Joel Achenbach | Washington Post
With the United States poised to slam into its debt limit today, conservative economists are eyeballing all that gold in Fort Knox.
There’s about 147 million ounces of gold parked in the legendary vault. Gold is selling at nearly $1,500 an ounce. That’s many billions of dollars in bullion.
“It’s just sort of sitting there,” said Ron Utt, a senior fellow at the Heritage Foundation. “Given the high price it is now, and the tremendous debt problem we now have, by all means, sell at the peak.”
But that’s cockamamie, declares the Obama administration. Mary Miller, Treasury’s assistant secretary for financial markets, said the United States should sell assets in an orderly, “well-telegraphed” manner, not in a “fire sale” atmosphere with a debt limit deadline accelerating the process.
“It would be bad for the taxpayers. It would be bad for the markets,” Miller said.
Another senior administration official, not authorized to speak for attribution, was more blunt: “Selling off the gold is just one level of ‘crazy’ away from selling Mount Rushmore.”
The United States may have run up a huge debt, but it is not poor. The federal government owns roughly 650 million acres of land, close to a third of the nation’s total land mass. Plus a million buildings. Plus electrical utilities such as the Tennessee Valley Authority. And the Interstate Highway System.
The Heritage Foundation on Tuesday released a plan for balancing the budget that did not include tax increases, but did include a proposal to sell $260 billion in federal assets over 15 years.
The administration recently did a rough calculation of the nation’s gold reserves, including the stash at Kentucky’s Fort Knox (technically, it’s in the fortress-like U.S. Bullion Depository) and concluded that it was worth about $370 billion.
Although the country does not use the gold for anything, Treasury officials believe that selling it could create the impression of desperation and thereby rattle the markets.
A sudden gold sale would also postpone only briefly – two or three months, perhaps – the deadline for raising the debt limit.
“It’s merely a procrastination technique. It would throw markets into turmoil, and you’d have to accept fire-sale prices,” said the senior administration official.
But some economists want to liberate the bullion.
“Why not?” asks Chris Edwards, director of tax policy studies at the libertarian Cato Institute. “I think it shows that the government is getting serious about reforming itself.”
One prominent economist, the Urban Institute’s Eugene Steuerle, said that selling assets doesn’t really help the government’s balance sheet in a strict sense.
“In a normal accounting system, if you sell an asset, it doesn’t add to your income,” Steuerle said.
The debt limit, or debt ceiling, is set by Congress as the maximum debt the federal government can carry. Congress last raised the limit in February 2010, to just under $14.3 trillion (which includes money the Treasury owes to government trust funds, such as Social Security).
The Treasury Department projects that the limit will be reached today but that “extraordinary measures” that involve shifting money among different accounts can keep the government flush until Aug. 2.
