IN THIS ISSUE:
1. The Government’s Ongoing Property “War on the West”
2. Government Land Grab Has Intensified Last 50 Years
3. Why More Government Ownership of Land is a Bad Idea
4. Conclusions: Reign in Government, Build More Infrastructure
Overview
Last week was a slow time for news on the economic front, the political front and in the markets for the most part, so I struggled to find a good topic to write about for today. As always, I like to write about what interests me most, and that led me back to something I read in March, which I will share with you today.
The topic is how much land the federal government owns and controls. We all know the federal government owns a lot of land around the country. You know – national parks, protected forests, tribal reservations, fish and wildlife refuges, rivers, historical battlefields and other sensitive areas. But I’ll bet you don’t know just how much of America the federal government owns. I sure didn’t, until last month. That’s what we’ll talk about today.
Now before you jump to any conclusions, let me assure you this is not a political issue. The government land grab has been going on for well over 200 years under both Democrats and Republicans. In that sense, it is political but it’s bipartisan.
There are several questions regarding the federal land grab: How does the government take control of privately-owned lands; what authority does it have to do this; and how does it pay for it? I’ll touch on all of those questions as we go along. Let’s get started.
The Government’s Ongoing Property “War on the West”
Sometimes, it’s best to start with a chart, especially if it’s a good one. Before you look at it, take a few seconds to guess how much of the land in the western United States the federal government owns. Would you think 20%, 30%, 40% or more or less? Now let’s take a look.
As you can see, the federal government owns, in one way or another, the vast majority of the land in the western United States including Alaska. Note the dramatic contrast with what little the government owns in the eastern half of the country.
Now let me ask you, did this chart surprise you? It certainly did me. Sure, I knew the government owned a lot of land in the western US, but I had no idea it was this much. I knew, for example, that tribal reservations are technically owned by the government, even though they are largely controlled by the tribes.
Yet as you can see above, the tribal reservations (colored yellow) make up a small fraction of the total land owned by the government in the West. And it increases every year as I will discuss below.
Government Land Grab Has Intensified Last 50 Years
Arguably, the government land grab has been going on since the country was founded, but it has intensified over the last 50 years or so. The primary government agency involved is the US Land and Water Conservation Fund (LWCF), which was created back in 1964 under President Kennedy.
Over its five-plus decades, the LWCF has dispensed tens of billions of dollars to federal agencies and states for purchasing millions of acres in land for national parks, wildlife refuges, forests, historic and scenic rivers, national battlefields, monuments and other lands across the country. The LWCF has also bought private land as a wildfire buffer between public forests and vulnerable communities. It buys more land every year.
The power of “eminent domain” allows the government to take private land for public purposes only if the government provides fair compensation to the property owner. The process through which the government acquires private property for public benefit is known as “condemnation.”
The proponents of the LWCF argue that it’s a good thing because it protects federal lands, protects the environment and provides recreation areas for all Americans. Environmental activists want wildlife and other undeveloped areas expanded; outdoor enthusiasts want larger expanses to hunt, fish and hike; preservation groups want more battlefields saved; and urban planners want to incorporate more green space into their cities.
You’re probably wondering how the LWCF is funded. Taxpayer dollars, you’re probably thinking. Not exactly. The LWCF has been primarily funded from the taxes paid to the government from energy companies for offshore oil and gas drilling leases on federal lands.
The LWCF actually ran out of government funding in September of last year and had to scale back its operations temporarily. But in February of this year, Congress reauthorized the LWCF and made its funding permanent. The measure will allow the government to continue buying private lands each year, and the LWCF will continue to receive its funding from offshore drilling tax revenues. It also authorized the following national park and monument expansions.
Why More Government Ownership of Land is a Bad Idea
There are numerous reasons as I will discuss below, but the fundamental question is: Why do we want the federal government owning more and more of America’s private lands? We can argue about whether it’s appropriate for the government to own certain lands deemed to be federal property: think National Parks. But as we see in the first chart above, federal ownership of land in the western United States is completely out of control.
And let’s not forget that when the government buys or otherwise acquires private lands, it owns those properties in perpetuity. As noted above, the federal government already owns 640 million acres and hundreds of millions more in mineral rights below the surface and offshore.
Then there’s the issue of maintaining these hundreds of millions of acres of land and the funding for same. The Heritage Foundation reports that the US Interior Department already has a $16 billion maintenance backlog on the lands the government already owns – that it can’t take care of.
As the government acquires more and more land, resources for maintaining those lands are spread thinner and thinner. They are stretched to serve more land holdings challenged with overwhelming maintenance backlogs, including issues like soil erosion, land mismanagement, improper forest protection, littering, etc., etc.
The federal government has proven over and over the last several decades that it is an atrocious protector of our forests and wildlife. The Feds have let millions of acres of government lands be damaged or destroyed through inadequate land management and even “let it burn” policies during forest fires.
Also, as you can see in the chart at left, federal land trusts earn far less on their investment in recreational areas and other projects than do comparable state trusts.
Furthermore, federal land management has devolved into unclear, redundant and expensive regulations that often thwart good stewardship and enable discouragingly excessive litigation. The federal government has proven to be inflexible in managing land, unresponsive to local concerns and not competitively managed.
Finally, the LWCF has awarded over 41,000 grants to state and local governments for community projects including swimming pools, parks, tennis courts, boat ramps, snowmobile trails, creek access points, local zoos, golf courses, recreation centers, playgrounds, baseball field lights, soccer fields, etc., etc.
While funding these local projects around the country is very popular, and politicians work very hard to get these dollars for their communities, such LWCF grants have no place or authority within the constitutional functions of the federal government.
Conclusions: Reign in LWCF, Build More Infrastructure
I could go on and on with reasons why the government should not own unlimited amounts of otherwise private property, much less finance such purchases with profits earned from offshore drilling leases that could go toward reducing the federal budget deficits each year.
The bottom line is, the Land and Water Conservation Fund has become a vehicle dedicated to the growth of the federal government at the expense of better and more accountable management initiated at the state, local and private levels.
Most members of Congress support the Land and Water Conservation Fund because their constituents associate the LWCF with their local parks and other government funded projects. In reality, however, the LWCF is primarily a federal program that expands government control of America’s land and water. This needs to change!
In case you’re not convinced, here’s another idea I’ll leave you with. What if we used those huge taxes from offshore drilling leases to fund a big infrastructure project that everyone agrees we need? There is no question we need more roads, bridges, airports, new pipelines, better ports, etc., etc.
Why not have the government stop acquiring more private land and use that money to pay for a major infrastructure program? Sadly, I don’t expect this to change anytime soon.
Best regards,
Gary D. Halbert
Forecasts & Trends E-Letter is published by Halbert Wealth Management, Inc. Gary D. Halbert is the president and CEO of Halbert Wealth Management, Inc. and is the editor of this publication. Information contained herein is taken from sources believed to be reliable but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgement of Gary D. Halbert (or another named author) and may change at any time without written notice. Market opinions contained herein are intended as general observations and are not intended as specific investment advice. Readers are urged to check with their investment counselors before making any investment decisions. This electronic newsletter does not constitute an offer of sale of any securities. Gary D. Halbert, Halbert Wealth Management, Inc., and its affiliated companies, its officers, directors and/or employees may or may not have investments in markets or programs mentioned herein. Past results are not necessarily indicative of future results. Reprinting for family or friends is allowed with proper credit. However, republishing (written or electronically) in its entirety or through the use of extensive quotes is prohibited without prior written consent.
© Halbert Wealth Management
© Halbert Wealth Management
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