Many, well majority, of governments around the world now are simply fiscally irresponsible. That is, they live beyond their means, they spend much larger than their revenues, year in and year out. And how do they fill in the annual gap between high spending and low revenues? Through borrowings, endless borrowings, so that their public debt keep rising and rising.
Take for instance, this annual gap between spending and revenues of the UK government starting in 2002. These are not absolute numbers but as percent of GDP. Nonetheless the gap is very clear. Such yearly gap would require yearly borrowing so that the cumulative debt should be rising every year.
Well, many European governments are notorious for accumulating huge public debt. See for instance the gross debt of six governments in that continent, in billion Euros. The trend is a shameless picture of ever-rising debt. So what sort of "fiscal discipline" that these governments can preach to other poorer countries through their foreign aid projects via the IMF, WB, UN, OECD and other agencies?
The US federal government is among the most notorious fiscally irresponsible ones around the world now. With budget deficit of about $1 trillion a year since last year or last 2 years, not much proof is needed.
Most governments would think of more taxes and regulatory fees to raise their revenues to retire some of the debt contracted by past administrations. They always think of how to pass the cost of wastes and inefficiencies (if not robberies) to the public, not to the government bureaucracies and politicians themselves.
One important measure that governments can do to significantly reduce their public debts and eradicate the need to raise more taxes and fees, is to privatize many of their assets and properties. Privatization, not more taxation, is a practical solution that many governments simply do not wish to consider.
One of my favorite free market think tanks around the world, the Americans for Tax Reforms, has produced a short and recent paper on how to reduce the US' public debt, Mr. President: Instead of Buying Time, Sell Government Assets & Rescind the "Stimulus" . Here they are:
1. Get out of the bailout business. Simply by selling the remainder of its General Motors shares, the government could net $18 billion in savings. The government should also demand GM pay back the $30 billion in outstanding assistance from TARP.Amen to that!
Days gained on the federal debt: 12
2. Lease government lands for energy production. The federal government currently owns over 85 million acres of untapped oil and gas reserves. Immediate income from auctioning federally-owned leases could total $61 billion.
Days gained on the federal debt: 15
3. Sell public lands. The federal government currently owns over 650 million acres of land – almost 30 percent of all land in the United States. Based on land values estimated on past exchanges, selling federal lands (exempting National Parks) could be worth as much as $230 billion. This doesn’t include the over $25 billion spent on maintenance or $347 million spent on acquisition annually.
Days gained on the federal debt: 57
4. Reform Federal Real Property Management. The federal government is estimated to hold 900,000 buildings and structures. GAO has warned that real property owned by the government is consistently underutilized or abused, including the government’s maintenance of its real property as a part of its High-Risk Series since 2003. Selling nonperforming real estate assets and reforming federal real estate management would save at least $4 billion.
Days gained on the federal debt: 1
5. Rescind spending programs that have been proven failures, such as the “stimulus” plan. The White House recently admitted that as much as $168 billion in funds remain unspent.
Days gained: 42
Total amount of government assets and rescinded spending: $536 billion
Total number of days gained before the debt limit must be raised: 127
Simply by selling the assets the government maintains, Congress could gain roughly four months and one week to debate comprehensive spending reform that would prevent lawmakers from fixating on the debt problem and refocus on the problem at hand: government overspending.
Privatization 4: Utilizing Proceeds and Revenues, August 06, 2010
Privatization 6: Camps Aguinaldo and Crame, January 08, 2011