In the time it takes you to read this sentence, the national debt will have increased by almost $2 million. By the end of the hour, the national debt will have increased by almost $113 million; by the end of the day by over $2.7 billion.
In the aggregate, the federal government’s accumulating obligations are staggering. The total national debt exceeds $22 trillion. That’s larger than the entire Gross Domestic Product, and equal to more than $176,000 for every household in the country. And it’s close to four times the average national debt carried throughout our nation’s 243 year history.
In addition to the national debt, other federal obligations for unfunded entitlement programs like social Security and Medicare now total more than $95 trillion, an amount equal to more than $760,000 for every household in the country.
A recent report from Wall Street estimates that total federal government obligations of all kinds – including traditional debt instruments like bonds and notes, unfunded entitlement programs, intergovernmental borrowing, and public employee pensions and benefits – may actually exceed 1800 percent of our Gross Domestic Product.
We a driving into uncharted territory, with our real-time National Debt Clock clicking over like an odometer marking our relentless movement down the road toward fiscal perdition.
For years, economists have warned that our ever increasing debt burden will ultimately prove to be unsustainable. They have repeatedly advised that taxes must be raised and spending cut and entitlements reduced in some combination without delay before some unexpected economic dislocation precipitates a ruinous financial crisis.
Despite such warnings, most elected officials, Republicans and Democrats alike, have shown little interest in using cost containment or revenue enhancement to tame the debt. Some progressives have proposed higher taxes, but usually to justify even higher levels of spending.
Progressives also now seek to justify ever higher spending by referring to so-called Modern Monetary Theory. According to this theory, a government whose financial obligations are denominated in its own currency, like the United States, can expand its obligations without limit or consequence because its central bank can always simply print new money in whatever amounts are needed to meet the expanding obligations when they come due. Have a debt? Print the money. Presto!
“Modern” Monetary theory is really quite old. Down through the years, many governments have tried to print their way out of debt. Ultimately, none successfully avoided the deleterious economic consequences that always result from unsustainable debt. None.
So, what are we to do if too few will embrace the traditional tools of debt control and too many are prepared to embrace fallacious theories of public finance in order to minimize the threat that confronts us? There may, in fact, be another way to deal effectively with the government’s debts, one that does not require elected officials to enact politically unpopular and growth-retarding measures that raise taxes, cut spending, or reduce benefits. This alternative has been frequently discussed and sometimes implemented to a very limited extent, but it has never been fully embraced and implemented to an extent consistent with its great potential.
The federal government’s liabilities are certainly enormous. But so are its assets. The federal government owns over 300,000 buildings of all kinds, over 640 million acres of land, thousands of miles or roads and railway infrastructure, nearly 3500 dams, massive electric generation facilities, and much more. In addition, the federal government holds mineral rights for oil, gas, and ore deposits that several years ago were estimated to have a total value of more than $125 trillion.
An exact total valuation of the government’s assets is difficult to arrive at because of the different time periods, assumptions, and methodologies used to make particular estimates. Nevertheless, is seems reasonable to conclude that the total value of the government’s assets far exceeds its aggregate liabilities.
This raises a very important question. Putting aside assets like the national parks and historical monuments, and assets needed for national defense, what portion of the government’s remaining assets could it sell to pay down its debt and securely fund its currently unfunded entitlement commitments? We should find out the answer to that question.
Existing law, including the Federal Assets Sale and Transfer Act of 2016, obligates the federal government to manage its real and personal property efficiently and economically. Properties not needed to effectively support government programs are to be identified periodically and disposed of expeditiously to produce the highest value and best return for the taxpayer. President George W. Bush issued Executive Order No. 13327 in 2004 directing agencies to give increased management attention to the efficient and economical use of their real property assets. In June 2010, President Obama issued a Presidential Memorandum noting that the federal government has long held more real property than its needs to function effectively, and directing agencies to increase their efforts to identify and eliminate excess properties.
Despite the clear requirements and bipartisan directives, relatively few assets have actually been identified as excess and disposed of. Each particular proposal is always met with stiff resistance from the entrenched interests amassed around and benefitting from the status quo. This should not be surprising. Agencies and their constituencies are unlikely ever to agree that they have too much of anything needed to support their ever-expanding programs.
Nevertheless, the potential is so great for federal asset sales to shore up our national finances that the concept clearly deserves to be reconsidered. Candidate Trump floated the idea of selling off federal assets to cut the debt. Now, we should revisit the idea, thoroughly evaluate all the issues involved, and debate the possibility fully and fairly.
The place to start, as with every significant endeavor, is with a statement of purpose and plan, articulated with the clarity and force needed to rally support for the endeavor that is sufficient to overcome the resistance of those wedded to the status quo.
Such a statement would highlight the dire condition of the nation’s finances, the costs associated with traditional debt reduction policies, the vast extent of the government’s assets, and the obligation of elected officials to address our financial challenges using innovative policy solutions that do not retard the economic growth we must sustain or betray the legitimate and settled expectations of benefit program participants.
Such a statement would stress the vital importance of protecting assets like the nation’s parks and historical monuments, and maintaining the assets need for national defense. It would call for the development of a comprehensive and complete inventory of all the other assets currently held by the government. And it would call for the identification of all the statutory amendments and regulatory modifications needed to ensure that all the proceeds from any asset sales are dedicated to debt reduction, and to the secure and certain funding of currently unfunded entitlement programs.
Such an endeavor, if undertaken with seriousness, would be a dramatic departure from business as usual. It would be a truly challenging endeavor, with many significant issues to be debated and resolved. But America’s best moments occur when it takes bold steps to deal creatively with big problems. The old song rightly notes that “This land is your land, this land is my land; From California to the New York island.” The government’s land is our land, to be shared by all of us to secure the future for all of us.
Let the debate begin!
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J. Kennerly Davis, Jr. is a former Deputy Attorney General for Virginia whose duties in that capacity included state infrastructure and land use planning. He is a contributor to the Regulatory Transparency Project.