The Looting Continues....

Immune from reason or shame, the Bush Administration continues its jaw-dropping looting spree of our common assets. In previous administrations, there would be a public uproar once it was learned that the government was giving away, say, the people’s forests. But these days, the government is giving away a dizzying array of prime national assets as a matter of public policy. In Moscow somewhere, a mafia don is laughing in admiration at the sheer scope and brazenness of this plunder — er, “privatization.” The mainstream media is quick to jump on the smallest “trend” in celebrity styles or film motifs. So how come no one is connecting the dots among the enormous corporate giveaways proposed or underway?

Let’s start with the Bush Administration’s proposal to sell off public forests and lands in order to mask the yawning operating deficits in its FY 2007 budget. In the classical Orwellian style that we have come to expect (the “Clean Skies Initiative” that sanctions more pollution, the “Leave No Child Behind Act” that is under-funded), the proposal to sell off scores of tracts of public land is part of the “Secure Rural Schools and Community Self Determination Act.” Because revenues from timber harvests have declined, the Administration wants to make up the difference by selling off the assets themselves! The list of sites currently proposed for sale requires 97 sheets of paper to print.

Then there’s the Interior Department’s proposal, also incorporated into the President’s proposed budget, which would invite the oil and gas industry to pump about $65 billion worth of those fuels from public lands over the next five years without paying any royalties. It’s an estimated giveaway of $7 billion in foregone royalties — this only weeks after the announcement of Exxon Mobil’s record-breaking profits in the fourth quarter of 2005 and continuing high prices for gasoline and home heating oil.

Corporate America and economists blanch at the idea of a minimum wage, which would “distort” the free market and would supposedly have a ruinous effect on people’s work ethic. But here they happily embrace the idea of drilling “incentives” to the oil and gas cartel, which have have more money than they know what to do with.

Meanwhile, reports Edmund Andrews in The New York Times (February 14) Kerr-McGee Exploration and Development has filed a lawsuit challenging limitations on “royalty relief” in federal waters in the Gulf of Mexico. If this brazen lawsuit succeeds, 80% of the oil and gas in this area would be royalty-free, and Kerr-McGee would reap a $28 billion windfall over the next five years.

See what I mean? These giveaways are like waves rolling in from the ocean. Yet another one is the FCC’s giveaway of radio spectrum. As Jesse Drucker reports in The Wall Street Journal (February 9, 2006), the FCC is allowing telecommunications companies to use their assigned spectrum allocation in ways that are not intended — and in the process, reap huge windfalls for themselves.

Mobile Satellite Ventures LP (MSV) is in the business of offering satellite phone service. But once it realized that its spectrum would be worth a lot more if it could use it for cellular phone service in addition, it asked the FCC for a regulatory change to its licenses so that it could add cell towers to its operations. The FCC agreed.

That little change meant that MSV’s spectrum was suddenly worth billions of dollars — a windfall to private investors who were “gaming” the public’s valuable asset, radio spectrum. The company that owns MSV suddenly saw its stock price rise from less than $3 a share to $22.15, making the company worth as much as $2 billion. Other satellite-phone companies, salivating at the prospect of easy money, are also asking the FCC to let them get into the cell phone business, too. Through backdoor regulatory changes, the actual value of our public assets is being privatized. I’m sure this an amazing tonic for the work ethic of high-tech entrepreneurs everywhere.

J.H. Snider of the New America Foundation, a vigilant monitor of spectrum management issues, correctly calls the FCC giveaway “an outrage.” He says that the FCC should have retrieved the radio spectrum from satellite operators and re-offer it, at auction, to other companies for cash. That way, the public would get fair-market value for its radio spectrum.

There is, in fact, a classic 1892 court case, in public trust doctrine — Illinois Central Railroad v. Illinois — which holds that the government does not have the authority to give away ownership deeds to assets that belong to the people. So where is a strict constructionist Supreme Court when you really need it? Where are the free marketeers rising up to decry the lavish provisioning of free lunches, which supposedly cannot exist in economics?