CRAIGforCONGRESS
Missouri's 7th District, U.S. House of Representatives

  
 
 

 

Liberty Under God
IS THE SOLUTION TO THE PROBLEM OF
Delayed Flights
Congress should

  • privatize the air traffic control system;

  • privatize the nation’s airports, while ending federal subsidies;
Cato Handbook for PolicymakersThis information is taken from the Cato Handbook for Policymakers, 7th Edition (2009)

Contents
(All files are in Adobe Acrobat PDF format.)
  1. Introduction (11 pp, 760Kb)
  2. Limited Government and the Rule of Law (11 pp, 778Kb)
  3. Congress, the Courts, and the Constitution (29 pp, 841Kb)

Restructuring the Federal Government

  1. Cutting Federal Spending (15 pp, 812Kb)
  2. Fiscal Federalism (11 pp, 802Kb)
  3. Privatization (11 pp, 761Kb)

Government Reform

  1. The Delegation of Legislative Powers (9 pp, 770Kb)
  2. Term Limits (9 pp, 764Kb)
  3. Campaign Finance (9 pp, 765Kb)
  4. Reclaiming the War Power (9 pp, 766Kb)
  5. Tort and Class-Action Reform (11 pp, 778Kb)

Health Care and Entitlement Reform

  1. Medicare (9 pp, 762Kb)
  2. Medicaid and SCHIP (9 pp, 755Kb)
  3. The Tax Treatment of Health Care (11 pp, 781Kb)
  4. Health Care Regulation (17 pp, 816Kb)
  5. Health Insurance Regulation (15 pp, 784Kb)
  6. Social Security (13 pp, 795Kb)

Cutting Federal Departments and Programs

  1. Agricultural Policy (9 pp, 766Kb)
  2. The Defense Budget (15 pp, 834Kb)
  3. K-12 Education (15 pp, 1.0Mb)
  4. Higher Education Policy (13 pp, 802Kb)
  5. Housing Policy (9 pp, 761Kb)
  6. Interior Department and Public Lands (11 pp, 776Kb)
  7. Surface Transportation Policy (11 pp, 774Kb)
  8. Cultural Agencies (9 pp, 765Kb)
  9. Corporate Welfare and Earmarks (15 pp, 802Kb)

Threats to Civil Liberties

  1. Civil Liberties and Terrorism (11 pp, 780Kb)
  2. Electronic Surveillance (9 pp, 766Kb)
  3. National ID Systems (7 pp, 757Kb)
  4. Regulation of Electronic Speech and Commerce (9 pp, 764Kb)
  5. Restoring the Right to Bear Arms (9 pp, 767Kb)
  6. Tobacco and the Rule of Law (7 pp, 760Kb)
  7. The War on Drugs (9 pp, 764Kb)
  8. Property Rights and the Constitution (21 pp, 817Kb)

Regulation

  1. The Limits of Monetary Policy (13 pp, 801Kb)
  2. Monetary Policy and Financial Regulation (9 pp, 778Kb)
  3. Telecommunications, Broadband, and Media Policy (9 pp, 763Kb)
  4. Copyright and Patent (9 pp, 763Kb)
  5. Health and Safety Policy (11 pp, 821Kb)
  6. Antitrust (11 pp, 776Kb)

Tax Policy

  1. Federal Tax Reform (9 pp, 769Kb)
  2. International Tax Competition (15 pp, 784Kb)

Energy and Environment

  1. Energy Policy (21 pp, 813Kb)
  2. Environmental Policy (13 pp, 783Kb)
  3. Global Warming and Climate Change (15 pp, 1.0Mb)

Foreign and Defense Policy

  1. Countering Terrorism (9 pp, 770Kb)
  2. Domestic Security (11 pp, 778Kb)
  3. Strengthen the All-Volunteer Military (7 pp, 759Kb)
  4. Iraq (101 pp,775Kb)
  5. U.S. Policy toward Iran (9 pp, 762Kb)
  6. U.S. Policy toward Afghanistan and Pakistan (9 pp, 765Kb)
  7. U.S. Policy in Middle East (11 pp, 775Kb)
  8. Relations with China, India, and Russia (13 pp, 778Kb)
  9. East Asian Security Commitments (11 pp, 774Kb)
  10. Transatlantic Relations (9 pp, 766Kb)
  11. The Balkans (11 pp, 777Kb)
  12. Relations with Cuba (11 pp, 776Kb)
  13. The International Drug War (13 pp, 783Kb)

International Economic Policy

  1. Trade (15 pp, 807Kb)
  2. Immigration (13 pp, 788Kb)
  3. U.S. Policy toward Latin America (9 pp, 767Kb)
  4. U.S. Policy toward Sub-Saharan Africa (11 pp, 789Kb)
  5. Foreign Aid and Economic Development (17 pp, 813Kb)

In recent decades, governments on every continent have sold state-owned assets, such as airports, railroads, and energy utilities. The privatization revolution has overthrown the belief widely held in the 20th century that governments should own the most important industries in the economy. Privatization has generally led to reduced costs, higher-quality services, and increased innovation in formerly moribund government industries.

The presumption that government should own industry was challenged in the 1980s by British Prime Minister Margaret Thatcher and by President Ronald Reagan, who established a Commission on Privatization. But while Thatcher made enormous reforms in Britain, only a few major federal assets have been privatized in this country. Conrail, a freight railroad, was privatized in 1987 for $1.7 billion. The Alaska Power Administration was privatized in 1996. The federal helium reserve was privatized in 1996 for $1.8 billion. The Elk Hills Petroleum Reserve was sold in 1997 for $3.7 billion. The U.S. Enrichment Corporation, which provides enriched uranium to the nuclear industry, was privatized in 1998 for $3.1 billion.

There remain many federal assets that should be privatized, including businesses such as Amtrak and infrastructure such as the air traffic control system. The government also holds billions of dollars of real estate that should be sold off. The benefits to the federal budget of privatization would be modest, but the benefits to the economy would be large as newly private businesses would improve their performance and innovate.

The Office of Management and Budget has calculated that about half of all federal employees perform tasks that are not “inherently governmental.” The Bush administration attempted to contract some of those activities to outside vendors, but such “competitive sourcing” is not privatization. Privatization makes an activity entirely private, with the effect of getting spending completely off the government’s books, allowing for greater innovation, and preventing corruption, which is a serious pitfall of govern­ment contracting.

Privatization of federal assets makes sense for many reasons. First, sales of federal assets would cut the budget deficit. Second, privatization would reduce the responsibilities of the government so that policymakers could better focus on their core responsibilities, such as national security. Third, there is vast foreign privatization experience that could be drawn on in pursuing U.S. reforms. Fourth, privatization would spur economic growth by opening new markets to entrepreneurs. For example, repeal of the postal monopoly could bring major innovation to the mail industry, just as the 1980s’ breakup of AT&T brought innovation to the telecommunica­tions industry.

Some policymakers think that certain activities, such as air traffic control, are “too important” to leave to the private sector. But the reality is just the opposite. The government has shown itself to be a failure at providing efficiency and high quality in services such as air traffic control. Such industries are too important to miss out on the innovations that private entrepreneurs could bring to them.

• Air traffic control. The Federal Aviation Administration has been mismanaged for decades and provides Americans with second-rate air traffic control. The FAA has struggled to expand capacity and modernize its technology, and its upgrade efforts have often fallen behind schedule and gone over budget. For example, the Government Accountability Office found one FAA technology upgrade project that was started in 1983 and was to be completed by 1996 for $2.5 billion, but the project was years late and ended up costing $7.6 billion. The GAO has had the FAA on its watch list of wasteful “high-risk” agencies for years. Air traffic control (ATC) is far too important for such government mismanagement and should be privatized.

The good news is that a number of countries have privatized their ATC and provide good models for U.S. reforms. Canada privatized its ATC system in 1996. It set up a private, nonprofit ATC corporation, Nav Canada, which is self-supporting from charges on aviation users. The Canadian system has received high marks for sound finances, solid management, and investment in new technologies.

• Airports. Nearly all major U.S. airports are owned by state and local governments, with the federal government subsidizing airport renovation and expansion. By contrast, airports have been fully or partly privatized in many foreign cities, including Athens, Auckland, Brussels, Copenhagen, Frankfurt, London, Melbourne, Naples, Rome, Sydney, and Vienna. Britain led the way with the 1987 privatization of British Airports Authority, which owns Heathrow and other airports. To proceed with reforms in the United States , Congress should take the lead because numerous federal roadblocks make cities hesi­tant to privatize. For example, government-owned airports can issue tax-exempt debt, which gives them a financial advantage over potential private airports.

At the end of fiscal year 2007, the federal government held $1.2 trillion in buildings and equipment, $277 billion in inventory, $919 billion in land, and $392 billion in mineral rights. The federal government owns about one-fourth of the land in the United States.

Many government assets are neglected and abused, and would likely be better cared for in the private sector. It is common to see government property in poor shape, with public housing being perhaps the most infa­mous government eyesore. The GAO has found that ‘‘many assets are in an alarming state of deterioration’’ and the watchdog agency has put federal property holdings on its list of activities at high risk for waste.

The GAO also notes that the federal government has ‘‘many assets it does not need,’’ including billions of dollars worth of excess and vacant buildings. The federal government spends billions of dollars each year maintaining excess facilities of the Departments of Defense, Energy, and Veterans Affairs.

The solution is to sell federal assets that are excess to public needs and to better manage the smaller set of remaining holdings. For example, there are substantial maintenance backlogs on facilities of the Forest Service, Park Service, and Fish and Wildlife Service. The solution is not a larger maintenance budget, but trimming asset holdings to fit limited taxpayer resources. Another part of the solution is to scrap the Davis-Bacon rules, which require that artificially high wages be paid on federal contracts, including maintenance contracts.

Federal asset sales would help reduce the federal deficit and create budget room for improved maintenance of remaining assets. Perhaps more important, economic efficiency and growth would increase as underused assets were put into more productive private hands.

next: Campaign Finance, Corruption and the Oath of Office