Good grief! The Congressional summer recess ends tomorrow, and that means we’re all in danger again. President Obama will address Congress on Thursday with his latest plan to increase jobs and “get the economy moving again.” We don’t know what he’ll propose this time. But, I’m sure we’re all hopeful it will be an effective plan . . . I say, hopeful, not expecting.
So maybe it’s up to us as businessmen to impart some wisdom to the President and Congress on how they can cut down the federal budget deficit, reduce borrowing, and do it without increasing our taxes!
“No way,” you say? Well, think about this. In business, especially in lean times, we often sell off assets and equipment we no longer need or use to raise cash and steer away from more debt. That said, we must recognize that those in Washington only think one way -- spending more, borrowing more and collecting more from taxes! But, what if?
The federal government owns stuff that boggles the mind – lots of assets sitting idle and serving no purpose for the country. At least one estimate tops $1.6 trillion, according to the current issue of Trends (www.trends-magazine.com). Selling off some to the private sector needs to be seriously on the table. Here are some samples:
LAND: The federal government owns nearly one-third (650 million acres) of the total land in the nation. A small portion of these lands are used for defense, national parks, or energy production, leaving the majority unused. Still, the land costs billions annually just to manage and the government continues to buy more. Robert P. Murphy, writing “Privatizing Federal Government Assets” for the Library of Economics and Liberty (www.econlib.org), estimates $500 billion or more could be raised by selling unused land and the mineral rights. In addition, millions more acres underwater containing valuable resources are in the government's possession. So, let’s sell some and, very important, all the revenue must go to debt reduction, which would lower our annual service on that debt.
BUILDINGS: How about selling unused and underutilized federal buildings? Maintaining empty buildings actually costs money just to hold onto them. In 2010, Peter Orszag, former director of the Office of Management and Budget, estimated 70,000 federally owned buildings and structures were excess, under utilized, or not utilized, according to the Reason Foundation (www.reason.org). If each of these is worth an average of just $2 million, selling them would generate $140 billion, according to Anthony Randazzo and John M. Palatiello in “Knowing What You Own: An Efficient Government How-To Guide for Managing Federal Property Inventories.” Again, the proceeds must be used to reduce debt which lowers our annual service on that debt.
OIL: Offshore deposits unavailable for exploration due to federal regulations are estimated to contain 59 billion barrels of recoverable crude. One study concludes the impact of expedited offshore oil leasing will generate up to $164 billion and reduce trillions of U.S. dollars going to OPEC in the future. So, let’s sell leases.
The Trends editors offer other interesting ideas, ranging from selling half our 9,000 tons of gold for an estimated $200 billion (still leaving the U.S. with the largest stockpile of gold in the world) to raising $600 billion from TARP Assets and the Direct Loan Portfolio currently held by the government. The justification for buying such assets to bail out the auto industry, AIG and Citigroup, for example, was to restore confidence when private investors wouldn’t buy. There is no reason for keeping them now. Sell.
But here’s the catch – there’s always a catch and this one’s big! Selling assets must be linked to genuine, mandated spending cuts. If not, the danger is obvious . . . the government’s big spenders may sell assets to pay off some debt, but continue to spend even more. To them, it could feel like "free" money that they could spend on "meaningful" programs, not dull and boring debt reduction. After all, the latter won’t make for great re-election TV commercials! What do you think?