The Congressional Pack Rats

02/16/2015 09:33 am ET | Updated Apr 15, 2015

The U.S. Congress hoards real estate like proud pack rats. For example, the Department of Defense has 562,000 facilities which cover 24.7 million acres - an area about the size of the state of Virginia. The Pentagon has surprisingly indicated that it might be wise to shed some of its real estate. Congress has stonewalled the Pentagon. Indeed, Congress has barred the Pentagon from even thinking about the Department of Defense's excess asset problem.

The Congressional - and often bureaucratic - asset hoarding pathology is a result of perverse economic incentives that accompany public ownership. These incentives encourage bad behavior. The fact that capital carrying charges or rents are not paid for publically-owned assets means that no costs have to be budgeted for holding them. Once assets are under government ownership and control, they are viewed as being free - nothing must be given up for the assets' use and retention. Furthermore, if a decision is made to dispose of public assets, the revenues from their disposal are usually not earmarked for use by the department or agency that initiates the sale. Hence, there are no bureaucratic or budgeted benefits that flow from the liquidation of government property.

I ran into both Congressional and bureaucratic stonewalling over thirty years ago, when I designed President Reagan's privatization program. Until capital carrying charges on public assets are budgeted (read: charged), the game will remain rigged in favor of the pack rats.