“If the Fed raises interest rates the federal budget deficit goes into a death spiral as interest costs eat up a higher and higher percentage of the budget.”
That used to be the case, but now the government mostly borrows from itself. Interest matters a lot less.
This chart is a year old but shows a lot of foreign countries holding big bucks in US debt:
https://www.statista.com/statistics/246420/major-foreign-holders-of-us-treasury-debt/