Wanna Buy the Brooklyn Bridge?

When individuals get low in cash and high in debt, they often sell off old jewelry that they can afford to live without, get rid of the extra car, liquate the pension plan, sell the second home if they have one or mortgage the old farm as far as it can go. Why the government can’t do the same thing, ask a number of conservative economists, seeking to get America’s debt under control?

Noting that the United States has long been off the gold standard for years, they eye the mega stash of gold bars in Fort Knox – 147 million ounces – as a huge treasure trove of deficit reduction. Assuming that dumping that much gold doesn’t tank the price (they’d have to do it slowly or risk eroding the price well below the $1,500/oz target), that alone could reduce the deficit by almost a quarter trillion dollars! Well over a third of a trillion if you take all of this nation’s gold reserves into consideration. But then the gold would be gone… forever. And just think what how the markets would react at the obvious desperation such a sale would signal.

“The United States may have run up a huge debt, but it is not a poor country by any stretch of the imagination. The federal government owns roughly 650 million acres of land, close to a third of the nation’s total land mass. Plus a million buildings. Plus electrical utilities like the Tennessee Valley Authority. And an interstate highway system.” Washington Post, May 16^th. Why should the United States be in the electrical power generation business? The government organized Amtrak in 1971 to continue passenger rail service over 21,000 miles of track, thus rescuing the railroad industry at a critical time, but can continued government involvement still be justified? Can UPS or FedEx replace the Postal Service? It may have taken a government to construct the dams and water projects necessary to generate hydroelectric power (think Tennessee Valley Authority, Hoover Dam, etc.), but running these operations might best be relegated to the private sector, argue some. Even the Interstate Highway system might do better – vis-à-vis repairs and maintenance – argue others; this system too should be sold into the private sector. Tolls might skyrocket, but that may be the price of financial stabilization. Picture the public offering… and the fees to Wall Street (argh!) that would be generated along the way.

We’re in hock up to our eyeballs, and we are killing ourselves by not reinvesting in education, research and improving the infrastructure we have (maybe privatizing some of it would help). We’re cutting where we need to increase spending while wasting billions in military campaigns that are not exactly going our way. With Congress mired in conflict over raising the debt limit, something has to give: “The debt limit, or debt ceiling, is set by Congress as the maximum debt the federal government can carry. Congress last raised the limit in February 2010, to just under $14.3 trillion (which includes money the Treasury owes to government trust funds, such as Social Security). The Treasury Department projects that the limit will be reached Monday, but that ‘extraordinary measures’ that involve the shifting of money among different accounts can keep the government flush until Aug. 2.

“The Obama administration has said that it needs to borrow an average of $125 billion a month to keep paying its bills and meeting its obligations under current law. Although the raising of the debt limit has historically been viewed as a noxious necessity — to fail to do so would raise the specter of the government defaulting — Republicans in Congress have insisted that any increase this time be tied to long-term spending cuts.” The Post. The incumbents aren’t opposed to selling off some of America’s hard assets, but no one in government has exactly set a schedule of priorities of a plan to implement this strategy. No one’s talking about selling off the art treasures in the National Gallery, but ideas not too far from that notion are being bandied about. What do you think about the possibilities, and if you think the government should sell some assets, what are your ideas of what is expendable that someone would actually pay for?

I’m Peter Dekom, and tough problems require tough solutions.