GUEST opinion

Opinion
Apr 24, 2009

GUEST opinionCollateralizing our national debt

The U.S. has become a debtor nation. Our federal government now owes more than $10 trillion in national debt, or about $35,000 for every man woman and child now living in this country. That money has been borrowed from other nations and from huge private banking consortiums.

Like others who lend money, these nations and banking entities expect more than just a promise to repay the debt. They expect something to be offered as security to make good on the debt in case of default. For instance, the lenders who extend a home equity loan require a mortgage on the title to the home as collateral. If the borrower defaults on the loan, the lender is able to foreclose on that property and sell the home to recover the amount of money that was lent. Likewise, when someone finances the purchase of an automobile, the lender holds the title to the vehicle until the loan is paid in full. If the buyer fails to make timely payments on the debt, the lender is able to repossess and sell the vehicle to recover the amount of money lent. Just like all lenders, the nations and banking entities extending credit to the United States expect such debt to be securitized by collateral. Nevada rancher and economist Wayne Hage postulated in his 1989 book Storm Over Rangelands that our creditors expect collateral in the form of an implicit mortgage on the land owned by the United States government. Mr. Hage suggested that the near exponential growth in lands being set aside for environmental preservation had more to do with providing collateral for our lenders than with preserving the environment for our posterity.

The federal estate is worth many trillions of dollars. This enormous wealth is primarily comprised of timber, mineral deposits, coal deposits, and vast natural gas and oil resources.

Those nations and banking entities that have loaned the United States trillions of dollars consider these gigantic reserves the collateral that secures their loans. They want these resources, their collateral, preserved until the loans are repaid. The direct result is that our government continues to exclude more and more of our vast natural resource wealth from development in direct proportion to the growth of our national debt. Over the past three decades, our government has excluded areas from development that contain much of our natural resource wealth. A few salient examples come to mind. The Alaskan National Wildlife Refuge that holds billions of barrels of easily recoverable oil and huge quantities of natural gas is banned from development. The Staircase Escalante National Monument that holds one of the world’s largest coal deposits is excluded from mining. The Green River Basin that holds more oil in its oil shale deposits than mankind has ever used is banned by presidential order from exploration and development. The vast Bakken formation in Montana and the Dakotas also holds more known recoverable oil resources than mankind has ever used and is also off limits. United States companies are forbidden from exploring and developing known oil and gas resources on our outer continental shelf. Even though the United States is often characterized as the Saudi Arabia of natural gas reserves, much of that wealth is locked up as well. Have we ever wondered why we annually purchase $700 billion in fossil fuels from other nations at the same time that our own nation possesses some of the world’s greatest fossil fuel resources? Moreover, our government has designated more than 100 million acres of publicly owned land as wilderness reserves.

To put that amount of wilderness acreage into perspective, it is more than 150 thousand square miles, an area half again larger than the entire land mass of Oregon. As we all know, wilderness reserves are excluded from development and from natural resource harvest of any kind. Of course, national parks, national monuments, national heritage areas, road-less national forest areas, marine reserves, and many other exclusions are in addition to the wilderness reserves. In fact, the total area officially excluded from development and natural resource harvest is about the size of Texas.

The rate of acquisition of private lands by the federal government has also increased dramatically in recent years. The most usual method is for non-government conservation organizations to purchase the “last great places” with the stated intent of preserving them for future generations. After ownership is transferred to the conservation organization, it is usually sold to the federal government for a handsome profit. These profits are then used by the conservation organization to purchase more “last great places” for future sale to the government. The insidious process is self perpetuating and is extinguishing private property ownership at ever increasing and more alarming rates.

The conservation easement is a similar and equally effective means of extinguishing ownership of private property. Property ownership has been characterized as owning a bundle of sticks where each stick represents a portion of that total ownership right. In this analogy, individual sticks could represent ownership rights such as easements, mineral rights, water rights, or the right to develop the property. A conservation easement represents the sale of one or more of this bundle of rights to another owner while the property owner retains the remainder of the bundle of rights. Generally, a conservation organization purchases a conservation easement for the purpose of conserving the property by preventing the use of the rights purchased. The property is conserved in order to keep the property from being substantially altered, or to prevent the change of use of the property. In many cases, the end result is that the requirements of the conservation easement cause the property to become an uneconomic unit for the original owner.

When that reality becomes apparent, the only viable purchaser may be the conservation organization that purchased and holds the conservation easement. Once that conservation organization purchases the property distressed by the conservation easement, it usually becomes available for sale to the federal government. This is also an insidious, self perpetuating process that insures the acceleration of the transfer of private property to the federal government to build the value of the federal estate.

On March 30, President Obama added another 2 million acres, another area about half the size of Klamath County, to the wilderness reserves when he signed the Omnibus Public Lands Act. He said, “This legislation guarantees that we will not take our forests, oceans, rivers, national parks, monuments and wilderness areas for granted, but rather we will set them aside and guard their sanctity for everyone to share.”

President Obama’s administration has been borrowing money at previously unheard of rates. The direct result is that our national debt, and the requirement for collateral to secure that debt, has been growing at an unprecedented rate as well. Would it have been more appropriate for the president to have told the people the whole truth? Is the real truth that our creditors required further guarantee that their collateral is sufficient and safe? Do our creditors require further guarantee that this nation will not use the natural resources that secure the debt until the debt is paid? The question that begs asking is, how will this nation ever repay its debts when it is excluded from using its natural resources to create the wealth required to repay the debt? — Senator Doug Whitsett, R-Klamath Falls, OR, District 28

(Senator Whitsett is a 35-year large animal veterinarian and second-term Oregon state senator representing Klamath, Lake, Crook, and parts of Deschutes and Jackson counties in Oregon. He grew up on a ranch in central Oregon. His wife, Gail, is from a fourth-generation ranching family south of Dillon, MT.)

{rating_box}