The Corner

Omnibus Bill on Its Way to the President’s Desk

After being cleared in the Senate, the bipartisan and massive omnibus budget bill is heading to the White House to receive the president’s signature. The rationale for growing spending beyond the sequester levels is that we certainly couldn’t live within the limits set by the Budget Control Act, and the sequester cuts were too drastic (in particular for an allegedly funding-starved military). And yet a look inside the bill reveals that it is stuffed with waste, duplicate and outrageous spending items that if eliminated wouldn’t constantly require Congress to violate its commitment to cutting spending. Here are a few of the duplicative programs and some of the military spending (even though the Pentagon doesn’t want it), which I mentioned in my Washington Examiner column this morning:

The bill, for instance, includes $4 million for alcohol and substance abuse research, $12 million for Alzheimer’s research, $120 million for breast cancer research, $10.5 million for lung cancer research, $20 million for ovarian cancer research, $80 million for prostate cancer research, and more — all of which are nondefense activities and overlap research performed by the National Institute of Health.

A document prepared by the staff of Sen. Tom Coburn, R-Okla., shows the omnibus bill is also stuffed with funding for weapons not even requested by the Pentagon, including $90 million for Abrams tank upgrades to maintain “critical industrial base capability,” $1.2 billion to the Navy’s request to fully fund a second Virginia-class submarine in fiscal year 2014 (the Navy had requested partial funding), and eight additional MQ-9 Reaper UAVs on top of the 12 the Air Force requested. The Coburn document also shows that the omnibus funds research not requested by the Pentagon, including $6 million for human, social and culture behavior modeling, $46.7 million for weapons technology, and $70 million for common kill vehicle technology.

And that’s for the Department of Defense alone. For the waste in other departments, please look at the very detailed document put together by Senator Coburn’s office.

While we are on the issue of saving money, there is an untapped source that Congress seems unfortunately reluctant to touch: government-owned assets that could/should be privatized. The Economist has two articles in this week’s magazine on the issue. The first one is called “The $9 trillion sale.” It gives an overview of the assets available for privatization in the OECD from state-owned enterprises to assets-buildings, land, and subsoil resources. The piece notes that:

America’s federal government owns nearly 1m buildings (of which 45,000 were found to be unneeded or under-used in a 2011 audit) and about a fifth of the country’s land area, beneath which lie vast reserves of oil, gas and other minerals; America’s “fracking” revolution has so far been almost entirely on private land.

The other one is called “Selling out the Store.” It explains that advanced countries have been very slow to sell their assets and puts a number on the gigantic opportunity they are missing as a result. The whole piece is worth reading, but here is a tidbit:

The greatest untapped opportunities may lie in land, buildings, subsoil resources and other “non-financial” assets. However, their scale is hard to gauge because of poor data-collection and accounting…

In America, by contrast, the situation may be worse in Washington, DC, than in the states. The federal government lacks a detailed inventory of its buildings, points out Leonard Gilroy of the Reason Foundation, a think-tank. Management of these assets has improved a bit since the creation in 2004, by executive order, of a council to push reform in this area. But there is still far to go, as shown in a series of reports from the Government Accountability Office. One, in 2011, estimated that in 2009 at least 45,000 government buildings were under-used or unneeded.

America also has, for historical reasons, vast swathes of federally owned land concentrated in the West (see map). The Department of the Interior oversees more than 500m acres, around a fifth of the land area of the country. In fiscal 2011 its agencies spent $13 billion more than they collected for use of land and resources—a deficit that critics want to see closed through better management or land sales.

One possibility, other than selling to individuals or developers, would be to sell to non-profit conservation trusts. These have mushroomed over the past decade: there are now 1,700, some handsomely funded, supported by hundreds of thousands of volunteers. Another approach would be to transfer ownership to state administrations, which have generally been more creative than the feds in their management of parks, grazing land and buildings, says Chris Edwards of the Cato Institute, a libertarian think-tank. A study conducted for a land-management task-force in Nevada (which is 84.5% government-owned) concluded that state-managed land generates net revenue of $6.29 an acre on average, compared with a net loss of $1.86 for federally managed land. However, both ranchers and greens support the status quo.

The greatest value could lie beneath. The Green River Formation, a field of sedimentary rock beneath Colorado, Utah and Wyoming, contains the world’s largest deposits of oil shale. Three-quarters of this is under federally controlled land. Leases from oil- and gas-fields under federal land could potentially generate royalty, rent and bonus payments of $150 billion (excluding operators’ tax payments) over ten years, according to the Congressional Budget Office. Up to now, almost all of the shale-oil and gas revolution in America has taken place on private land.

Let’s start selling!