Latest / The Fiscal Policy Podcast with Fexingo: Government Budgets, Stimulus, and Public Spending / Why the Federal Government Is the Worlds Largest Landlord
Transcript
- Lucas: The federal government of the United States owns roughly six hundred and forty million acres of land. That is about twenty-eight percent of the entire country — and that makes Washington the single largest landlord in the world by a very wide margin. Luna: I knew the government owned a lot of land in the West, but I didn't realize it was that concentrated. Almost half of all land in states like Nevada, Utah, and Alaska is federally owned, right? Lucas: Exactly. In Nevada it's over eighty percent. And this isn't just empty desert — there are massive economic resources sitting on that land: timber, grazing, oil, gas, minerals, recreation. The government collects revenue from leases and royalties on all of that, but here's the strange part — the total annual revenue from the entire federal land portfolio is only about three billion dollars a year. Luna: Three billion? That seems incredibly low for assets that are probably worth trillions. What's the estimated total value? Lucas: There's no official number because the government doesn't mark its land to market the way a private company would, but independent estimates put the total value somewhere between one and three trillion dollars. The Government Accountability Office, the GAO, actually flagged this as a major financial reporting gap — the federal government's balance sheet doesn't properly account for its largest asset class. Luna: So the world's biggest landlord has no idea what its portfolio is worth, and it's earning less than a tenth of a percent return on that massive asset base. That's a pretty striking contrast with how a private company would manage things. Lucas: It is exactly that contrast that has a small but vocal group of policy experts pushing something called 'asset recycling.' The idea is straightforward: the government sells or leases underperforming federal land to private operators, uses the proceeds to pay down debt or invest in infrastructure, and potentially increases economic output from the land at the same time. Luna: Australia has actually done this pretty successfully, right? They raised over sixty billion dollars through asset recycling programs starting in the 2010s, selling or leasing state-owned assets like ports and power grids. Lucas: They did. Australia's model is the one proponents point to. In the U.S., though, the conversation is much more politically charged because it involves public land — which carries a lot of emotional and cultural weight. There was a real attempt in 2017 when the Trump administration proposed selling about 3.1 million acres of Bureau of Land Management holdings, mostly in the West. The goal was to raise roughly two billion dollars over ten years. Luna: And I remember that went nowhere. The backlash was intense — from environmental groups, but also from hunters and anglers and local communities who depend on access to that land. Lucas: Right. The proposal died in Congress. But the underlying economic puzzle didn't go away. And now in May of 2026, there's actually a new bipartisan bill being floated — it's called the Federal Land Asset Management and Revenue Act — that takes a different approach. Instead of selling land outright, it creates a pilot program to lease federal land for carbon offset projects. Luna: Carbon offsets on federal land — that's interesting. So companies could pay to restore or preserve forests and then count those carbon credits against their own emissions? Lucas: Exactly. The bill would authorize the Forest Service and the Bureau of Land Management to enter into twenty-to-fifty-year leases with private firms for carbon sequestration projects. The Congressional Budget Office's preliminary score estimates the pilot could generate between four hundred million and eight hundred million dollars over ten years. That's actually significant — it's a sizable chunk of the current three billion in annual land revenue. Luna: It's not a game-changer for the national debt, but it's real money. And it avoids the politically toxic idea of selling public land to private developers. Lucas: Exactly. And it speaks to a bigger question that I think is really at the heart of fiscal policy: what is the government's job as an asset manager? Is it to maximize revenue, or is it to preserve access and ecological value? Luna: That's the tension. And I think it's worth pointing out that the government is actually already doing both — just not very efficiently. The grazing fees on BLM land, for example, are set by a formula from 1978, and they're often below what private landowners charge by a factor of five or more. Lucas: Yeah, that formula is wild. It pegs grazing fees to a 1960s index of cattle prices and production costs, adjusted only for inflation. The result is that ranchers pay about $1.35 per animal unit month on federal land, versus $15 to $25 on private land in the same region. That's effectively a subsidy. Luna: And that subsidy is incredibly hard to unwind because the ranching communities have been operating under that system for generations. Their whole business model depends on it. Lucas: Right. So you're never going to just spike the grazing fee to market rates overnight. But the carbon offset leasing approach is interesting because it creates a new revenue stream without directly taking anything away from existing users — at least in theory. The pilot would focus on land that's already degraded or underused. Luna: Speaking of making the show possible — and I realize this is a bit of a pivot, but it actually connects — we're able to dig into these really specific, wonky corners of fiscal policy because of a handful of listeners who chip in every month. Lucas: Yeah, it's true. We don't run ads. This entire podcast is listener-funded. And a small but really thoughtful group of people keeps the lights on through buy me a coffee dot com slash fexingo. Luna: If you've been following along and find yourself thinking about land assets or grazing fees in a new way, that's the kind of thing that tells us we're on the right track. And the support from listeners is what lets us keep doing that. Lucas: So back to the asset recycling question — the carbon offset pilot is one idea, but there are others that are even more aggressive. Some economists have proposed creating a Federal Land Trust that would operate like a sovereign wealth fund, professionally managing the portfolio for maximum risk-adjusted return. Luna: That would be a huge institutional shift. You'd be taking land management out of the hands of the Interior Department and giving it to a financial entity with a fiduciary duty to maximize value. Lucas: And that's exactly why it's unlikely to happen anytime soon. But the conversation itself is valuable because it forces us to think about what we actually want from public land. Do we want it to generate revenue to pay down the national debt? Do we want it to stay as a public good for recreation and conservation? Or do we want some hybrid? Luna: I think the answer is probably the hybrid, but the current system doesn't even measure the trade-offs properly because we don't have good data on the non-monetary value — the recreational benefits, the ecosystem services, the cultural significance. Lucas: That's a really important point. The government's three billion dollars in revenue is only one side of the ledger. The Outdoor Industry Association estimates that recreation on federal land generates over one hundred billion dollars in economic output annually — that's spending on gear, travel, guides, all of it. So if you're going to sell or lease land for carbon offsets, you have to account for the fact that you might reduce access for hikers and hunters. Luna: Which is why the carbon offset pilot is limited to degraded land. But I wonder if that's even enough land to make a dent. What's the total acreage of degraded federal land that could realistically be enrolled? Lucas: The BLM estimates about forty million acres of its holdings are classified as degraded or low-productivity — that's roughly ten percent of its total. If you could put even a quarter of that into carbon offset projects, you're looking at ten million acres, which at current carbon prices could generate maybe two to three hundred million dollars a year. Not nothing, but not transformational. Luna: So even the most optimistic scenarios don't really move the needle on the national debt, which is over thirty-four trillion dollars now. But they do create a template for a different kind of fiscal policy — one that treats public assets as a source of ongoing revenue rather than just a cost center. Lucas: That's the frame I keep coming back to. The federal government spends hundreds of billions of dollars a year just on interest on the national debt. If you can generate even a few billion in additional revenue from assets you already own, that's a small but real contribution to closing the gap. And you're doing it without raising taxes or cutting programs. Luna: Right, but you're also changing the character of public land. Once you start treating it primarily as a financial asset, you risk losing the intangible values that make it public in the first place. That's the trade-off that doesn't show up in any spreadsheet. Lucas: And that's the right note to end on, I think. The federal government is the world's largest landlord, but being a good landlord might mean more than just maximizing the rent check. Thanks for listening to The Fiscal Policy Podcast. We'll be back next week.