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Weekly Privatization Report 1-23-2017

1) National: The Harrisburg Patriot-News asks “Will Trump keep [his] campaign promises or cave to Ryan on Medicare?” Ryan’s goal, the publication notes, “is to privatize Medicare. As it stands, Medicare is a single-payer system under which the government directly pays for medical care for seniors and the younger disabled people who qualify. Ryan favors paying seniors a set amount they can apply to buying coverage from private insurers (…) Campaigning for president, Donald Trump repeatedly promised not to gut Medicare, the government program that pays for medical care for people 65 and over. (…) Trump himself has referred to Ryan’s proposed Medicare changes as ‘political suicide,’ and has argued it would be unfair to the people who have paid into the program for years.”

2) NationalMother Jones lifts the veil on CoreCivic’s PR machinations against critical reporting on its operations. “The prison company’s connection to the PR firm came to light through a recent email sent by CoreCivic spokesperson Jonathan Burns to Hillenby chief operating officer Katie Lilley. Burns copied Texas Public Radio reporter Aaron Schrank on the email, presumably unintentionally. Schrank forwarded the email to me. The email suggests that Hillenby has been assisting CoreCivic in developing its public response to my reporting.” Hillenby/Lilley has also done media work for Encore Capital Group, which works on student debt collection.

3) National: The Los Angeles Times says Betsy DeVos embarrassed herself in her confirmation hearings and should be rejected by the Senate. “She was so unprepared that she sounded like a schoolchild who hadn’t done her homework.” AFT President Randi Weingarten makes the case that DeVos’ intention is to “drain the public system of the dollars it desperately needs when half our kids are poor.” Sen. Elizabeth Warren grilled DeVos on waste, fraud and abuse in higher educationDiane Ravitch also weighed in to recommend Valerie Strauss’ piece in the Washington Post discussing the role some Democrats played in paving the way for DeVos.

4) National: Yesterday kicked off National School Choice Week, the school privatization crusade’s week of action. Partners include American Federation for Children, founded by Betsy DeVos.

5) NationalThe Hill reports that Trump’s transition team, following the blueprint of the Heritage Foundation, has recommended privatizing the Corporation for Public Broadcasting, which was created by an act of Congress to promote public broadcasting. The move would be especially debilitating to children’s programming, and hit the red states hardest. Free Press President and CEO Craig Aaron said, “the idea of privatizing public broadcasting is appalling. Years of public polling show that the American people consider support for public media to be among the most important uses of their tax dollars—even if they don’t realize how little we actually spend on these vital services. Combined with a plan to shut down important arts and humanities programs, this proposal shows that those advising the Trump administration are completely out of step with the public. We should be spending more on public and community media–which serve as an antidote to fake news–not cutting their funds. As those who have tried to zero out support for public media in the past discovered, millions and millions of people will oppose these attacks.”

6) National: Philip Kennicott, the Washington Post’s art and architecture critic, warns that the Trump/Republican privatization plans “are part of a nascent but ominous larger movement to eliminate the last vestiges of a public realm free of the dictates of the market. Privatizing the social safety net and shifting tax dollars away from public schools are essential moves in a longer war on a social contract that preserves faith in the public realm. Academia is another target and is in the cross hairs as well.”

7) National: Arts groups are gearing up to fight the Trump/Republican elimination of the National Endowment for the Arts (NEA) and National Endowment for the Humanities (NEH). One lawmaker warned that this could usher in a “cultural dark age” under Trump. “President Ronald Reagan tried to abolish the NEA in when he came into office in 1981 but later backtracked after a task force he formally tasked with finding ways to privatize arts support instead recommended continuing the agency’s existing structures. Reagan also met resistance in Congress in trying to cut the NEA’s funding.”

8) NationalIn the Public Interest is offering a two-part webinar series on infrastructure deals and financing schemes, with an emphasis on ‘public-private partnerships.’  The webinars, on January 25 and February 6, are designed to give participants the necessary tools to monitor and intervene in proposed projects in their area to ensure that they truly benefit the community.

9) National: Shoot First, Inc. has launched a kickstarter campaign to support its new film, The Price of Privatization. The film includes commentary and analysis from Shar Habibi of In the Public Interest, attorney Lisa Bloom, Lisa Graves of the Center for Media and Democracy, Peter Montgomery of People for the American Way, Diana Ravitch of the Network for Public Education and others. Schedule a showing.

10) National: Wall Street is hungrily eyeing the profits it can make from “increased privatization in the student loan market” under the Trump administration. “Sallie Mae (SLM, US), the leader in private student loan origination, saw its stock price grow more than 50% between the election and the end of last week. Other companies involved in the industry, including Navient (NAVI, US) and Nelnet (NNI, US), two publicly traded firms that service student loans originated by the government, also saw increases of about 18% and 26% respectively during that period. Discover (DFS, US), which also offers private student loans, saw its stock rise about 8%. Though a variety of factors likely contributed to the growth in the stocks, experts say investors’ perception that the new administration will make more room for private companies in student lending likely played a role. The Department of Education is the nation’s largest student lender, accounting for roughly 90% of the market. But large scale changes or even smaller tweaks to the system, which may be on the table in a new administration, could shift that balance.” The Department of Education is in the midst of awarding a new contract for servicing its student loan portfolio.

11) NationalSunshine Week is being held from March 12-18 this year. For more on how you can participate, check out Sunshine Week’s FOI in Action pageBright Ideas collections from past Sunshine Weeks, and @SunshineWeek.

12) NationalPrivate equity looks to cash in on Trump’s infrastructure plan as states load up on debt. “‘States will increasingly leverage motor fuel and other road taxes to issue more debt, which will lead to a faster increase in transportation-related debt than overall state net tax-supported debt,’ said Moody’s analyst Julius Vizner, author of the report. ‘States generally have low debt levels and have the capacity to tap capital markets to finance a substantial amount of infrastructure.’ (…) States could have a pivotal role in the $1 trillion infrastructure program proposed by President Donald Trump in late October, Vizner said. ‘We believe implementation of this plan will include public revenue sources that states control, either from availability payments made directly from the state, state-sanctioned tolls on highways and bridges, or other state taxes that provide attractive returns to private equity,’ Vizner said.” [Sub required]

13) National/Virginia: Donald Trump is looking for “big shiny” projects with revenue streams for his infrastructure program. “The list of Virginia projects with potential revenue sources provided to the new administration ranged from upgrades to the Port of Virginia to the expansion of Interstate 81, Layne said. ‘We’d be very happy to have more,’ [Virginia transportation secretary Aubrey] Layne said. ‘But quite frankly, it’s only a very small part of our projects because it’s going to require tolling.’” (…) [Commerce nominee Wilbur] Ross said that Trump’s infrastructure oversight council headed by New York City developers Steven Roth of Vornado Realty and Richard LeFrak of LeFrak Organization will identify infrastructure projects that could attract private investments. ‘I don’t think the list has been refined yet,’ Ross said. ‘They will play a big role in helping determine what are the key projects and how to implement them.’ (…) Public-private partnerships are suitable at best for only 20% of U.S. transportation infrastructure projects, outgoing Transportation Secretary Anthony Foxx told the Associated Press [last] week. [Sub required]

14) National: Former Fed chair Alan Greenspan, who supported the privatization of Social Security under George W. Bush, pours cold water on the idea of major investment in U.S. infrastructure, saying it is basically unfundable. He instead advocates deep cuts in social programs and a repeal of Dodd Frank. [Sub required] Steven Eisman, a Neuberger Berman senior portfolio manager, has explained why “Undoing Dodd-Frank Would Be a Disaster.” Prominent economist Robert Solow once wrote of Greenspan’s inability to absorb the lessons of the financial crisis and its causes, “his eyes are too often closed and he seems to be listening to another voice, with quite conventional opinions, coming from somewhere stage right.”

15) National: Real estate analyst Charlie Harrison shares a deep dive on possible legal and political scenarios for the privatization of Fannie Mae. Agree or disagree, he raises some important issues. Might the government make a huge payout to shareholders? One commenter responds: “Seems to me that there would be an outcry from the left if the common shareholders got a windfall, especially since some notable hedge fund managers involved are pals with Trump. Legals aside, which are too difficult to understand, the politics are in favor of the preferred shareholders.”

The Wall Street Journal
 reports that Steve Mnuchin, Trump’s nominee for treasury secretary, “could also face questions in connection with comments he made in November supporting the privatization of mortgage-finance companies Fannie Mae and Freddie Mac, which remain effectively controlled by the Treasury as a result of their 2008 bailouts. Financial disclosures made public last week show Mr. Mnuchin stood to benefit as an investor from those comments, which were made hours after his announcement as Treasury secretary-designate and which drove up the prices of the firms’ shares. Mr. Mnuchin has pledged to divest himself of some, but not all, investments he controls.” [Sub required]

16) National: Emanuel Savas, one of the key figures driving the privatization agenda for the right wing for five decades, has some advice for Donald Trump on “personnel”: follow Reagan. “Early in his administration, Reagan held frequent cabinet meetings, sometimes two or three a week, the principal purpose of which was to acclimate the members of his cabinet to the idea that they worked for the president, not for the Iron Triangle. By coming so frequently to the White House, Reagan’s appointees bonded with their peers—and with the president. If he is to avoid the threat to his agenda posed by the Iron Triangle, Trump should follow Reagan’s lead.” The “iron triangle” is “(1) the permanent employees of a department or agency; (2) the congressional committees with a stake in the growth of—and deference to—a corresponding executive department or agency; (3) the department or agency’s constituents.”

17) NationalPrivatization of NOAA could become “a priority issue if the budget for the Department of Commerce, which oversees NOAA, is slashedThe Hill reported Thursday that the Commerce Department could see ‘major reductions in funding’ under the new administration. Last week NOAA reported that 2016 was hottest year in modern history.

18) NationalSen. Maria Cantwell (D-WA) urges energy secretary nominee Rick Perry not to privatize the Bonneville Power Administration. “The Bonneville Power Administration (BPA) is a self-financed administration that markets hydropower generated at federally-owned dams. Ratepayers compensate the government, with interest, for Bonneville’s power and transmission systems. Several administrations, beginning with President Reagan, have proposed to sell the administration or raise electric rates to increase federal revenues. Congress has repeatedly rejected those proposals. Sen. Cantwell asked Gov. Perry to oppose privatization and any artificial increase in electric rates. Gov. Perry acknowledged Sen. Cantwell’s concerns and committed to visiting BPA.”

19) California: San Francisco General Hospital workers and doctors rallied on Friday to protest against the attack by President Trump on public healthcare. “The rally was organized by the SEIU 1021 SF General Hospital chapter and it included miscellaneous workers, nurses and doctors as well as supporters of public healthcare. The Mayor and CEO of the hospital has allowed Facebook billionaire and privatizer Mark Zuckerberg to rename the hospital to the Zuckerberg hospital. Also hospital workers talk about growing privatization and corporatization of healthcare at the public hospital. They also discuss the epidemic of workplace bullying against healthcare workers while the institution is being corporatized.” A production of the Labor Video Project. [Video, 34 minutes]

20) IndianaThe Department of Corrections’ chief medical officer, Dr. Michael Mitcheff, reportedly also works for an outside company. “DOC spokesman Doug Garrison noted for the Jan. 8 article that Mitcheff had tendered his resignation from the DOC on Dec. 6, to be effective Jan. 3. On Dec. 30, Mitcheff rescinded the resignation ‘for personal reasons.’ Mitcheff is still listed in Indiana’s state employee online portal as a full-time employee drawing a $234,000 annual salary, and a voice mail at his Indianapolis office still names him as chief medical officer. But it appears that at least since early November, Mitcheff has also been working for a competitor to Corizon, Peoria, Ill.-based Advanced Correctional Healthcare. He is listed on the company’s website as corporate medical director.”

21) Indiana: The state’s new governor, Eric Holcomb, intends to pursue more ‘public private partnerships.’ “The rookie Republican governor reiterated his support for a range of options to fund investments—including fuel tax increases, new tolling options, fees for alternative-fuel vehicles and creative public-private partnerships.”

22) Maryland: The Frederick News-Post asks “How accessible are Frederick County’s charter schools?” In Frederick County, “charter school conversations have centered lately around possible transportation to the Frederick Classical School. None of the county charter schools—the Classical school, Carroll Creek Montessori Public Charter School or Monocacy Valley Montessori Public Charter, all Frederick based—offer busing. The lack of transportation has called into question access to the schools for families on the county outskirts, or those without a vehicle.”

23) New JerseyThe State of New Jersey Common Pension Fund D reportedly purchased 360,000 shares of the GEO Group, worth around $8.56 million, in the third quarter. “Other large investors have also modified their holdings of the company. Vanguard Group Inc. increased its stake in The GEO Group by 4.6% in the second quarter. Vanguard Group Inc. now owns 12,708,613 shares of the real estate investment trust’s stock worth $434,380,000 after buying an additional 555,282 shares during the period.”

24) OregonOpponents of land privatization gear up to fight the Trump administration on a number of issues, especially climate change. “Still, even as they gird themselves for whatever comes out of Washington, D.C., green groups believe that closer to home, they can gain ground. The troops are ready. ‘It’s like in a tragedy, where everyone comes together and people want to do something to help,’ said [Erica Stock, director of the Oregon chapter of the Sierra Club.] Her organization is campaigning against privatization of the state’s Elliott Forest, and to remove four Snake River dams, an old issue revived by a federal court ruling last May. It’s also pushing for more stringent stream protections in an Oregon Department of Forestry rulemaking process.” [Sub required]

25) PennsylvaniaAqua America sees an expanding market for water privatization. “At least that’s the outlook from CEO Christopher Franklin, who expects the Bryn Mawr-based water and wastewater company to continue a ramped up acquisition strategy in the coming year thanks to legislative changes in its home state, an increased federal focus on infrastructure and a ripening market for water system privatization. (…) Harrisburg changed the utility game in March 2016 when it allowed private companies like Aqua to pay a municipality a higher amount to acquire its water system. The company can now bring in an outside engineer to assess the system’s fair value and base its offer on that, rather than its depreciated value under prior law. The legislative shift boosted Aqua’s acquisition efforts in its most important market, said Franklin.” [Sub required]

26) InternationalChina’s sovereign wealth fund is looking to invest in U.S. infrastructure. China Investment Corporation chairman Ding Xuedong “told the Asian Financial Forum in Hong Kong that the US would need at least US$8 trillion to fund the rebuilding effort, and money from the federal government and American private investors would not be sufficient. ‘They have to rely on foreign investors,’ Ding said, who oversees the nation’s US$800 billion sovereign fund.”

27) InternationalProtestors win repeal of water and gas privatization in Baja California, Mexico. “Meanwhile, protesters are blocking state facilities in the state capital to demand the resignation of the local president and the deputies who voted in favor of the water law. They also demanded the state eliminate the gas tax and immediately pay salaries and benefits kept from state employees.”

28) Upcoming Conference: NASHTU, the National Association of State Highway and Transportation Unions, will be holding its annual conference from April 24 through April 26 in Washington, DC. The 2017 conference will advocate NASHTU’s priorities:

  • Require state and local departments of transportation to perform cost-benefit analyses prior to outsourcing
  • Ensure public safety by requiring public employees to perform the construction inspection on federally funded transportation projects
  • Oppose efforts that seek to mandate or incentivize the use of outsourcing on transportation projects

The NASHTU conference will also feature key Members of Congress and transportation policy experts.  In addition, it will have many informative panels on outsourcing schemes and issues affecting public sector labor unions.

Legislative Issues

1) NationalJohn Tierney, a columnist for the Koch-funded Manhattan Institute’s City Journal, calls for a major expansion of the federal program to privatize airports. “This year, as Congress debates legislation to reauthorize the Federal Aviation Administration, lawmakers should make it easier for airports to emulate San Juan. The FAA’s current program allows only a few experiments with privatization, and then only with the airlines’ permission.” [Sub required]

2) Iowa: As the state prepares for a busy legislative session where Republicans control the House, Senate and governor’s office for the first time in nearly 20 years, the Des Moines Registerinvites us to “Meet the Register’s Statehouse coverage team.”

3) Illinois: As lawmakers return to the capital, they are warned that inaction could kill plans “for the state to pursue a public-private partnership to build managed lanes on Interstate 55 to relieve congestion. The Illinois Department of Transportation refiled needed legislation on Thursday that would allow the state to stay on track with the procurement process by authorizing a formal request for proposals. IDOT has conducted 17 interviews with firms based on responses to a request for information conducted last year.”

4) Kentucky: Lawmakers are discussing a possible charter school law, and are reportedly looking to Indiana for a model. Experts say “it’s crucial that state policy gets the authorizing right.”

5) MichiganThe Michigan Department of Corrections slaps its latest food contractor—Trinity Services Group—with more than $2 million in penalties for inadequate staffing and other problems since it began providing meals for prisoners in September 2015. Trinity was brought in, despite numerous warnings from public interest groups and AFSCME, after Aramark was turfed out in 2015 for poor performance. At the time, the Detroit Free Press reported that “the new contract with Florida-based Trinity Services Group is more costly, and critics said the state would be better off bringing back state employees, who were better-paid but had far less turnover and discipline problems than the Aramark workers who made about $11 an hour.”

6) New Hampshire: As the issue of for-profit charter schools may enter New Hampshire for the first time if Betsy DeVos and Donald Trump push them nationally, the Concord Monitor demands that the focus should remain on equitable treatment in state funding—and on Republican efforts to continue forcing the burden down onto local communities instead of the state paying its rightful share. “The state average cost to educate one student is closing in on $15,000 per year. Next year, it will pay $3,636 of that to maintain the fiction that it’s covering the cost of an ‘adequate’ education.”

7) Pennsylvania: The Scranton Times-Tribune reports that Republican leaders “have vowed to press ahead with more privatization of the liquor system. Democratic leaders stress that the changes enacted so far have preserved thousands of good jobs at the state stores. In memos announcing forthcoming legislation, GOP lawmakers in the House and Senate are proposing to allow businesses with a restaurant or hotel liquor license to sell distilled spirits such as vodka and gin to customers. They could apply to the state Liquor Control Board for a “spirit expanded permit.” A customer could purchase up to 3 liters of spirits—less than a gallon—in a single transaction.”

8) WyomingCitizen activists win one on public lands. Senate President Eli Bebout has killed a constitutional amendment bill that would have opened the door to public lands for  privatization. “A coalition called Keep it Public, composed of more than a dozen nonprofits, sportsmen and conservation groups, mobilized the public to voice opposition to the amendment. It launched in Casper at a November rally and organized a social media campaign to notify people how to participate and inform lawmakers of their position, said Chamois Andersen of the Wyoming Wildlife Federation. Outdoor recreationists attended meetings in droves, submitted local letters to the editor and met with lawmakers to express their opposition. ‘Everybody’s been notifying their representatives and senators to vote no if this amendment materialized,’ she said. ‘I think Sen. Bebout read the tea leaves. He saw the vote was not going to be there.’”

 

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