With the debt ceiling negotiations deadlocked, politicians are struggling to fix the nation's fiscal woes. Republicans refuse to raise taxes, and Democrats resist substantial spending cuts. Both are avoiding a solution which requires neither.
The federal government owns more than $3 trillion worth of assets. Many are underutilized, and would be more productive if shifted to private hands.
Some are completely unused. Selling even a portion of these assets would greatly reduce the borrowing necessary to keep the government running.
A good place to start would be federal land. The federal government owns about 650 million acres of land, or nearly a third of the entire country. There is no reason for the government to own this much land. They have proven to be ineffective in both economic and ecological management.
The environmental protection of many national parks is neglected by government administrators whose incentives are for a larger bureaucracy and a larger budget.
All national parks and other environmentally sensitive areas should be put in the hands of private conservation groups. Organizations such as the Audubon Society and the Sierra Club have a stellar record of managing such spaces.
However, these lands make up a small portion of the government's total. Much land is already being used for economic purposes such as mining, grazing and logging.
Areas such as these should be sold to private buyers, who will certainly manage these resources more efficiently. In terms of debt reduction, the federal government values its land and mineral rights at $753 billion, so even a partial sale could yield significant revenues.
Land isn't the only asset that the government is sitting on. There are currently about 9,000 tons of gold sitting in vaults at Fort Knox and the New York Federal Reserve. These are the United States' gold reserves, worth about $430 billion at current market prices.
These reserves have served no real purpose since the dollar was taken 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? Even though the price would drop with the announcement of a sale, current prices are so inflated that the government would still get a great value. Why not put the gold into the hands of the American people?
Another great way to reduce the debt would be privatizing federal business ventures. The government runs several companies in industries already proven to be effectively served by the private sector. The most prominent examples of these are the Postal Service, Amtrak, and federal power companies like the Tennessee Valley Authority.
Bureaucrat administrators do not have incentives for efficiency or effectiveness, and thus these agencies are prone to cost overruns and mismanagement.
Often they are also faced by obstacles outside their control. (Consider a very unprofitable Amtrak line; a manager knows it makes sense to shut it down, but realizes he cannot because it has a stop in the congressional district of a very powerful representative.)
Usually, the only arguments for continuing government involvement are based on narrow self-interest. Residents of Tennessee want to keep their cheap subsidized electricity, postal workers unions want to keep their generous pensions, but both are benefiting at the expense of the nation at large.
In terms of sale revenues, the TVA alone is worth $13 billion, according to NASDAQ. A large-scale privatization of all federal business ventures could reduce the debt by tens of billions.
There are still more unneeded assets. The Treasury's 2010 financial report states that over $10 billion worth of government operating materials and inventory are "excess."
This includes everything from vehicles to office supplies. In addition, a report commissioned by President Obama identified nearly 70,000 federally managed buildings as either excess or underutilized.
Clearly, there is a great deal of money that could be raised through a sale of federal assets. If the government just sold off half its land, half its gold, and all excess property, and privatized its business ventures, it could reduce the debt by well over $600 billion.
That would give Congress and the president more time to develop a comprehensive plan to reduce future deficit spending.
It is absurd for the government to forgo vast potential revenues by holding on to these unneeded assets. This is especially true given the magnitude of the fiscal crisis we are facing.
In terms of politics, this is not a partisan issue. Facing deadlock over taxes and spending, both sides should look to asset sales as a third option to lower the debt.
John Kendrick is a rising senior at William & Mary College in Williamsburg, Va.
