July 17, 2009
By Stuart M. Butler, Ph.D.
At a budget meeting early in his administration, President
Reagan pondered paying for part of the defense buildup by selling
off other assets. "I wonder how much we could get for Rhode
Island?" he joked.
Well, maybe not Rhode Island. But how about Nevada? The feds own
almost all the land there.
As every good business manager knows, rather than go further
into debt it often makes sense to finance new acquisitions by
selling off old, less productive assets.
Well, Congress has racked up trillions in new spending recently,
heaping up long-term debt to buy government assets, from General
Motors to new roads and bridges. This debt will be a huge financial
burden on our children and grandchildren.
Rather than saddle future generations with higher taxes, why not
pay off some of this debt by selling off something the government
has plenty of - land.
Uncle Sam owns almost 700 million acres of land - roughly a
million square miles. That's four times the area of California and
New York combined, and one-third of the entire country. This
federal footprint is heavily concentrated in the West. Uncle Sam
owns 85 percent of Nevada, 70 percent of Alaska and nearly half of
By contrast only 0.4 percent of Rhode Island is federally owned.
Mr. Reagan picked the wrong state to auction.
Most federal land holdings fall into three broad categories:
grazing land, where ranchers have access rights for their animals;
timberland, where trees can be harvested privately; and wilderness
and wildlife preserves.
In addition, the government owns just under a half-million
buildings, with about 3 billion square feet of office space (about
10 square feet for every American).
How much is all this worth?
It's hard to say, since the government refuses to place a
commercial value on its western land holdings. Still, using a
benchmark of $525 per acre, as some do, selling off just one third
of total federal holdings would bring in about $100 billion.
According to the Treasury's Financial Statement of the United
States, the commercial value of buildings and related land owned by
the government is nearly $400 billion, roughly half of which is
defense-related. Much of this is hardly a candidate for sale. But
the government routinely overlooks the commercial value of its own
property. It does little to figure out how to sell and trade
property to meet its office needs while generating sales
Taxpayers would be better served if Uncle Sam spun off much of
his holdings into regional real estate investment trusts, partly
sold off to commercial investors. These trusts would manage the
government's facility needs while generating sales revenue for
What about western land? Proposals to sell that are taken by
some to be akin to an attack on Smokey the Bear. But that reaction
overlooks many problems with excessive public ownership.
The major problem is that ownership by "the public" actually
means no direct ownership by anyone. So nobody, including
government agencies, has a real incentive to manage lands carefully
to enhance their long-term value. For instance, ranchers can buy
permits to graze their cattle on federal land, but because they
don't own it they are reluctant to invest their own money to
improve the land. Just like a tenant doesn't have much incentive to
maintain his landlord's apartment.
That's why market-oriented resource economists like John Baden
and Richard Stroup have long argued that novel forms of private
ownership would improve natural resources while bringing in money
to pay down debt. They point to examples of private fish streams in
Scotland and private wildlife management in parts of Africa as
In the U.S., environmental organizations like the Audubon
Society also have a long history of owning land. As owners, these
organizations have a strong incentive to permit careful use of
their land, such as allowing oil and other mineral exploration, to
raise revenue to pay for enhancements and to acquire other
So while much western land could and should be sold to private
investors, as it was in the east and Midwest many years ago, some
more environmentally sensitive land could be sold to joint ventures
headed up by environmental organizations. The result: money to pay
down debt together with better managed land.
The federal budget looks increasingly like an R-rated horror
movie, where Americans under 18 don't get to see the accumulating
debt in case they get nightmares. Any lawmaker with fiscal
integrity should be trying to stop the wave of debt. The next step
is to roll it back. And Congress could get things rolling the right
way by selling federal land - in ways that produce better
management as well as raise cash.
M. Butler, Ph.D., is Vice President for Domestic and Economic
Policy Studies at The Heritage Foundation.
First Appeared in the Washington Times
At a budget meeting early in his administration, President Reagan pondered paying for part of the defense buildup by selling off other assets. "I wonder how much we could get for Rhode Island?" he joked.
Enterprise & Free Markets Initiative of the Leadership for America Campaign
Stuart M. Butler, Ph.D.
Distinguished Fellow and Director, Center for Policy Innovation
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