Newspaper Article

BUSINESS FORUM; WHY IT PAYS TO PRIVATIZE PUBLIC SERVICES

Butler, Stuart M, Stuart M. Butler is director of domestic policy studies at the Heritage Foundation and author of "Privatizing Federal Spending."

1986

Overview

FEDERAL budget-making in the era of the Gramm-Rudman balanced-budget amendment has catapulted a new word into the nation's vocabulary - ''privatization,'' or the transfer of Federal assets and functions to the private sector. As a commendable first step, the Reagan Administration has proposed the sale of a portion of the $245 billion portfolio of outstanding Government loans, such as those to students and small-business men. Sales of assets make good political and budget sense as a strategy to make the kinds of rapid deficit reductions necessary under Gramm-Rudman. They would bring in large amounts of cash quickly, in contrast to the savings from ''contracting out,'' which would take years to amount to significant reductions. Thus, selling assets can be used to meet immediate budget targets, after which savings from other forms of privatization and from orderly program cuts would keep deficit reduction on track. Asset sales in the United States could result in similar benefits. Selling public housing at a discount to tenants would raise money, cut subsidy costs and give low-income Americans the chance to own their own homes. Selling airport landing slots to airlines would bring in revenue and lead to more efficient use of airspace. Selling Washington's National and Dulles Airports would cut the deficit while leading to a more economic use of each airport. And selling franchises to private companies to sort and deliver first-class mail would help meet the Gramm-Rudman target - and there can be little doubt that service would improve.

• Publisher: New York Times Company
• Subject: BUDGETS AND BUDGETING / BUTLER, STUART M / FINANCES