Notebook > Money
Ralph Alswang

Going once, going twice

Money | The government considers billions in asset sales

Issue: "Libyan exodus," March 26, 2011

The Treasury Department in early March sold part of its interest in Ally Financial, the former lending arm of General Motors once known as GMAC. The $2.7 billion sale accounts for only a fraction of the $17 billion Uncle Sam poured into GMAC in 2008 and 2009 to keep the company afloat. The U.S. government still owns 74 percent of Ally's common stock, along with nearly $6 billion in preferred stock. The common stock is expected to be put back on the public market later this year.

Meanwhile, the Obama administration said it wants to sell thousands of unused government-owned buildings-including a one-million-square-foot warehouse in Brooklyn, New York, that has stood empty for a decade. "We need to get rid of this real estate [and] stop paying for unnecessary upkeep," said Jeffrey Zients of the White House Office of Management and Budget.

OMB has identified 14,000 federally owned properties as "excess" and another 55,000 as "underutilized," but needs congressional approval before putting them on the market. The budget office is proposing to sell the properties via online auctions.

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The federal government is the largest owner of buildings and property in the nation, with more than 1.2 million individual holdings.

Internal reform

In what The Wall Street Journal described as "a rare show of leniency," the Internal Revenue Service unveiled new rules aimed at helping struggling taxpayers. "We are making fundamental changes to our lien system and other collection tools," IRS Commissioner Doug Shulman announced, saying that the new policies would help taxpayers "have a better chance to stay current."

The policy changes came weeks after National Taxpayer Advocate Nina Olson criticized the IRS for filing tax liens against the property of 1.1 million taxpayers in 2010-in many cases making it more difficult for taxpayers to clear their tax obligations. Although the new rules are "a significant step in the right direction," Olson told the Journal, "they are not sufficient to address the problems we have seen." The taxpayer advocate is an independent watchdog within the IRS.

Insufficient postage

Warning that the U.S. Postal Service is facing a "liquidity crisis," new Postmaster General Patrick Donahoe issued a plea to Congress: "We need help." Donahoe told a House Oversight Subcommittee that the agency's finances are being crippled by an "incredibly onerous burden" Congress enacted in 2006: a requirement that USPS make a $5.5 billion annual payment to fund health costs for future retirees.

The requirement has caused the Postal Service-a self-funding agency that doesn't receive tax dollars-to suffer billions in losses in each of the past four years, he said. Absent a change in the law, "the Postal Service will be insolvent" by the end of the fiscal year in September, Donahoe warned. "We will pay employees and deliver mail," he said. "The thing we will not do is be able to pay the federal government."

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