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