Washington, Seeking Revenue, Is in a Mood to Sell

Townhall.com Staff
Posted: Sep 29, 2011 3:12 PM
Washington, Seeking Revenue, Is in a Mood to Sell

WASHINGTON — Like Americans trying to raise quick cash by unloading their unwanted goods, the federal government is considering a novel way to reduce the deficit: holding the equivalent of a garage sale.

Deep within President Obama’s proposals to raise revenue and reduce the deficit lies a method that has garnered bipartisan support, something rare in Washington these days. It involves selling an island, courthouses, maybe an airstrip, generally idle or underused vehicles, roads, buildings, land — even the airwaves used to broadcast television.

Among the listings: Plum Island, N.Y., off the North Fork of Long Island, which the government has already begun marketing as 840 acres of “sandy shoreline, beautiful views and a harbor.” As former home to the federal Animal Disease Center, it may need a bit of “biohazard remediation,” making it a real fixer-upper.

Many conservatives — including Representative Paul Ryan of Wisconsin, chairman of the House Budget Committee, and the budget experts at the Cato Institute — support the broad idea of shrinking the government by selling parts of it. Democrats like the idea of virtually painless revenue-raising. Whether Congress can pass any bill in the current atmosphere, however, is far from certain.

“This is something that we can have bipartisan agreement on,” said Representative Jeff Denham of California who, as one of the most conservative House Republicans, almost never agrees with the president.

Fire sales of unused government property will not come close to closing the deficit, of course, and there are plenty of bureaucratic obstacles in the way even if Congress approves.

But the proposals could make a modest difference. With the government owning more than a million properties, the sales possibilities are plentiful, supporters say. Senator Jon Kyl of Arizona, the No. 2 Republican in the Senate and a member of the special Congressional deficit-reduction panel, has said that property sales is one area where the committee can probably agree.

The White House figures it could raise up to $22 billion over the next decade, though there are plenty who doubt the government could raise anywhere near that amount. More than 80 percent of that figure might come from the auction of public airwaves now dedicated to broadcast television which the Obama administration believes can be better used for wireless broadband.

The idea behind that plan, which is supported by both parties and the Federal Communications Commission, is to reclaim and sell a public asset that previously was given away. But it also could generate some serious opposition from the nation’s broadcasters, which have a powerful lobby.

The other $4 billion would come from selling buildings and property. The Pentagon and the Postal Service have both sold buildings and generated a lot of cash. Sales of 350 closed military installations have produced $1.5 billion over the last 20 years, according to the Congressional Budget Office.

The Postal Service raised $180 million from the sale or lease of properties last year alone, and postal authorities have identified an additional 3,653 post offices for closure or consolidation. In New York, the iconic Farley Post Office Building in Midtown Manhattan was sold to New York State in 2002 for $230 million for potential use as a passenger train terminal.

Post office sales are kept on a different set of books and do not reduce the federal deficit, but plenty of potential sales would. Moffett Federal Airfield, a decommissioned air strip near San Francisco that now houses a NASA operation, has been long aimed at for sale and could bring in millions. Moffett has embarked on a small privatization effort: Google’s founders pay $1.3 million a year to park their three private jets there.

Like a lot of things in Washington, selling federal property is tangled in red tape. To sell airwaves, for instance, Congress would need to pass a law. Selling off property requires a multistep process that includes other agencies looking it over to see if they could use it, and another check to see if it might be a good candidate for a homeless shelter or some other public purpose. Only if it fails various tests is property finally offered to the public.

Mr. Denham of California has a bill that, along with a similar Senate bill sponsored by Scott Brown, a Massachusetts Republican, would streamline the property sale process by creating a commission like those used by the military to close surplus bases. Both bills are similar to an idea that President Obama sent to Congress in his 2012 budget.

When the Obama administration first proposed a property review more than a year ago, it came up with a list of more than 12,000 properties ripe for sale. But only about 1 percent of those were actually available for sale at the time.

Many attractive properties were not on the list, including the sprawling grounds of the Veterans Administration Medical Center in West Los Angeles. The property also has long been coveted by local groups, both for development and for continued use as open space, and small parts of the 387 acres, sandwiched between Beverly Hills and Brentwood, already are leased for private use.

But in a letter this year to President Obama, Representative Henry A. Waxman, the influential Democrat whose district includes the V.A. center, and both California senators likened the idea to building high-rises on the National Mall. “It would be a tremendous disservice to our veterans and would violate the terms of the 1888 deed” that conveyed the property to the government, the letter said.

The Congressional Budget Office, the Government Accountability Office and the Congressional Research Service all are skeptical on the administration’s sales estimates, largely because of the spools of red tape.

Theresa A. Gullo, deputy assistant director for budget analysis at the C.B.O., told a House committee in July that a review of the president’s plan found that it “was not likely to significantly increase receipts from sales of federal property.”

In selling broadcast spectrum, the F.C.C. wants small urban television stations to give up space on the spectrum in exchange for part of the proceeds from an auction of the airwaves to wireless telephone companies. The commission also would move other stations around on the dial to use airwaves more efficiently.

But broadcasters, who spread a fair amount of political largess on Capitol Hill, are less enthusiastic — one reason the plan hasn’t happened so far.

“It’s a very compelling initiative that has very broad national support,” Julius Genachowski, chairman of the F.C.C., said. “It’s market oriented, it contributes to deficit reduction, and it gets big things done that really everyone supports.”