In this article I explain the logistics of the debt ceiling and how Geithner is going to buy himself a couple of more months.
I then say:
In all the hoopla over the debt ceiling, I haven’t heard many people raise the point that the government has a huge collection of assets that could be sold to the private sector. This would cushion the blow and make the transition easier. In other words, if people say that $750 billion in spending cuts (between now and September 30) is simply “impossible,” then we still don’t have to either borrow more or raise taxes. We have another option: namely, the federal government could auction off some of its holdings and fill the gap that way.
For example, the Strategic Petroleum Reserve (as of late November) had almost 727 million barrels of crude oil. At current market prices, this inventory is worth more than $80 billion. The Outer Continental Shelf (OCS) contains an estimated 59 billion barrels of technically recoverable crude oil. Obviously, a barrel of oil in the hand is worth more than one under the sea floor, but clearly the federal government could raise huge sums of money by selling this property to the private sector.
In addition to mineral resources, the federal government has enormous holdings of real estate and office buildings. A Reason report quotes then-OMB Director Peter Orszag estimating in 2010 that the federal government owned 14,000 buildings and structures that were “excess” and 55,000 that were “under- or not-utilized.”
Beyond auctioning assets, the feds could get even more creative in dreaming up win-win scenarios that would ease the cash crunch without having to raise taxes or borrow more. For example, the government could tell current Social Security beneficiaries: “If you agree to renounce all of your future benefit checks, we will exempt you from income taxation should you go back to work.” Depending on how the deal were configured, this arrangement might not “sacrifice” too much future tax revenue from the government’s point of view, and it would reduce the upfront cash outflow needed to pay Social Security beneficiaries.
Incidentally, do any of the policy wonks out there know if a think tank has done a compilation of how much the federal government could raise by selling off assets? I was surprised that I couldn’t quickly find such a thing at Heritage or Cato.