A Social Security Liquidation Sale
by Gary Jason
http://www.lewrockwell.com/orig7/jason1.html
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It is obvious to everyone (except those completely blinded by liberalism) that Social Security in particular and entitlement spending in general is headed off a fiscal cliff. Our national debt stands at $7 trillion (give or take a few hundred billion dollars), and there is $10 trillion in unfunded Social Security liability. I won’t even mention the Medicare obligations, and such "minor" fiscal pits such as the Pension Benefit Guarantee Corporation, dicey Fannie Mae loans, and such like. I have seen truly frightening estimates that current "obligations" may be upwards of $40 trillion in all.
Now, faced with a huge debt load brought about by promiscuous spending, the average Joe or Josephine will declare bankruptcy and liquidate assets. While I don’t suggest that Uncle Sam declare bankruptcy, I do want to suggest that we look closely at the option of selling off assets. In the current discussions covered in the press on the issue of social security reform, I have heard every other proposal put forward but the one I am proposing. Some have suggested a dramatic lowering of benefits, while others – including to my dismay an ordinarily rather fiscally respectable Senator Lindsey Graham (R-S.C.) – have proposed jacking up payroll taxes, and still others have suggested "means testing" social security – which means telling (say) the wealthiest one-third of the populace that every nickel ever forcibly extracted from them as contribution to what was (and is) claimed to be an "absolutely secure" retirement system is being flat-out confiscated. (This is what happens when a Ponzi scheme collapses: many of the later investors eat it, while the earlier investors just laugh). But – again – nobody, Democrat or Republican, has explored the route all private individuals in a similar self-induced pickle would be forced to take, to wit, the liquidation of assets.
You, the reader, might wonder to which Federal assets I refer. I don’t have in mind the gold in Fort Knox – there is only about $100 billion of the shiny stuff, a laughable pittance compared to the near $20 trillion we owe. No, I have in mind two major assets: Federally owned companies and land.
Take the first. The Federal government owns among other things power facilities. We should look at selling off any and all of them. The original rationale for owning such utilities has obviously faded since the 1930s. We don’t need to target the rural South for electrification and development: the South has risen again, economically speaking. And the worry that private power companies would act monopolistically if we had no publicly owned utilities is belied by our current experience with private utilities. Moreover, the option of additional Federal regulation is always available. But I wouldn’t stop there. Amtrak (the National Railroad Passenger Corporation) is possibly saleable. Indeed, I would even look at privatizing the U. S. Postal Service – the parcel post portion of the business would be quite attractive to UPS or Fed Ex.
More importantly, there is land. The Federal government currently owns about 30% of all land in the U.S. It owns roughly 81% of Alaska, 42% of Arizona, 45% of California, 30% of Colorado, 60% of Idaho, 30% of Montana, 80% of Nevada, 33% of New Mexico, 52% of Oregon, 60% of Utah, 30% of Washington State, and 47% of Wyoming. (Even in the remaining states, in which the Feds own less than 10% of the land, we are talking about a huge amount of property). Now, a lot of this land is directly tied to the Defense Department, the Bureau of Indian Affairs, and the National Park System. I am not suggesting selling National Parks, military bases or Indian reservations, of course. But there is a huge amount of other land that could be sold, and since a lot of it is in states that are white hot from the real estate perspective – Arizona, California, Oregon, Washington State and Idaho in particular have all seen residential and commercial real estate values rocket up – sales of large chunks of land should bring in enormous revenue.
Now, selling off almost all unused Federal land would offend violently those of Greenish hue. The whole environmentalist focus over the last few decades has been in the opposite direction of what I am proposing (viz., Uncle Sam selling off his unused land). The enviros have been working hard – with, alas, considerable success – to take or tie up privately owned land without compensating the owners. So we can expect a battle royal. But by educating the public about how horribly the Feds have screwed up financially, about, that is, how profoundly in debt we really are, we may succeed in getting public support for selling the unused land.
If you think that my modest suggestion of paying down national debt by systematically selling off national assets is totally outré, you might reflect upon the recent announcement by the Japanese government that they are contemplating selling their $7 billion stake in the Central Japan Railway company as part of a large-scale sale of their assets to pay down their national debt (which is no less daunting than our own). This involves looking also at selling their holdings in other railway companies, as well as their holdings in the Nippon Telegraph & Telephone Corporation.
There would be several side benefits to such an asset sale. First, as the lands get sold, they would be developed, creating more businesses and more jobs. This would in turn add a lot to the tax base, increasing tax revenues at all levels of government. Second, by selling off Federally owned corporations, the large ongoing Federal subsidies would be ended, helping bring down the grotesque level of government spending.
Finally, and perhaps most importantly, a massive sell-off of Federal assets would concentrate people’s minds wonderfully regarding the virtue of fiscal responsibility. We might be able to privatize Social Security altogether (for those who choose freely to do so), and – if you will excuse me for dreaming here a bit – finally pass a balanced budget amendment. It might go like this: we set up a commission (say, of all living American Nobel laureate economists who would volunteer to serve) to identify all Federal assets that should be sold, and as they are sold, use the money to pay back (on a first come, first served basis) any person who wants to elect out of the Social Security system, returning to each person every nickel they have ever contributed (including the employer contributions).
October 10, 2006
Gary Jason [send him mail] is a writer, businessman and philosophy instructor in San Clemente, CA.
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