WASHINGTON - By collecting some aging IOUs, the U.S. government could shrink the budget deficit by half, without raising taxes or cutting spending. All it would have to do is reopen old war wounds, some dating as far back as World War I.The United States is owed a gargantuan $91 billion in debts from foreign countries that are unlikely to ever be fully recovered.
That breaks down to $27.4 billion arising from World War I, $1.2 billion from World War II, and $62.4 billion from the post World War II period, according to the Congressional Research Service.
Those that have fully repaid their World War I debt are Cuba, Finland, Greece, and Liberia. The deadbeats from World War I include this country's best friends. The nations owing us the most are Great Britain ($12.5 billion), France ($9.1 billion) and Italy ($2.7 billion.) Germany's World War I reparations to the other allied nations of $2.2 billion is as politically charged as the war itself.
Germany's repayment is tied to the problem of war reparations - the money Germany owes other countries for damage done during the war - and to other debts owed between European countries stemming from the war. Seventy years later, the issue of German war reparations remains unsettled, and many European countries say they won't make their payments on war debt to the U.S. until it is settled, since they had intended to use their reparations from Germany to pay back the U.S.
The Lend-Lease Act of 1941 gave the president the power to assist another country in its defense, if the defense seemed vital to U.S. security. That act is the source of most of the World War II debt.
The borrowers have said the United States implied that the assistance was its contribution to the war and would not have to be repaid.
The lend-lease assistance amounted to more than $40 billion. Five countries owe about 97 percent of the $1.2 billion that remains unpaid. They are the Soviet Union ($678.8 million), Great Britain ($325.5 million), China ($116.1 million), Indonesia ($26.4 million) and Iran ($23.3 million).
Since World War II, the bulk of foreign debt is linked to military assistance, non-military foreign aid, and trade financing. Debt stemming from the Export-Import Bank Act, the various foreign assistance acts, the Agricultural Trade Development and Assistance Act, the Commodity Credit Corporation and other small programs amounts to more than $62 billion.
The five biggest foreign welfare cases have been Israel, Egypt, Turkey, India and Pakistan. The debts range from Israel's $8.5 billion to Pakistan's $1.9 billion.
America has been a generous banker to the world but has not been a very thorough collection agent.
For that reason, the government will always find it easier to go back to the taxpayers for more rather than lean on foreign countries to pay their debts.