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The Public Policy
A Federal Black Friday
Raising taxes is not the only way big government could raise revenue.
Black Friday this year was a roaring success. I have heard it said that it is called Black Friday not because it inspires black tempers among shoppers, but because it’s the day on which businesses get out of the red and into the black. The federal government, of course, is deeply in the red. It could get, if not into the black, closer to it with a few well-placed sales of its own.
We have just been through an effort to reduce the deficit, of course. The obstructionist left-liberals on the late and unlamented Supercommittee were simply short on imagination. They appear to believe that the only way to raise revenue is to raise taxes. This is akin to a company in financial trouble saying that the only way to increase accounts receivable is to increase product sales. There are other things you can do. For instance, when Ford found itself short on cash during the crisis that hit the American auto industry, it sold off a prized asset, the Volvo brand, for $1.8 billion. This was a huge loss — Ford paid $6.5 billion for Volvo in 1999 — but it was a necessary way to raise needed revenue.
Congress has many similar options for raising revenue. The United States is sitting on a large hoard of assets. For instance, the federal government owns almost 30 percent of the land in the United States, most of which is controlled by the four federal land agencies and the Department of Defense. Many of these lands and other federal properties have high commercial potential. Selling some federal lands and buildings will put money in the federal treasury, put unproductive assets to use, and increase local property tax revenue as well as corporate and personal income taxes.
The Feds can also speed up the permitting process for new energy and extractive operations on federal lands. Congress can play its part by expediting the determination of companies’ compliance with the exhaustive environmental assessment requirements of laws like the National Environmental Policy Act (giving a short but appropriate window for challenge, of course). Pipeline projects, mines, and even solar power plants could start operating much more quickly on federal lands in this way, bringing in substantial non-tax federal revenue streams.
A speed-up in permitting is long overdue. For example, the Environmental Protection Agency’s (EPA) own Inspector General (IG) has just released a report that says the agency has been dragging its feet over the permitting of surface mines in the Appalachians. Almost half of the 185 permit applications reviewed by the IG took an average of 731 days to approve. The EPA says it should take just 144 days. That means that many projects endured almost two whole years of delay — two years during which those project could have been providing jobs, resources, and federal tax revenue, but couldn’t because of EPA ineptitude or possibly even intransigence.
The federal government holds many other valuable assets. Amtrak, for instance, is a continually loss-making service that would bring in cash if privatized. Not only are the track, trains, and stations worth something in themselves, but the opportunity to turn a money pit into a generator of tax revenue is one that many governments around the world have taken. Similarly, privatization of a host of government agencies would bring in revenue both immediately from the sale and into the future through taxation.
In many cases, agencies can be asked to cover their own costs by charging user fees. An example would be the U.S. Forest Service, which should charge users fair market value for recreation and other uses of the lands it manages. These fees would almost certainly recoup the service’s $5 billion operating budget.
Not all such assets are tangible. The federal government controls access to the electromagnetic spectrum used for telecommunications. Auctions of spectrum have raised $60 billion in revenues to date. Estimates suggest a further $16 billion could be raised from future auctions.
When Margaret Thatcher embarked on her privatization program in the UK, she was criticized for “selling off the family silver.” Yet by doing so she made the British family much more prosperous. From being the “sick man of Europe,” when much of its economy was state-owned, Britain became one of the most competitive economies in the world over the next decade following the privatizations. America faces a similar opportunity. All that’s needed is the political will.
About the Author
Iain Murray heads the Center for Economic Freedom at the Competitive Enterprise Institute and is the author of Stealing You Blind: How Government Fatcats Are Getting Rich Off of You.
Letter to the Editor View all comments (23) | Leave a comment
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c. j. acworth| 11.30.11 @ 6:50AM
Mr. Murray, you are right that Uncle Sam could raise revenue by selling off assets, perhaps quite a lot of revenue. Would the revenue thus raised go to paying down the debt, however, or be spent on another non-stimulating stimulus, or the next Solyndra? To ask the question is to answer it. One more time and all together now, "Revenue is not the problem, it's the spending, stupid!"
jan| 11.30.11 @ 5:05PM
WA DC would just piss the money away, GUARANTEED.
HIGH TIME FOR TERM LIMITS.
Bill Hussein O'Stalin| 11.30.11 @ 7:00AM
Washington isn't selling, it's spending to gather more power.
Timothy L. Pennell| 11.30.11 @ 7:24AM
How free is a Country, when its' Rulers own 30% of the Land? How is UTAH a State, when D.C. owns 80%?
This Land must be sold off. The Concept, of the Federal Government owning this much of THE PEOPLE'S COUNTRY, needs to be fought in Court.
This is one of the reasons that we left Europe. Because you couldn't Hunt or Fish or Grow Crops or Eat the Fruit from the Trees, on THE KING'S LAND.
The Tree of Liberty needs some serious Watering.
Mac Jehoff| 11.30.11 @ 8:36AM
This time from the blood of tyrants.
Timothy L. Pennell| 11.30.11 @ 11:20AM
Actually, I was thinking more along the lines of Gregory, Schieffer, Amanpour, anyone associated with MSNBC or CNN, and, of course Little Pinch and EVERYONE that works for him, and for the WAPO.
You wanna throw in some Tyrants?
Go for it.
TrueBlue| 11.30.11 @ 1:15PM
First problem, the federal government was NEVER meant to be our rulers. Federal employees are our servants, not the other way around. That's one of the massive changes in thinking that needs to occur in DC. They need to be reminded that they are there to serve US, not themselves, nor are we here to serve them in ANY fashion.
David W| 11.30.11 @ 9:36AM
I'll echo acworth - we don't need more revenue, we need to cut spending. Any additional revenue will be swallowed up on the massive spending. The "peace dividend" that will supposedly result from bringing troops back from Iraq and Afghanistan will be swallowed up by typical wasteful spending. We need to cut up the US credit card and spend within our means, just like any rational household head or company exec would.
Al Adab| 11.30.11 @ 10:11AM
"The wise King knows that low taxation prospers his kingdom" Ibn Khaldun
"That some become rich means that others may become rich." A. Lincoln
"A rising tide lifts all boats." JFK
"A wise and frugal government shall not take from the mouth of labor the bread it has earned." T. Jefferson
Why are we still having this conversation? The truth of taxation and spending is well understood.
Ned| 11.30.11 @ 10:15AM
I'm sure that the Corrupt-O-crats in the District of Corruption could come up with any number of ways to sell off the assets of the United States to their cronies in the Dimocrat party, lining their own pockets in the process. Those sales could generate billions in revenues... while our debt is measured in TRILLIONS. Anybody see a problem there?
TrueBlue| 11.30.11 @ 1:23PM
The lower upkeep would also lower spending slightly. That aside, the federal government shouldn't own any of that land to begin with. Other than land necessary for military bases and the offices of the various federal agencies.
Honestly, when you look at the fact the Constitution itself states how large the seat of federal government power WILL be, it's pretty definite that they shouldn't be using any significant portion of land. FBI, CIA, NSA, Defense (all easily put under the allowed federal powers of defense and general welfare of the country) are the only ones that use land outside the DC limits. I'm willing to give allowance for the National Parks as being under general welfare, but that's about it. Any waters off our coast not considered International Waters should be under control of the states, not the fed.
creeper| 11.30.11 @ 11:04AM
"Not only are the track, trains, and stations worth something in themselves..."
You need to do a little reading. Amtrak operates over more than 22,000 route miles. It owns 730 of those. Private railroads own the rest, allowing Amtrak to operate on their rail. In most cases private companies also own the stations. Please don't make recommendations like this without doing the research first.
TrueBlue| 11.30.11 @ 1:25PM
Doesn't change the fact Amtrak needs to be privatized completely.
da monk| 11.30.11 @ 12:22PM
To all you sellers: Who do you expect to buy the land? The Chinese? The land the government owns is OUR LAND, we the all the citizens of the United States own that land. If we sell that land the owners will charge us for the use of that land or do what they want to that land for good or bad. Think it over
TrueBlue| 11.30.11 @ 1:44PM
Except that it ISN'T our land. The federal government prevents the use of that land in many cases, so all it does is sit there soaking up care costs when the land could be used. The federal government should NOT own ANY land outside of the territory alloted for it in the Constitution (10 square miles). "To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the acceptance of Congress, become the Seat of the Government of the United States." Article I, Section 8
Nowhere in the Constitution does it say the Executive or Judicial Branch has the power to OWN land. Yet it DOES specifically say that if it's not listed as a power of the federal government then IT IS NOT A POWER OF THE FEDERAL GOVERNMENT, it's reserved for the States and the People.
Al Adab| 11.30.11 @ 1:46PM
Sales of federal lands can easily be for homestead purposes. Yes it becomes the property of the owner. That is known as property rights. Are you sugesting that the collective somehow has an ownership interest? If sales are used exclusivly to pay down the national debt that is a benefit for all.
Al Adab| 11.30.11 @ 1:48PM
I should add that leases for mineral rights or grazing purposes would profit as well. The idea that the land must be held "pristine" is silly. We have overstepped the original purpose of conservation.
DTOM| 11.30.11 @ 6:50PM
It should revert to the States!
Goldman| 11.30.11 @ 1:04PM
Well said da monk.
Skippy| 11.30.11 @ 1:48PM
Here in Wine Country, we voted a 1/4 cent sales tax to fund a system which purchases development rights for tracts and ranches deemed valuable to the community.
The landowners, usually longtime ranchers and pioneer families, get a big wad of cash to not build on their property.
Of course, the public who paid for it is not allowed to hike, hunt or enjoy the land at all, ever, as we might have a negative environmental impact. Or disturb the well-paid landowner.
Net reult, the enviro-elites get a pretty view of undeveloped ridgelines at the expense of the hoi-polloi.
Pretty sweet deal for the swells.
diviz| 11.30.11 @ 3:10PM
Too much of the electromagnetic spectrum is already locked up. Opening up more of the spectrum to public use would result in faster devlopment.
JC| 11.30.11 @ 9:17PM
The land could be sold to the liberal nation where its Marxist ideology could be tested without subsidy. ..sort of like North and South Korea. This would have a dual affect: No subsidizing liberals, and, when it fails, capitalists could move in at bargain basement prices!
POST American| 11.30.11 @ 10:06PM
--------------------BOTTOM LINE----------------------
---Raise revenue? ---rescind the TAX FREE
status of the ULTRA RICH, culture and sovereignty
subverting, 'benny violent', duplicitous
and TREASONOUS foundations and NGOs.
---------------UH, and that would be on the
way to the warm and unflinching prosecution
and abolition thereof for an entire century
of staged history that includes ---Bolshevik,
Nazi and Maoist genocide ---multiple armed
conflicts --world wars ---and, even now,
aggressive EUGENICS, and
CON-trived, USURY driven 'depressions'.
----------DO CUT TO THE CHASE.
------------------REALLY