US Government Debt Different - Finance Department - University of ...

166Burning the Furniture to Heat the House – The Potential Role of Asset Sales in Funding the Federal Government’s Deficitsner additional revenue. 24 These additional actions, if legal, could generateaggregate proceeds of between $1.3 trillion and $1.5 trillion,or 13 to 14 percent of US debt held by the public. That would besubstantially more than the two cents per acre price that the US paidRussia in 1867, or more than a tenfold return on the $110 million intoday’s dollars that was then referred to as Seward’s Folly.Beyond the Coastal Plain in Alaska, oil and gas reserves in Federallands currently off limits to development might generate an additional$350 billion through 2030. 25 Because these areas would continueto produce significant flows beyond 2030, the US governmentmay be able to obtain as much as $1 trillion if it were to sell themnow.Liquidating the US government’s entire portfolio of land and mineralrights might therefore generate closer to $2.5 to $3.5 trillion. Ontop of that, selling the assets in the Federal Government’s financialportfolio could yield $1 trillion. The nearly $900 billion in defenseassets would probably continue to be viewed as off limits, but sellingnon-defense fixed reproducible capital and inventories could yield anadditional $800 billion.The aggregate sales price of all of these non-defense assets could bebetween $4.3 and $5.4 trillion, which, if applied to debt reduction,could decrease publicly-held debt as a share of GDP to between 36and 43 percent—well below the 90 percent threshold associated withslower growth 26 and in line with AAA-rated Sweden.ConclusionIn looking for solutions to the US debt problem, serious considerationshould be given to asset sales. The US has a wealth of assets.Selling those assets could turn around a dangerously weakening balancesheet.24 The State of Alaska currently has $30 billion in obligations, which would offsetat least some of a premium that sovereignty transfer could provide.25 Wood Mackenzie, Energy Policy at a Crossroads, note 18 above.26 Reinhart and Rogoff, note 10 above.