Travis Fisher and Joshua Loucks
What can the federal government do to avert ballooning deficits, unsustainable entitlement programs, and unfunded tax cuts? A leaked document from several House committees outlined a host of fiscal reform options available to the 119th Congress and President Donald Trump. Some promising ideas from the energy sector appear to be on the menu, including repealing the massive subsidies in the Inflation Reduction Act (IRA) and selling off some assets the federal government is either misusing or abusing, namely federal lands and the Strategic Petroleum Reserve.
Repealing the Inflation Reduction Act
First and foremost, the IRA must be repealed. It’s a partisan giveaway to corporations and politically favored entities, and it undermines permitting reform and sabotages the precious little competition we have in the electricity sector. According to our estimates (from an upcoming policy analysis), the cost of the IRA could reach $2.04 trillion by 2034 and $4.67 trillion by 2050.
Congress must stop issuing blank-check subsidies with no expiration date. The huge cash transfer from taxpayers to private firms under the guise of environmentalism creates significant market distortions and an undue, unprecedented, and unending burden on taxpayers. Repealing the IRA will require political courage because the handouts have such strong and well-organized constituencies. But it is absolutely necessary if we are to reduce wasteful government spending.
Reducing Federal Land Ownership
According to a 2020 report by the Congressional Research Service, the federal government owns “roughly 640 million acres, about 28% of the 2.27 billion acres of land in the United States.” What are the odds the Founding Fathers intended the federal government to own such extensive land, including the majority of land in five states and 80% of Nevada?
Agencies like the Bureau of Land Management (BLM) under the Department of the Interior manage about 245 million acres that are neither national parks nor military bases. In other words, there are significant opportunities to transition federal lands to private ownership without impacting national parks or historic sites.
In 2015, a Bureau of Economic Analysis paper estimated that the value of government-owned land was $1.8 trillion, a number likely higher today due to rising land values. To be clear, securing $1.8 trillion in sales revenue from selling all federal land would be complicated and would barely put a dent in our national debt. Nonetheless, selling a substantial portion of federal land could raise hundreds of billions of dollars, alleviate some fiscal strain, and improve economic efficiency by enabling Americans to purchase land and develop it however they see fit.
Selling the Strategic Petroleum Reserve
Established 50 years ago, the Strategic Petroleum Reserve (SPR) is an outdated and unnecessary government asset, especially in the current energy landscape. The US Energy Information Administration (EIA) highlighted that the “United States produces more crude oil than any country, ever,” and is set to produce even more now that burdensome regulations and restrictions are being lifted.
The United States now has significant strategic petroleum reserves in our extensive shale formations stretching thousands of miles, from the Marcellus Shale in New York and Pennsylvania to the Permian Basin in Texas and New Mexico. While it’s easy to see why the SPR seemed like a good idea in 1975, times have changed. America is now the epicenter of global natural gas and oil production.
Unfortunately, the SPR now functions more like a political tool prone to abuse than a cornerstone of national strategy. In 2021, President Biden sold nearly half the reserve, reducing its holdings to just under 400 million barrels to improve his party’s political outlook. Selling 400 million barrels would raise something like $25–28 billion in addition to the valuable infrastructure that could be auctioned off. Liquidating the entire enterprise would also help remove the federal government from the oil business, which is the correct course of action in a nation built on free enterprise.
Conclusion
Restoring fiscal stability will require comprehensive reforms, but these three measures—repealing the IRA, reducing federal land ownership, and selling the SPR—represent meaningful steps toward reducing the size of government and easing taxpayers’ financial burdens. Limiting the size and scope of government is essential to preserving the economic and personal liberty of all Americans. With a thoughtful and deliberate garage sale, Congress can reduce government control and help Uncle Sam return to fiscal sanity.