President Reagan first tried his hand at selling portions of the federal estate in 1982, vowing to raise $9 billion in three years by "shedding" a vast array of "unneeded" government property.
It seemed a perfect marriage of Reagan's vision of a smaller government and the vision of David A. Stockman, then director of the Office of Management and Budget, of a smaller budget. But it failed miserably.
The grand total raised by the experiment was $422.6 million. An administration that once envisioned selling national forest tracts in the southeast, scrub lands in the west, military property on Honolulu's Waikiki Beach and weather satellites in the skies had to swear off the notion in deference to an angry and bipartisan political backlash.
Four years later, senior administration aides say Reagan is again moving to unload federal assets, this time on a far broader scale. His fiscal 1987 budget -- to be unveiled next month -- seeks to divest the Bonneville Power Administration, which sells electricity generated by federally owned dams in the Pacific Northwest, and three similar agencies in the southeast, southwest and west, officials said.
Also on the auction block or under serious consideration for "privatization": the Naval Petroleum Reserve, the Tennessee Valley Authority (TVA), portions of the U.S. Postal Service and federal loans to students, homeowners, small businesses and others.
Targeted for future sale -- but not this time around -- is the Federal Housing Administration and its multibillion-dollar mortgage portfolio. The rail freight system, Conrail, and Dulles and National Airports already are in the process of being sold. And the administration continues to shed social service programs, looking to private charities to pick up the slack.
The reaction to many of these proposals, while fiery, has been muted compared to the uproar of four years ago. Some observers attribute the change to concern over the $200 billion-plus annual federal deficit, twice its 1982 size, which must be eliminated by fiscal 1991 under the Gramm-Rudman-Hollings law.
But several officials of this and earlier administrations explained it as a shift in political moods, a waning of Great Society-era notions that government is good and business is bad, a swapping of dogma for pragmatism.
"The country has gotten conservative," said Charles L. Schultze, chairman of the Council of Economic Advisers in the Carter administration and budget director under President Lyndon B. Johnson. "People generally are more likely to say ho-hum and not think you're selling off the country's crown jewels compared to the era of [Franklin D.] Roosevelt through Johnson.
"Back then federal dams and the TVA were the glory of the world. Today people are more pragmatic," said Schultze, a senior fellow at the Brookings Institution. "I think it's a good shift. It's not going to save the world, but it's good to look at these things pragmatically."
Along with the shift comes a vexing philosophical question: Where should the public sector stop and the private sector begin? Which functions carry so much public trust that they should be vested in the government and which could be ceded to the marketplace?
Thomas Moore, a member of Reagan's Council of Economic Advisers who chairs a White House working group on privatization, placed defense, the justice system, welfare and Social Security in the first category but said he would like to see the government turn over many other functions to corporations.
He included the Commerce Department's weather satellites, which Congress blocked Reagan from selling in 1983. One obstacle at the time was a fear that a business would forgo buying the most sensitive equipment to save money, thus compromising the safety function of the weather forecasting system.
"That's no longer an issue," Moore said, "because with Gramm-Rudman there's not going to be money in the federal budget to buy [the most expensive equipment]. It's more likely that the money could be raised privately for these kinds of activities than within the government."
The New Deal moved the government into the arena of providing wide-ranging social services, a tradition that expanded for almost half a century. And at the same time, vast areas of American life became part private and part public.
The government contracted out to private companies such diverse functions as manufacturing weapons and running hotels in national parks. Moreover, virtually every enterprise from growing wheat to drilling oil wells became subsidized by a panoply of tax and budget favors, each carrying a price tag.
There are significant differences between "privatizing" certain functions of government, such as the postal service, and simply paring the size of government by selling assets like loans, reducing subsidies such as farm price supports or contracting out existing services.
Office of Management and Budget Director James C. Miller III says the present romance with privatization is philosophical -- symbolic of a belief that the government would run more efficiently if some services were run by business. But some White House officials say it grows in part from a desperate need for deficit reduction.
"The term suggests an ideological approach, but I look at it rather as a stab at going cold turkey," said economist John Makin of the American Enterprise Institute. "We're short on revenue so [OMB says] let's sell off assets."
Current and former officials across the political spectrum agreed that one way to satisfy the old saw of "making government run like a business" is to let businesses run at least certain functions.
They cited most often the federal power authorities and TVA, which in many ways are similar to utilities owned by investors and local governments. Another oft-cited example is private parcel delivery and messenger services, which some see as eclipsing the postal service.
But several questioned proposals to sell government loans to raise cash, saying this would bring in dollars in the short run, but deprive the government of revenue in the future. "Back during the Vietnam war," Schultze said, "we did some of the same kinds of things in the Johnson administration to make the deficit look better, and we probably shouldn't have."
The present shakedown is directed exclusively to shedding government obligations, but Schultze suggested that in the same spirit of pragmatism, the administration should consider whether to resume certain discarded functions.
"Some of the efforts to contract out government services have proved very inefficient," he said. "There are legitimate questions whether certain things now done by government could be done better on the outside. And there may be some things now being done outside that we ought to bring back in."