A Social Security Liquidation Sale

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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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