Up in the Air


President Bush's timing was either very good or very bad.

On April 30, just as Los Angeles was going up in flames, Bush signed an executive order clearing much of the federal red tape that would stand in the way of privatization of state, local, and federal government assets. Because of the riots, Bush's order didn't get the publicity he probably had hoped for. But it seems the order may make it easier for L.A. to raise funds to rebuild.

Days after the riots, President Bush suggested that the city help raise the money for rebuilding by selling its international airport to private operators. Selling LAX could certainly put a great deal of money in city coffers. Two years ago, a Reason Foundation study pegged the market value of the airport at $1.3 billion; other estimates range as high as $2 billion. In addition, the city could then collect tax revenue on the operation.

In fact, the idea of privatizing LAX had quite a bit of support before the administration made its suggestion. City Council members Joy Picus and Joel Wachs have publicly backed the concept; other council members have privately expressed interest. No City Council members oppose the idea, although some have expressed concerns about regulating a private airport.

In addition, several firms have looked into bidding on the airport. No doubt they've been impressed by the big profits earned by Great Britain's airports since the government privatized them in 1987.

Ironically, the Bush administration's remarks about the airport may have made privatizing LAX more controversial. During a May visit to L.A., Vice President Dan Quayle said the administration was only pointing out that its executive order had cleared away much of the federal red tape that might have slowed the sale of LAX. But Mayor Tom Bradley and others complained that the president was just trying to shirk the federal government's role in rebuilding L.A.

Still, the drive to privatize LAX continues. And the executive order has reportedly re-energized efforts to privatize airports in Indianapolis, Dallas, and New York. If airport privatization is successful, governments may then turn to privatizing other assets. A recent Reason Foundation study estimates that state and local governments could raise more than $227 billion by selling airports, roads, bridges, and other types of infrastructure.