Everything Must Go?

by Patrick Appel

Robert Murphy claims that the government is “currently holding assets that clearly belong in the private sector, regardless of the fiscal situation.” He lists assets (including gold, securities, the Strategic Petroleum Reserve, and underutilized or “excess” real estate), and takes issue with the Treasury’s go-to “fire sale” counter-argument:

The federal government has at least $1.6 trillion in liquid assets. An aggressive program to sell a large portion of these holdings over the next few years, coupled with equally aggressive spending cuts, would allow the government to honor its existing interest payments without raising taxes or going deeper into debt.

Liquidating all of these assests is extreme, but the Obama administration has already begun selling unused property. Selling the country's gold is reasonable, but it should be done on a fairly lengthy time-line otherwise we'll artifically push gold prices down, as we have done with helium prices.

The Strategic Petroleum Reserve (SPR) makes sense on paper, as a security measure should our oil supply get cut off temporarily, but the way it is used in practice, as a political instrument during periods of high oil prices, makes me question its utility.

That said, taxes are going to have to rise one way or another, even if the federal government parts with several pricey assets. Murphy's belief that a government asset sale can spare us from tax increases is naive at best.