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  • Federal Government Could Reduce Debt by $1.5 Trillion with a Sale of Unneeded Assets

    As Congress and the President scramble around for budget cuts, caps and freezes, all are ignoring a wealth of federally owned assets that serve little or no purpose to our nation. If sold, the proceeds would measure in the hundreds of billions and would take a significant chunk out of the public debt. It would also result in lower interest payments, which today are the fourth largest item on the budget.

    $193 Billion from Gold
    The federal government currently holds about 9,000 tons of gold. These holdings have had no practical use since President Richard Nixon took the country off the gold standard in 1971. Some argue that this gold is necessary in case of a national emergency. What emergency could be greater than the rapidly approaching fiscal train wreck?

    Selling off just half of this gold would yield approximately $193 billion in revenues. Even with this sale, the United States would still easily have the largest gold reserves of any country. Gold prices have been skyrocketing in recent years and are currently near record levels. Gold currently appears to have all the characteristics of an asset undergoing a price bubble, which will inevitably burst. Now is the time to sell.

    $500 Billion from Land and Mineral Rights
    The federal government owns about 650 million acres of land, nearly a third of the total land in the United States. The government also holds title to millions of subsurface acres teeming with valuable resources. Although some land and subsurface mineral holdings are being used for defense, national parks, or energy production (albeit inefficiently), a large portion is not being used for any purpose. Furthermore, federal agencies spend billions every year to “manage” these lands (doing a poor job, at that), and still continue to spend money on acquiring even more.

    Just selling off some of the non-defense, currently unused land and mineral rights could result in upwards of $500 billion for debt reduction. This sale would also remove a burden from state governments and open more area for private investment.

    $600 Billion from TARP Assets and the Direct Loan Portfolio
    The federal government has added an enormous amount of financial assets to its already large loan portfolio in recent years with the bailouts of AIG, the auto industry, Citigroup and others. There was little justification in purchasing these assets in the first place, and there is almost no justification in holding on to them now. Other federal loans include housing and urban development, rural housing services, water and environmental and international development. Liquidating some of these assets could raise as much as $600 billion, and would restore a free market environment for loans, encouraging efficient investment.

    More Fat to Trim
    There are numerous other assets that could be sold. For example, a report commissioned by President Obama found about 70,000 federally owned buildings that were either excess or under-utilized. In addition, the 2010 Financial Report of the US Government lists billions of dollars worth of excess and obsolete operating materials. On top of that, federally run utilities and other government-run operations could be sold, or at least required to charge market rates for their power or services. The revenues collected from selling these various assets could be hundreds of billions of dollars.

    A large-scale sale of this magnitude would be a significant first step toward paying down the federal government’s unsustainable debt. It would be relatively painless, not requiring any tax increases or spending decreases. It would also decrease annual interest payments by nearly $50 billion. Finally, it would free up more resources to be used by private enterprise rather than government activities. This would promote efficiency in the economy and increase tax revenues. A sale of unneeded federal assets should be a part of any serious debt-lowering proposal put forward in the coming months.

    John Kendrick is currently a member of the Young Leaders Program at the Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm

    Posted in Ongoing Priorities [slideshow_deploy]

    9 Responses to Federal Government Could Reduce Debt by $1.5 Trillion with a Sale of Unneeded Assets

    1. George Colgrove, VA says:

      Love it! We need a lot more thinking like this. I am not sure about selling the gold. I like it setting there in case we go back to the gold standard (i.e. getting rid of the federal reserve.) Here is another idea in this line. I would like to see every national park sold to the private sector with a few stipulations:

      1) The land stays open as it is now with the exception that the private sector developer/park management company is allowed to set up a limited amount of land to contain a limited number of hotels, restaurants, parking and shops to help fund caring for the lands. With creativity, these structures could fit well with the environment.

      2) The public shall have free access to the land by foot for hiking – however the private companies can charge for parking of cars, bikes or the like.

      3) The Private company is free of liable for people accessing the park "earth". So long as the company ensures all infrastructure meets all latest engineering standards, they cannot be held accountable for the safety of the terrain.

      4) The company be allowed to profit.

      5) The company must follow some minimum set of standards for park management, for which they can participate on the development of – in a democratic way. This would be done via a non-governmental private/public sector organization.

      6) The Department of the Interior is closed as it will no longer be needed – as if it is needed now.

      7) Each park shall be auctioned off to the highest bidder.

      8) All public park land in DC shall be deeded over to the the Smithsonian for free and should be managed by the Smithsonian. In this case the federal governemnt will only provide matching funds to the Smithsonian based on their fund raising and perhaps some minimal funding for the care of the property. This is the only exception I have for public lands. It would be a nightmare to manage otherwise. Plus I believe the Smithsonian would do a far better job making DC look awesome then a bunch of union feds. I would also sever the employment of the Smithsonian from the extreemily expensive and ineffective federal workforce, so their budgets and productivity could be more in line with the private sector.

      There is so much we can do to recover the orginal purchase costs and operatonal costs by selling off public lands, unused equipment, buildings, etc.

      When the public lands are in the hands of the private sector, they will be able to put a lot of value-added services and products that can make visiting these lands fun and far more enjoyable.

      Great Article!

    2. Wildcat from Dallast says:

      This concept is very illuminating. It reminds me of street savvy families who sell their unwanted excess material goods as an integral part of a comprehensive family financial plan to make tough choices to get their finances in order when combined with cutting spending on unnecessary services and goods.

      I would still maintain a significant amount of precious metals (gold and silver) as a viable hedge against such things like the IMF eventually replacing the dollar as the reserve currency. Regardless of what the IMF establishes as the reserve currency, gold and silver can be easily converted to that currency to buy such things as oil from OPEC etc. That is one reason why India, China and even Russia are all busy buying large quantities of gold; like 200 to 2000 tons at a time. The other happens to be the financial aftershock (hyper inflation) that Dick Morris has written about. They will get more of whatever the reserve currency is with gold than their own currency or dollars, especially since they can’t legally print more dollars like the U. S. government can.

      Just think if we actually cut the unnecessary (bloated) entitlements and did away with the federal agencies and departments that have not even got close to achieving their assigned objective since their inception. If we actually made necessary deep cuts, spent less money than we took in and started actually paying down the debt year after year we just might get out of this financial mess in the next 25 to 50 years just like a street savvy family would do (without printing more dollars) in a few tough months or possibly years.

    3. Jay Janson, Minnesot says:

      The extent to which the U.S. $ is backed with gold is the reason it remains the premium currency.

      That The Heritage Foundation or its representatives do not understand this undermines your credibility in economic issues.

      Read von Hayek, Murray Rothbard, George Reisman "The Capitalist" and, eventually, von Mises "Human Action"

    4. Pingback: » Financial and World News Update – 02/17/11 NoisyRoom.net: The Progressive Hunter

    5. Bobbie says:

      Great article! Great comments! SELL! SELL! SELL!…Make sure it's sold to Americans!

    6. Bob, Seattle, WA says:

      This sounds like a family selling their backyard because they don't use it at night. It wouldn't be painless and would end up costing more in the long run as the government would have to pay rent on buildings and land it previously owned. How is this any different a gimmick from states selling their capital buildings to balance their current budget?

    7. George Colgrove, VA says:

      Bob,

      You sell then vacate. Simple. I do not advocate selling occupied buildings.

    8. Lynda Moore says:

      Very well researched article and well written. One might also consider cutting more military spending. I hope to read more from this author. I am very impressed with his work.

    9. Prof. Harry Bliss says:

      How about LONG TERM LEASING rather than selling. And with stipulations attached to insure that foreign countries (such as China) and megabuyers (such as oil rich Middle Easterners) are limited in the amount of properties they can gobble up. LEASING would be for enough time (25 or more years) to allow the private sector landlords to build and attract customers for their concessions and/or products. Restrictions would need to be in place to insure that the leased land and/or structures would be well maintained and that no manufacturing, mining or agricultural uses would be destructive or polluting to the environment or constitute a health or safety hazard for users, customers or visitors.
      A FEDERAL LEASING PROGRAM to private enterprises is already in place and has been since the get go for grazing, mining, tree farming and other activities.
      It would be just a matter of opening up the other idle lands and buildings mentioned above to individuals, businesses and corporations who can make good use of otherwise unprofitable holdings which are, at present, costing the Federal Government quite a bit to just maintain.
      Another positive aspect to a LONG TERM LEASING PROGRAM would be the employment of otherwise unemployed or underemployed Americans to work on the development of the leased lands.

      Is anyone in DC considering these practical ideas? Or discussing them in Congress or the Cabinet ?
      There will be critics of this as there always are of any programs of 'change'. But this could work, and would subdue some of the criticism leveled at the idea of selling government owned ( that is, 'citizen owned') properties outright. And I would venture that the majority of the voting population would get behind such a program to reduce the crazy debt and interest that is hanging over all our heads.

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