U.S. Offers Foreign Aid to Countries Holding Billions in Treasury Securities

The United States is providing hundreds of millions of dollars of foreign aid to countries that it borrows billions from, according to a report by Congress's research arm.

The Congressional Research Service released a report last month, a copy of which Fox News exclusively obtained, showing that in fiscal year 2010, the latest year that data was available, the U.S. handed out a total of $1.4 billion to 16 foreign countries that held at least $10 billion in Treasury securities, including China ($27.2 million), Brazil ($25 million), Russia ($71.5 million), India ($126.6 million), Mexico ($316.7 million) and Egypt ($255.7 million).

China is the largest holder of U.S. Treasury bonds with $1.1 trillion as of March, according to the Treasury Department. Brazil held $193.5 billion, Russia had $127.8 billion, India owned $39.8 billion, Mexico held $28.1 billion and Egypt had $15.3 billion.

The foreign aid to these countries is earmarked for a variety of causes, such as HIV/AIDs prevention, combating weapons of mass destruction, fighting tuberculosis, and counterterrorism efforts.

Sen. Tom Coburn, R-Okla., who requested the report, sounded the alarm.

"Borrowing money from countries who receive our aid is dangerous for both the donor and recipient," Coburn said in a written statement. "If countries can afford to buy our debt, perhaps they can afford to fund assistance programs on their own.

"At the same time, when we borrow from countries we are supposedly helping to develop, we put off hard budget choices here at home," he added. "The status quo creates co-dependency and financial risk at home and abroad."

The State Department did not respond to a request for comment.

The report arrives as lawmakers in Washington battle over the conditions for increasing the nation's ability to borrow money before defaulting on its obligations, which is scheduled to happen in August. The government reached its $14.3 trillion borrowing limit last month. Both sides agree that spending cuts are needed, but Republicans refuse to raise taxes that Democrats are insisting on.

President Obama has met privately with both sides this week over the issue, but no progress has been made. Moody's Investors Service said Thursday that if the parties don't make progress soon, it would place the U.S. rating under review for a possible downgrade.