Liquidating Unnecessary Federal Government Assets

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Published on Sep 2, 2011 in Issue 101 - September 2011, Economic Outlook, Politics

<strong>Liquid</strong>ating Unnecessary <strong>Federal Government Assets</strong>

Currently, the Federal government owns many types of assets that serve little or no purpose for the people of the United States. These assets are effectively sitting idle, not earning any return for the public. The market price of just the most easily identified of these assets is estimated to total at least $1.6 trillion. That's about equal to this year's entire Federal budget deficit.

Given the experience of other cash-strapped countries, legislators should mimic private-sector firms that frequently sell idle assets to avoid taking on more debt. Unfortunately, our government bureaucrats don't naturally think this way.

Instead, they borrow more or attempt to collect more revenue by raising tax rates, which is, of course, counterproductive when it shrinks the economy. Meanwhile, these assets sit idly by, their potential being wasted. In some cases, as in maintaining empty buildings, it actually costs the government money to hold onto them.

Just as private owners allocate resources to their best advantage, it seems reasonable that the government should begin privatizing some of its colossal holdings as part of the solution to the budget crisis.

These assets are made up of a combination of liquid and not-so-liquid holdings. Here are the six most promising categories:1

  1. 9,000 tons of gold are currently in the federal government's possession. Because we've been off the gold standard since 1971, there is no practical use for these holdings. The argument for retaining the gold is to save it for a national emergency. The question is: What emergency would be greater than the fiscal debt cliff we are quickly approaching? Selling just half of the gold would generate more than $200 billion in revenue — and it would still leave the U.S. with the largest stockpile of gold in the world. With gold prices at historic highs, now would be the time to sell.
  2. 650 million acres of land are owned by the federal government. This makes up nearly one-third of the total land in the U.S. In addition, millions of acres underwater, which also contain valuable resources, are in the government's possession. Although a tiny fraction of these holdings are used for things such as defense, national parks, or energy production, much of it is not being used. Furthermore, this land costs billions of dollars to manage e... To read the full article, you must be a Trends Magazine Subscriber. To learn more, click here

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