billion. America's investment surplus has evaporated as the country ran up huge merchandise trade deficits during the 1980s, transferring billions of dollars into the hands of foreigners to pay for color televisions, stereo equipment and automobiles. These dollars, now in foreign hands, have been reinvested in the United States in everything from government bonds to real estate, triggering alarm bells and calls in Congress for curbs on foreign investment. Commerce Undersecretary Robert Ortner, briefing reporters Thursday, said the administration was adamantly opposed to curbs being placed on foreign investment in the United States. He also objected to comparing the United States to Third World countries, saying unlike Brazil, the United States owes its debt in its own currency. Private economists have contended that the growing debt burden has already begun to lower Americans' standard of living as more and more money must be transferred into the hands of foreigners in the form of interest payments and dividends. But Ortner said he believed most Americans regarded the entire debate as a ``big yawn.'' He said that even with the growth in foreign investment, the debt still represents only about 4 percent to 5 percent of the country's total assets. Ortner said foreigners own about 17 percent of U.S. Treasury securities and about 12 percent of manufacturing assets in the United States. ``I am not calling this report good news. I am trying to argue that it isn't terrible news,'' he said. Ortner refused to make any projection about how large the debt would grow in coming years, but private economists have estimated it could top $1 trillion in the early 1990s before it begins to level off. ``We are losing control over our own economy and our capital markets. This money doesn't come free,'' said Lawrence Chimerine, president of the WEFA Group, an economic consulting firm in Bala Cynwyd, Pa. C. Fred Bergsten, director of the Institute for International Economics, said the United States has become hostage to the whims of foreign investors. He said foreign uneasiness with a plunging U.S. dollar and rising interest rates was an underlying cause of last October's stock market collapse. ``As long as the United States has to rely on foreign financing of such magnitudes, events could at literally any moment trigger a sharp turndown in our economy,'' he said. The Commerce Department report said that foreign direct investment in the United States, defined as ownership of at least a 10 percent stake in a company, had climbed 18.8 percent to $261.9 billion in 1987. The nation whose citizens had the biggest share of that investment was Britain, with $74.9 billion, followed by the Netherlands at $47 billion and Japan at $33.4 billion.
