Yes, in an effort to alleviate the huge debt burden, President Barack Obama is mulling to sell more than 14,000 unnecessary federal constructions. According to an administrative official, Obama wants to create an independent panel that will review and recommend how the federal government can sell off its superfluous real estate or consolidate thousands of not-so-used constructions to save billions in taxpayer funds, the Associated Press reported last week.
Though selling government property has flared up controversy in recent years, what else could the government do to rid itself of a debt pile? At least it’s better to save taxpayers’ hard-earned money than keeping surplus — though time-honored — government properties for charity. We do agree with one of the controversies that selling government property will never solve the debt problem at its grassroots level, but it gives some relief to taxpayers.
Target Properties
The government owns about 650 million acres of land with 429,000 buildings. Out of these buildings, about 14,000 have so far been identified as unnecessary. Among others, a Brooklyn warehouse and five vacant buildings in Fort Worth, Texas, previously used by the National Archives, are the target properties for sale. The Brooklyn warehouse has been vacant for 10 years.
The Sale Trail
According to General Services Administration (GSA), which acts as the government’s property manager, only 2,200 buildings were sold in 2009 while more than 10,000 were identified as dispensable. Similarly, only 835 buildings were sold in 2008.
GSA was able to sell only a small part of the surplus buildings as the law necessitates offering unwanted property to states, local governments and nonprofit organizations before selling at discounts of up to 100%.
Toning Down Debt?
Are these going to reduce the massive debt? According to the Treasury, the federal government may knock the current $14.3 trillion debt ceiling sometime between April 15 and May 31, whereas the sale of target properties are expected to save up to $15 billion in the first three years of the program.
As usual, at the eleventh hour, the government is worried about the adverse economic consequence of exceeding the debt ceiling. But no one seemed too uptight or alert back when an opportunity to cut spending and keep the budget within the current debt limit was on the table. This outcome was almost inevitable.
Skewed Government Spending
Notably, the government did not cut spending to continue with its monetary and fiscal stimuli that were obligatory to help the economy to fall into place. And many U.S. companies are just manipulating policies to mint more money and remain competitive in the free trade marketplace, injuring the livelihood of middle-class Americans.
Unable to rely entirely on an economy standing on government stilts, U.S. companies are hiring employees out of the domestic periphery to stay competitive. For most of the U.S. companies, international demand for goods and services is growing much faster than the domestic requirement.
The Coca-Cola Company (KO), DuPont Fabros Technology Inc. (DFT), United Parcel Service Inc. (UPS) and Caterpillar Inc. (CAT) are among the U.S. companies that have created significant jobs out of the country in recent years.
Is Something Better than Nothing?
As maintaining unnecessary government properties cost billions to taxpayers, selling them off definitely sounds a better option than carrying the weight of recurring costs.
It is almost certain that Congress will raise the debt ceiling prior to knocking it. If we go by past records, this should tidy up the economic mess related to the debt issue for the next few years.
But this points to concerns related to debt escalation rather than providing a debt solution. Similarly, selling unnecessary properties will not wipe out the debt concern from its root. Instead, greater efforts to pay down the debt or spending less would be a more feasible way out.
Raising the ceiling and property sale should be viewed as efforts to buy some more time in addressing economic problems. However, the government should use this time wisely by keeping its spending under control.
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