The Deficit Challenge Turns to Government Assets...
In a blog post yesterday, Donald Marron discussed an additional way for governments to ease budget pressures along with traditional spending cuts and tax increases. Dr. Marron noted that governments can also sell some of their assets (a proposition that is getting increasing international attention -- the focus of a Washington Post Op-Ed this morning -- in light of several German lawmakers' suggestion last week that Greece sell some of its assets).
Dr. Marron highlights that the government owns almost three trillion in assets; but while many of these -- such as government buildings and Navy ships -- are not sellable, the government owns hundreds of billions worth of financial assets.
Let's see how much the government could earn by selling some of these more notable assets...
The Financial Report of the U.S. Government shows us that the U.S. government owns $2.7 trillion in assets, up from just $2 trillion last year. These assets can be broken down into cash, international monetary assets, loans, mortgage-backed securities, and stocks. The CBO also reports the potential 10-year savings from selling portions of several agencies.
Net Value of Assets /
Ten-Year Savings1 (billions)
|Sell Treasury Holdings of Fannie/Freddie MBS||$221|
|Sell Government-Held Gold^||$292|
|Sell Portion of Tennessee Valley Authority's Assets||$161|
|Reduce Size of Strategic Petroleum Reserve||$51|
|Sell the Southeastern Power Administration#||$11|
|Sell Inventories Purchased for Resale||$89|
|Sell Excess, Obsolete, and Unserviceable Invetory||$8|
|Sell Excess, Obsolete, and Unserviceable Operating Materials||$4|
|Sell Stockpile Materials Held for Sale||$1|
Sources: Financial Report of the U.S. Government, CBO Budget Options: August 2009, author's calculations.
1 Ten-year cost savings for selected sales taken from CBO Budget Options, and reflect savings between 2010 and 2019.
^ The Financial Report show the government's holdings of gold equaling $11.1 billion as of September 9, 2009. However, as Donald Marron pointed out, this number assumes that the 261,498,900 ounces of gold is valued at the statutory price of $42.2/ounce. On March 9, 2010, the value of gold was over 26 times greater at $1,118/ounce, bringing the current value of these holdings to over $292 billion.
# Includes savings of $60 million a year in related costs and projects between 2013 - 2019.
The table above shows that the U.S. could earn over $600 billion by selling some of its many assets. Asset sales would not necessarily change the "net liabilities" of government (as we discuss here), but would reduce the debt. Yet, sales of this type would be one-time fixes to our country's annual deficits and would not change the unsustainable fiscal trends we now face.
We aren't advocating for such asset sales -- we're just trying to show how much the government could save by doing so. Marron notes that many U.S. government assets, such as stewardship and heritage sites, haven't been given dollar values, nor should they. But in the immense pile of assets the government owns - we agree with Marron that there have got to be some sellable assets in there somewhere.
See our list of previous Deficit Challenges: