To solve our debt problems, let’s sell Alaska

It would be much simpler for Beijing to use its $3 trillion in foreign exchange reserves — a large chunk of it invested in U.S. Treasury debt — to vacuum up Alaska’s resources and to resettle some people from China’s overcrowded and heavily polluted cities. As the Arctic ice melts with climate change, Alaska could also serve as a valuable shipping route, saving time, fuel and money for cargo ships traveling from China to Europe.

The transaction could be done by simply canceling the Treasury debt, thus avoiding the financial upheaval that would result if China sold those securities on the open market.

How about an individual buyer? Donald Trump comes to mind. He could advertise on Mount McKinley — or just rebrand it Mount Trump, the highest peak in Trumpistan. He could even issue his own birth certificates to avoid any confusion about the national origin of public officials there. Of course, this 570,640.95-square-mile bauble would be a tad expensive for him, and he’d have to make it a very leveraged buyout, but he’s gambled big before.

He floated the proposal (tongue in cheek) in a paper for a Wharton Business School conference on U.S. government debt. Speaking on a panel called “U.S. Ability and Willingness to Pay: Unwinding the Empire,” he also tossed in the possibility of selling off vast federal lands in the Rocky Mountain states and offshore areas. In a book based on the conference, his chapter was called “Burning the Furniture to Heat the House — The Potential Role of Asset Sales in Funding the Federal Government’s Deficits.”

As Millstein noted, there is a serious point beneath all this: Countries that spend with abandon and ask little of taxpayers end up facing some unpleasant choices.

Selling off the national furniture isn’t unusual or far-fetched in other parts of the world. When governments spend beyond their means, the International Monetary Fund usually rolls up and offers aid, often with a condition: Sell state-owned assets. Sometimes that means the state-owned airline or phone company. After the fall of communism, Eastern European countries sold off state-owned enterprises.

This can wound national pride, as in Greece recently. Two right-wing German politicians triggered outrage in Athens in 2010 when they said Greece should sell historic buildings, artwork and unpopulated islands.

But it’s not without precedent. In 1803, France was in a position that should sound vaguely familiar. France, the superpower of continental Europe, had suffered a severe setback in Haiti, where fighting had exacted a steep cost in lives and treasure. Napoleon wanted to bring the troops back home to confront England. So rather than maintaining all of his far-flung empire, he decided to sell the Louisiana Territory — including part or all of 14 modern-day U.S. states — to us for $15 million.

What could selling Alaska do? It could shrink the federal debt by 10 to 25 percent of gross domestic product, bringing it well within the range considered safe. Even without a budget deal to cut spending and boost revenue, there would be no need to ask Republicans to raise the debt ceiling for another five or six years. Now that’s long-range planning.