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.
