Final answer:
The answer is true; a substantial part of the U.S. public debt is owed to government trust funds and intra-governmental holdings, meaning the government owes the debt to itself. However, not all debt is internal, as foreigners hold a significant portion of the federal debt. Debt dynamics also affect interest payments and the deficit, but common beliefs about spending and taxing patterns may not always align with the data.
Step-by-step explanation:
True or false: The United States owes a substantial portion of the public debt to itself. The answer is true. A significant part of the U.S. public debt is indeed held by government trust funds and various intra-governmental holdings. This means that different parts of the government are in essence owing each other money. This kind of debt does not have the same economic impact as private debt since it involves one sector of the government borrowing from another, and the debts can be serviced through internal mechanisms such as tax revenues and issuing more bonds.
While the government can manage this internal debt through such measures, the U.S. also has debt owned by foreigners, which must be taken into account. As these funds are diverted out of the U.S. economy, it represents an actual loss of purchasing power to the country.
It's also worth noting that as the overall public debt increases, so does the burden of interest payments, which can contribute to growing the deficit regardless of other government spending levels. Nevertheless, this does not imply that all facets of government spending or taxes as a share of GDP have risen; several statements regarding spending and taxes listed are actually false when examined closely.