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This Week’s Outsourcing Scan 12-12-2016

1) NationalDonald Cohen of In the Public Interest and Michelle Chen of The Nation warn that Donald Trump’s infrastructure plan is a privatization trap. “America must invest in rebuilding our infrastructure for the 21st century, but we need to do it right. Doing it right means keeping public control, protecting taxpayers, creating good jobs in an increasingly unequal economy, and addressing climate change. Trump’s plan would lean heavily on the private sector through ‘public-private partnerships’ (P3s). Without protections, P3s hand control of our infrastructure to private investors or cost us more in the long run—or both,” says Cohen. “With P3s, the devil is in the details.” [See the ITPI report, Building America While Building Our Middle Class for best practices on P3s]

2) National: The right wing Heritage Foundation has issued a paper listing its demands on infrastructure policy from the incoming Trump administration. Heritage, on whose board Trump mega-funder Rebekah Mercer sits, is playing a pivotal role in staffing the incoming administration at all levels.

Building on Victory: An Infrastructure Agenda for the New Administration says the issue of America’s crumbling infrastructure is “a nonexistent crisis,” and calls for a weakening of environmental safeguards for infrastructure projects, ending project labor agreements and Davis-Bacon protections, and more “private sector ownership, financing, operation, and maintenance of infrastructure and transportation services.” Confirming concerns that Trump’s infrastructure plan will be used to benefit the fossil fuels industry by supporting more pipelines rather than needed civil infrastructure, Heritage says “the first step should be to approve the Keystone XL pipeline.” They even reject the idea of using repatriated corporate earnings for infrastructure improvement under a tax credit proposal laid out by Trump advisers, saying that it would amount to a wasteful “tax and spend scheme.”

Heritage takes direct aim at public mass transportation and public infrastructure finance tools: “Eliminate all funding for local and wasteful projects such as mass transit, local roads, and bike paths. Lift the ban on tolling the Interstate Highway System. Draw down federal gas taxes from the current 18.4 cents per gallon to 5 cents per gallon or less over 5 years. Limit Highway Trust Fund spending to revenues, reserved for maintenance of the National Highway System and reclassify this spending as discretionary.”

The Koch- and Donors Trust-funded Cato Institute has heartily endorsed the Heritage Foundation’s blueprint.

3) National: Frank Shafroth, director of the Center for State and Local Leadership at George Mason University, says Donald Trump’s infrastructure plan “looks like voodoo economics.” Shafroth says that eliminating the tax exemption for municipal bonds and rejigging the whole infrastructure financing system that has been in place for state and local governments for generations would be disastrous. “He has proposed this be financed in part through tax credits to investors and construction companies—that is, bypassing the nation’s state and local governments. Now, a further concern for states and local governments is that the President-elect and Congress may move to tax the interest on municipal bonds issued by states, counties, school districts, and cities to pay for credits or tax cuts in other areas.” 

Worse still, the public planning process would yield way to a chaotic mélange of project-driven financing schemes overseen by a dysfunctional Congress: “Perhaps of greater import is that unlike the federal government, states, cities, and counties have both operating and capital budgets and long-term planning processes. The federal government, which has yet to even adopt an operating budget for the current federal fiscal year, has no such capital budget process.” [Sub required]

4) NationalIn the Public Interest releases a fact sheet on how Wall Street banks enable private prison companies to increasingly control the criminal justice and immigration enforcement systems. “The loans given to GEO Group to acquire electronic monitoring companies have enabled the company to receive new monitoring contracts. For example, with the acquisition of B.I. Inc., GEO Group obtained the contract to manage Immigration and Customs Enforcement’s (ICE) Intensive Supervision Appearance Program, which tracks and monitors immigrants before trial.”

5) National: A small grassroots group of concerned citizens has launched a petition drive named Break the Cycle! to call attention to abuses in privatized post-prison programs and do something about it. “The privatized post-prison programs for former prisoners are charging high costs for classes, ankle monitors, and even a quarter of their pay for housing. A lot of these former prisoners do not have a support system, or can even get a job because of their criminal history and cannot afford all these fees. They end up being back into the system because they are victims of their own circumstances. We need to start a petition to help get more funding. We can start by spreading the word and getting signatures.” [Video discussion, 8 minutes]

6) National: A federal official is calling for a probe to investigate accusations of human rights violations on privately run vans that carry tens of thousands of prisoners across long distances every year. “Deb Miller, vice chairman of the Surface Transportation Board, made her comments last month, echoing calls from lawmakers this summer for a probe of Prisoner Transportation Services, the nation’s largest private extradition company, and others in the field. The company was highlighted in a Marshall Project investigation that revealed a pattern of deaths and abuse in the industry.”

7) National: Low wage workers, demanding that the federal government practice responsible contracting, stage a one-day strike in Washington, DC. “A report released Monday by Demos, a public policy organization based in New York, said ‘approximately 40 percent of all federal contracting dollars in 2013 went to contractors with health, safety or wage violations on their record’ and ‘Americans working for federal contractors lose up to $2.5 billion each year to violations of minimum wage laws alone.’ Good Jobs Nation, a campaign on behalf of low-wage federal contract workers that is supported by community and labor organizations, says it has recovered $5 million in back wages for 1,500 federal contract workers over the last three years. President Obama has taken action to protect contract workers, but his efforts are under attack.” [Demos report, “Don’t Let Government Contactors Cheat Working Americans”]

8) NationalMedia Indigena, a weekly indigenous current affairs program, takes on plans by the Trump administration to privatize Native American treaty lands so they can extract and profit from its oil and gas. They are joined by Cutcha Risling Baldy, an Assistant Professor of American Indian Studies at San Diego State University, and Taté Walker, editor of Native Peoples magazine. [Audio, at 22 minutes]. The land “may contain about a fifth of the nation’s oil and gas, along with vast coal reserves,” Reuters reports.

9) National: Marla Kilfoyle, executive director of the Badass Teachers Association (BATS), talks to Robust Opposition’s Lauren Steiner on Betsy DeVos, charter schools, and the future of public education. [Video, 1 hour]

10) National/Texas: Veteran Texas political journalist Glenn Smith says “school privatization is a pyramid scheme.” Smith writes, “As we near the start of the 2017 session of the Texas Legislature, the fate of public education once again hangs in the balance. [Gov.] Patrick—especially Patrick—has long had his sights trained on public ed. (…) The school privatization schemes share a great deal with the right’s dreams of privatizing Social Security. Their cronies and contributors see all that public money flowing to public services and they want to get their hands on it. That is the beginning and end of every privatization proposal. The quality of the public service to be distributed is completely irrelevant. To the public they say, give us the money and shut up.”

11) National: The results of the latest international survey of educational performance (PISA) are released, showing the U.S. is stagnating or falling behind in a number of areas. Students from the United States saw a decline in their reading, mathematics, and science scores on average since the last survey in 2012. But the American Federation of Teachers warns that school privatization and teacher punishment are not the answer.

12) NationalYears of underfunding of the Social Security Administration’s budget has led to service declines, which will now likely be used as an excuse to try and privatize the program. “Social Security officials acknowledge the bad service. ‘Our service budget has been underfunded since FY 2010,’ an agency statement said. ‘The number of Social Security beneficiaries and Supplemental Security Income recipients has already risen by 12 percent since 2010, resulting in service deterioration since we simultaneously have had less funding to serve them. … Additionally, Social Security’s enacted budgets for service have not kept pace with inflation.’ (…) For Witold Skwierczynski, president of the American Federation of Government Employees Social Security Council, it comes down to a simple mathematical equation: ‘We have fewer staff to do more work.’”

13) National: Thomas Sugrue, an expert in American urban history, American political history, housing, and the history of race relations, denounces the nomination of Ben Carson to head the Housing and Urban Development department. Sugrue points to the similar nomination of an inexperienced and uncommitted HUD secretary by Ronald Reagan, Samuel Pierce, as a bad lesson learned. “Pierce undercut HUD’s civil rights mission: Housing was nearly as segregated at the end of the decade as it had been at the start. Urban housing conditions deteriorated, the construction of affordable housing slowed to a trickle, and urban poverty deepened. HUD, however, still channeled money to private housing developers and contractors. And under Pierce, the vultures circled.”

Pierce was also a champion of privatization. “Reagan and Pierce were zealous advocates of turning HUD’s responsibilities over to the private sector. (One of Pierce’s assistant secretaries resigned when it came out that HUD staffers had helped him type and proofread his book, Privatizing the Public Sector.) HUD’s privatization efforts opened up new possibilities for crony capitalism. Staffers directed money to Republican-connected lawyers, consulting firms and developers. One of the dozens swept up in the resulting investigations by federal prosecutors and Congress was Trump’s former campaign manager, Paul Manafort , who had successfully lobbied for about $43 million in federal subsidies for a shabby New Jersey housing complex. He received $326,000 in fees for his efforts and eventually owned a 20 percent share in the development, which showed few signs of improvement after winning the HUD grants. Eventually, more than a dozen HUD staffers and external consultants were convicted on charges including taking bribes, accepting illegal loans, defrauding the government and lying to Congress. (Manafort was never charged with wrongdoing.) History never repeats itself exactly, but Pierce’s time at HUD offers some warnings for Carson’s nomination.”

14) Colorado/NationalA civil rights complaint could derail one of the most prominent ‘public private partnership’ road projects in the country—the $1.7 billion expansion of Interstate 70 in Denver. “The Transportation Department and the FHWA notified the Colorado Department of Transportation and attorneys for the plaintiffs on Tuesday that they planned to follow up on the complaint, which was filed by the environmental law firm Earthjustice on behalf of community groups in the mostly Latino neighborhood. The widening project would add traffic to area streets, pollute some of the Denver’s poorest neighborhoods, and force the relocation of 74 homes and businesses, the plaintiffs said.” Candi CdeBaca, a spokeswoman for the Cross Community Coalition, said “we are pleased to see federal attention to a proposal that is nothing short of life-threatening to our community. For us, what this means is that there’s somebody who’s actually going to step in and come pay attention.” [Earthjustice/community complaint]

15) IowaConcerns about care authorization are voiced at a forum in Colfax on Gov. Branstad’s Medicaid privatization. “The hardest part is when we tell them what level of care a client needs, and we’re told, no, this level is authorized. So the MCOs are dictating what level of care (residential, outpatient, halfway house) our clients can receive. (…) Pritchard, Clearview’s director for the past 12 years, said his facility reunites mothers who are in substance abuse recovery with their children, and treatment authorized typically was nine to 12 months under Magellan before the three MCOs were brought in by Gov. Terry Branstad. Now, not only has Clearview had clients stay for shorter times, but the staff is constantly on the phone getting seven-day re-authorizations or similar extensions or maintaining levels of care.”

16) MassachusettsState judge rules that privatization of mental health services in southeastern Massachusetts is legal. “In a 24-page ruling issued Friday in SEIU Local 509 v. Auditor of the Commonwealth, SJC Justice Barbara Lenk wrote that [Auditor Suzanne Bump] ‘did not abuse her discretion in determining that DMH’s privatization proposal met the requirements of the Pacheco Law.’ The so-called Pacheco Law requires the auditor to review privatization proposals and certify that the privatization is procured properly, that it would not result in a net cost to the state and that it would not cause a decline in the quality of services.”

17) New York: David McKay Wilson, the Tax Watch columnist at lohud.compicks apart the shoddy economics behind the rushed plan to privatize Westchester County airport. “The really smart private-equity guys [are] looking at annual profits of between 9 and 11 percent, estimated by CIBC Capital Markets if the deal goes through.” The bait? The buyer’s promise to build a deicing and sanitary sewage plant, which Wilson says is unnecessary. “‘It’s scary,’ said Donald Heithaus of Rye Brook, who chairs the Airport Advisory Board. ‘I’ve never heard about a sanitary treatment plant at the airport. Sounds like they’ll just do whatever they want.’ The construction of a deicing and sewage treatment plant in the environmentally sensitive lands by the Kensico Reservoir and Blind Brook is among the issues that will be left to the private sector if Astorino’s deal goes through. So, too, will what happens to an estimated $350 million in revenue from the airport parking garage from 2024 to 2056 that would be Westchester County’s, if the airport remained public.”

Wilson wonders if this public asset will become just another portfolio item to be flogged off after privatization. “I asked McCann about published reports that Oaktree is looking to sell its interests in infrastructure privatization deals at Munoz Airport in San Juan, Puerto Rico, and the port of Baltimore. He said it’s part of [Oaktree Capital Management’s] business plan. ‘We come in to build best in-place management,’ he said. ‘We set up a culture and values, and then look to deploy our capital elsewhere.’”

18) TexasThe Houston MTA is looking for bidders on a commuter line expansion. “The transit agency said it is looking for responses from transportation infrastructure contractors, transit operators and investors that would be interested to design, build, operate, maintain or finance the commuter line.” The agency will hold an information forum on January 10. Responses are due 7 February 7. [Sub required]

19) International: Last Thursday, at their annual general meeting, the Professional Institute of the Public Service of Canada (PIPSC) held a discussion on precarious work in the public service. “The panel engaged in a lively discussion of the public services Canadians rely on, of how federal public servants are faced with increasing privatization and outsourcing, and of the impact of precarious public service jobs on workers.” [Video, 46 minutes]

20) International: The Canadian federal government is locking horns with Saskatchewan on their partial privatization of public health services. “‘While the ‘two for one’ model you have enacted is unique,’ Philpott wrote in her letter to Reiter, ‘it still allows wealthier patients to jump the queue, both for initial diagnostic services, and for any follow-up care that may be required within the public system.’ Because the private MRI legislation is contrary to the fundamental principle of the Canada Health Act, she asked Reiter to ‘put an end to the current practice of encouraging private payment for diagnostic services and focus instead on ensuring that all residents have access to medically necessary services in a timely manner, regardless of ability, or willingness, to pay.’”

21) Think TanksDoes open government work better? Brookings says it depends, but yes. “Where open government initiatives have been effective, proponents have clearly identified the principals they were trying to reach and publicized information that was important and accessible to those principals. In addition, at least one of the following conditions held: either the principals could respond meaningfully on their own, or they could do so with the support of government officials, or they could do so through a coordinated effort by the principals to change the behavior of their representatives in government. Where these conditions are met, open government initiatives have been shown to improve the quality of governance.”

22) Think Tanks: The December 2016 issue of Criminology, Criminal Justice, Law & Society (CCJLS) contains a republication of Malcolm Feeley’s widely discussed lecture/essay, “Entrepreneurs of Punishment: How Private Contractors Made and Are Remaking the Modern Criminal Justice System—An Account of Convict Transportation and Electronic Monitoring.” Hadar Aviram of UC Hastings College of the Law comments, “Feeley’s lecture provides a similar counterintuitive comparison. Transportation and electronic monitoring emerged as public-private partnerships and created dramatic change in the criminal justice system by increasing punishment options. But, as Feeley argues, rather than decreasing reliance on options conventionally regarded as more barbaric—corporal punishment and incarceration— they ended up expanding punitive options and acting as an addition, rather than a substitution, to the punishment menu.” [CCJLS]

23) Revolving Door NewsDonald Trump has invited Global Infrastructure Partners chairman Adebayo ‘Bayo’ Ogunlesi “to join a group of executives advising on how government policy and the private sector can work together to boost the economy. Ogunlesi joins the 16-member ‘President’s Strategic and Policy Forum,’ chaired by Blackstone co-founder Steve Schwarzman, that will share private-sector experience and knowledge with Trump as he implements policies to create jobs and spur economic growth. (…) Ogunlesi could have a specific role in the forum as chairman and managing partner of GIP, one of the world’s largest infrastructure fund managers, considering Trump’s emphasis on infrastructure investment during the presidential campaign. GIP manages around $35 billion for investors, according to its website.” [Sub required]

Legislative Issues

1) National21 Senators write to Donald Trump expressing concern that he is abandoning his campaign promise to protect Medicare and Medicaid. “These Republican plans would be devastating for millions of Americans. They would increase the Medicare eligibility age. They would privatize Medicare, replacing guaranteed benefits with vouchers that seniors would be forced to use to purchase coverage, dramatically increasing out-of-pocket costs. They would cut billions of dollars from the Medicaid program, turning the program into a “block grant” that would force states to eliminate coverage for millions of beneficiaries, cut guaranteed benefits and consumer protections, and slash provider payments.”

2) National: The House Transportation and Infrastructure Committee has allocated $834 million for a ‘public private partnership’ project to build a new FBI headquarters in downtown DC. “The GSA is unlikely to realize the full value of the FBI site in downtown Washington with the proposed swap, said Rep. Peter DeFazio, D-Ore., the senior Democrat on the panel. ‘I am concerned that they’ve come up with this bizarre construct where they’re going to try to get someone to bid on buying the old FBI headquarters and building the new one. I think pairing the two is stupid,’ he said.”

3) California: State Sen. Ricardo Lara (D-Bell Gardens) introduces legislation, titled the Fight for California package, that includes measures to “prohibit local governments from detaining immigrants through contracts with private, for-profit detention companies, as well as require all detention facilities to meet the minimum health and safety requirements set by Immigration and Customs Enforcement.” 

 

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