Dear Mr. President, Secretary Lew, and Chairman Bernanke,
As a way out of the current political and budget disaster in DC, the Administration should - under the Executive Branch's ability to contract and manage the government's assets - consider selling assets to the Federal Reserve. They should begin with the government's hoard of gold, then the National Parks, the National Forest Service, off-shore leases, the GSA, holdings of Foreign Debt, and any other agencies holding real estate or financial assets. They could then use the cash generated to pay down debt. If it needed Constitutional cover beyond its authorities to contract, the 14th Amendment, while perhaps not allowing an increase in the debt limit, would certainly justify a debt pay down.
An additional fiscal benefit would be that once the Fed owned these assets related employees could be put on the Fed's payroll reducing Federal budget expenditures while tax revenues would remain the same. Thus along with the reduction in interest payments the fiscal deficit would be greatly reduced staving off future debt ceiling crises for several years. Further these government employees would now be beyond periodic Congressional machinations. Finally as significant hostage taking ability slipped away the Radical Republicans might be persuaded to act somewhat more responsibly.
William V. Rapp
Henry J. Leir Professor
Director Leir Center For Financial Bubble Research
School Of Management
New Jersey Institute Of Technology