The United States Is For Sale... One Piece At A Time

States Looking To Cash In Assets

Not only are our ports up for grabs, and our voting machines owned by a South American company, and our borders as porous as ever, but now every state in the union is trying to sell off assets that we have paid for so that they can line the coffers... In the meantime they are leasing or selling off control of our highways, airports and other infrastructure... Don't these things play a role in our national defense and security? Aren't the Interstate Highways an integral part of our ability to move troops from one place to another in case of national emergency or invasion? Shouldn't these things remain in 100% control of our governments?

As for the lottery leases, we might as well just let the mafia run their gambling schemes. The entire idea behind the lottery was that the states could manage the operations for the least cost and produce funds that went into our coffers for schools, arts, sciences and infrastructure. Somehow we have missed the point.

States and local governments across the USA are preparing to cash in valuable public assets for one-time windfalls that could reap tens of billions of dollars.
Illinois hopes to get at least $10 billion by selling its lottery and an additional $15 billion for leasing all or part of the 274-mile Illinois Tollway. Missouri plans to auction its student loan portfolio. Pennsylvania is considering leasing its highways, and Chicago is studying a plan to lease Midway Airport to private investors.

The deals would let governments collect billions of extra dollars without raising taxes but would reduce their future revenue.

Investment banker Carol Rein of UBS Securities says foreign investors like government assets in this country because similar investment opportunities in Europe and Australia have been successful. Assets such as toll roads and water systems are attractive to investors because they have little competition and generate steady revenue.

States hope to get high prices because of strong investor demand, and at the same time rid themselves of operations that private enterprise might operate better. In return, investors will manage the enterprise and pocket future revenue. The proposed deals vary widely, from outright sales to leases ranging from 25 to 99 years. Some come with restrictions, such as limits on raising tolls, that lower the price investors pay.

The rush to sell assets was sparked by one deal: Chicago received $1.8 billion — twice the next highest bid — from a Spanish-Australian investment group last year for a 99-year lease of its 4.4-mile Skyway. The deal turned what had once been a money-losing elevated highway into a windfall that was used to reduce the city's debt and create big budget reserves. In April, Indiana made a deal to get $3.8 billion in exchange for a 75-year lease of the 157-mile Indiana Toll Road.

Government watchdogs say they support many of the asset sales but worry that some states plan to use the money to start expensive programs that will need money long after the original cash is gone.

"How the money is spent is more important than what price they get," says Laurence Msall, president of the Civic Federation, a Chicago group that promotes cost-effective government. He says Illinois should use any windfall to help the state's troubled pension plans, which have a $39 billion shortfall, worst in the nation.

Instead, Illinois Gov. Rod Blagojevich plans to use the lottery money to start universal preschool, build schools and buy an annuity that replaces lottery profits for 16 years. "The money will kick-start something that needs to happen and build a bridge to funding in the future," says Illinois budget director John Filan. The Illinois lottery made a $615 million profit last year.

Filan says a privately run lottery can compete better against casinos and Internet gambling. "Government is not very agile in competitive businesses that require huge investments in technology," he says.

Fred Giertz, a budget expert at the University of Illinois, says the wisdom of asset sales depends on a state's financial discipline. "You're spending money now that you would have gotten later," he says.