Weekly Privatization Report 5-15-2017

1) National: After years of slow and careful bipartisan work to craft solutions to America’s over-incarceration crisis, which has brought together figures ranging from Grover Norquist to the ACLU, and is recognized as an international human rights issue, Attorney General Jeff Sessions moves the country backward toward discredited policies of harsh sentencing and drug-based minimum sentencing. [Sessions memo]. Cuts to programs aimed at reducing recidivism are also likely to follow.

The dramatic growth of the private, for-profit prison industry was largely created by mass incarceration and immigration detention, and in recent years both CoreCivic and the GEO Group have warned that sentencing reduction—especially for drug offenses—posed a serious risk to their business models.

“This absurd reversal is driven by voices who have not only been discredited but until now have been relegated to the fringes of this debate,” former Attorney General Eric Holder said. NAACP Legal Defense and Educational Fund President and Director-Counsel Sherrilyn Ifill said, “when President Trump asked Black Americans what we have to lose by electing him, the answer is all the gains we’ve made in advancing justice and fairness. By reinstating a long-discredited policy of harshly punishing individuals who commit low-level, nonviolent drug offenses, Attorney General Sessions has turned back the clock on our criminal justice system, ensuring it will continue to disproportionately punish Black people, harming our communities and widening painful divides in our society.”

Republican Senator Rand Paul (R-KY) also denounced the decision, saying “mandatory minimum sentences have unfairly and disproportionately incarcerated too many minorities for too long. Attorney General Sessions’ new policy will accentuate that injustice. Instead, we should treat our nation’s drug epidemic as a health crisis and less as a ‘lock ‘em up and throw away the key’ problem.” Even a Koch-backed group denounced the decision and called on Congress to pass reform legislation developed last year.

2) National/Texas: In a major political and legislative victory for immigrant detainee families and their advocates, a bill that would have allowed two Texas family detention centers that hold women and children seeking asylum to classify as child care facilities dies in the House. A day before the bill died, the Senate passed a companion bill. The bill would have allowed the federal government to continue detaining children in the facilities. The issue now is in the hands of the federal courts. The Project on Government Oversight reports that privately run detention centers are public information black holes because of “the sparse data the federal government makes public.”

3) National: A six-week national “gang surge” by Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in cooperation with local law enforcement results in nearly 1,400 arrests. The week before last, private prison companies CoreCivic and the GEO Group said in earnings calls that they are banking on a shift by ICE from a focus on the border to a focus on the interior to benefit their bottom lines. Critics have questioned law enforcement definitions of what constitutes a “gang affiliate.”

4) National: As we head into “National Infrastructure Week,” different sides of the infrastructure debate have taken shape. The program kicks off this morning with a three-and-a-half-hour event at the U.S. Chamber of Commerce including Transportation Secretary Elaine Chao, Denver Mayor Michael Hancock, Los Angeles Mayor Eric Garcetti, and the CEO and general manager of DC Water, George Hawkins. Chao will testify before Congress on Wednesday.

Key related questions are how big an infrastructure package should be, what the balance between large and medium projects should be, how it will be paid for, and how much private financing will be allowed into repairing and rebuilding America’s public works—and under what conditions. Although the political turmoil in Washington over Trump and Congressional priorities has raised questions about whether any infrastructure package will be passed at all, most of the key administration, Congressional, industry, and labor actors, while frustrated, are forging ahead.

The Trump administration, road privatization industry, and a broad mix of congressional leaders are keen on ramping up a large private financing component (under the marketing rubric of ‘public-private partnerships’), but have not yet reached full agreement on what the proportion should be between tax breaks and new public money—and where that money would come from. Over 500 projects are being pitched to the White House. (Marketplace is running a series of stories tracking them).

Democrats have had a full plan on the table since January, advocating for new federal funding and a program of infrastructure renewal spread through a broad range of sectors and regions. And last week, a coalition of right wing, Koch-backed groups led by Freedom Partners and including Grover Norquist of ATR, David McIntosh of the Club for Growth, and Michael Needham of the post-DeMint Heritage Action, released a letter encouraging Congress “to prioritize fiscal responsibility” and focus instead on slashing public transportation, splitting up transportation policy into the individual states, and eliminating labor and environmental protections (i.e., gutting the permitting process). They attacked the idea of a national infrastructure bank and called for ending project labor agreements and Davis-Bacon wage regulations. They also targeted the most important proposal of the Trump administration, Wall Street, and the infrastructure industry—to finance new infrastructure by tax reform to enable repatriation of overseas corporate revenues. The question is whether Trump will try to respond to these demands for “fiscal responsibility” by even more savagely cutting programs for the poor to “pay for” a plan, and whether that would kill any deal if Democrats refuse to go along.

5) National: As talk about the usage of private tax credits to drive policy goals ranging from more infrastructure to social programs intensifies, National Public Radio and PBS Frontline took a careful and wide-ranging look at the record of the large federal tax credit program that is supposed to increase access to affordable housing. They found that the program—sold as a ‘public-private partnership’ that was a ‘win-win’ proposition—costs more, and shelters fewer. “In a joint investigation, NPR—together with the PBS series Frontline —found that with little federal oversight, LIHTC has produced fewer units than it did 20 years ago, even though it’s costing taxpayers 66 percent more in tax credits.” Also, two weeks ago the Pew Charitable Trusts released a 132-page national assessment of evaluation practices for tax credit programs on jobs and growth. The bottom line: realistic and reliable information, and a willingness to make hard decisions on effectiveness, are essential. “And when lawmakers have this information, they use it.” The three steps: 1) Make a plan. 2) Measure the impact. 3) Inform policy choices. [Pew report]

6) National: Opposition to the Trump administration’s plans to expand vouchers and charter schools is taking the form of sustained protests against Education Secretary Betsy DeVos’ public appearances at schools and colleges. Protesters at Bethune-Cookman University, an historically black university, denounced DeVos and turned their backs on her at their graduation ceremony, pointing out her “questionable grasp over educational history, her support for school privatization and her stance on loan borrowers.” In Utah, “the protest was organized by Utah Indivisible, a group that describes itself as part of the resistance movement to President Donald Trump, and focused on DeVos’ support for school choice through vouchers. ‘Ninety percent of our kids attend public schools yet Secretary DeVos would do all that she can to actually privatize our schools with the voucher system,’ said Brad Asay, president of the American Federation of Teachers of Utah. Asay said Utahns ‘support public schools, not privatization, not vouchers, not austerity measures.’”

7) National: Colorado author Robert Crifasi say public lands are under threat of privatization. “America’s public lands are under threat from a variety of extractive industries. Some narrow-minded people want to privatize all Western lands; others wish to rescind the protections on beloved national monuments and parks. President Trump’s hypocritical executive order to review the national monument designations in the name of overturning a ‘massive federal land grab’ is part of a thinly disguised recycling of the rhetoric of the so-called Sagebrush Rebellion of the 1970s and 1980s in support of the fringe right and its agenda to appropriate or sell off public land and resources. Their goal is succinct: They want to take down the signs that read ‘Welcome to Your Public Lands’ and replace them with new ones that read ‘Private Property: No Trespassing.’”

8) California: The critically important elections for the Los Angeles school board take place tomorrow, and Donald Cohen of In the Public Interest reports that “billionaire cash” has flooded the city to try and capture the board for the school privatizers—and to advance the Trump administration’s assault on public education. Peter Dreier of Occidental College writes, “Some of America’s most powerful corporate plutocrats want to take over the Los Angeles school system, but Steve Zimmer, a former teacher and feisty school board member, is in their way. So they’ve hired Nick Melvoin to get rid of him. No, he’s not a hired assassin like the kind on ‘The Sopranos.’ He’s a lawyer who the billionaires picked to defeat Zimmer. The so-called ‘Independent’ campaign for Melvoin—funded by big oil, big tobacco, Walmart, Enron, and other out-of-town corporations and billionaires—has included astonishingly ugly, deceptive, and false attack ads against Zimmer.”

9) District of Columbia/Virginia/Maryland: DC resident Kathryn Collison Ray pushes back against proposals to privatize Metro, reminding us that good management is the real issue. “The Washington Metropolitan Area Transit Authority took over DC Transit, the failed bus system privately owned by New York real estate mogul Oscar Roy Chalk. The complaints lodged against privately owned DC Transit sounded just like those aimed at Metro today: too expensive, too slow, too outdated, too unsafe, too unreliable. Public transportation is necessary for the public good. Metro needs fixing, but privatization is no panacea.”

10) Illinois: The Rockford School Board has voted to outsource the jobs of 220 bus drivers to First Student. “Board members Lisa Jackson and David Seigel cast the two dissenting votes. The final vote to adopt a negotiated contract is expected to take place June 1. ‘I’ve worked for many organizations that sought outsourcing to solve their problems,’ Jackson said. ‘The outsourcing didn’t work.’ Dozens of bus drivers and their supporters attended the meeting. Several of them spoke. Some pleaded with the board to keep bus services in-house. Some admonished the board for turning its back on employees.” Because they will no longer be government employees, “RPS bus drivers who take jobs with First Student will no longer be able to pay into the Illinois Municipal Retirement Fund.”

11) Iowa: Complaints about Iowa’s privatized Medicaid system are spiking. “Kelli Todd, a manager of the Iowa Long-Term Care Ombudsman, said her office in March had its busiest month on record with concerns about the private companies’ Medicaid practices, with 556 contacts. April’s level dropped to 448 contacts but remained high, she noted. At the heart of the issue is Iowa’s controversial decision to turn over management of its $4.2 billion annual Medicaid program to for-profit companies, an act the federal government delayed for three months last year after saying the state wasn’t ready for the transition. Critics in 2015 warned that profits, not public health, would dominate decisions for the 568,000 poor or elderly Iowans on the program if private companies took control.”

12) Maryland: Frustrated by the pace of a federal court proceeding that has slowed down, and maybe killed, the proposal for the light rail Purple Line ‘public-private partnership,’ Gov. Larry Hogan (R) has directed the state attorney general to try and get the court of appeals to force the district judge to rule on whether the project can proceed. The judge has held up the project “at the requests of plaintiffs in an environmental lawsuit opposing the rail line. He cited concerns that ridership demand for the Purple Line might not reach projections due to the falling number of passengers on the Washington Metropolitan Area Transit Authority’s breakdown-plagued Metrorail system.” [Sub required]

13) Michigan: Food quality problems continue to plague the state’s prisons after Gov. Snyder (R) privatized the food service system to Aramark. “Gov. Snyder and Republicans in the Legislature have chosen to ignore these problems for too long and it’s time they canceled the contract and returned prison food service to state employees,” said Lonnie Scott, executive director of Progress Michigan. “This is what happens when you have a bottom-line approach to governance that puts the interests and well-being of corporate donors over the needs of the public.”

14) New York/New Jersey: Govs. Cuomo and Christie are calling for the privatization of Penn Station operations. In a letter to Amtrak, they wrote “between New York and New Jersey we pay approximately $150 million a year for our respective use for the facility. As Amtrak’s management of Penn Station continues to produce multiple failures, we believe systemic changes cannot wait. A professional, qualified, private station operator must be brought in to take over the repairs and manage this entire process going forward.” But a group of New Jersey lawmakers has rejected the idea. “New Jersey State Sen. Bob Gordon dismissed a request for a private operator ‘as if that were going to be the solution to these problems.’ Gordon said that it sounded like a plan from two lawyers, rather than officials with MBAs. ‘The problems here deal with organization, design, the structure of incentives, the sharing of information, financial management,’ the Democrat said. ‘What I believe we need here, more importantly than a change in ownership, is a change in organization.’”

Nicole Gelinas of the conservative Manhattan Institute has also panned the privatization idea, urging the two governors to come up with a real plan: “The private sector excels at many things; there’s no evidence—none—that it excels at managing a falling-apart monopoly train station fraught with political and financial woes. Penn Station was private before the government took it over in 1976 . . . because the private railroad that owned it had gone bankrupt. And train privatization is no sure-fire cure. Britain’s attempts to privatize its rail and subway maintenance ended in two separate disasters that left taxpayers on the hook for billions.”

15) Oregon: Citizens win a major victory as the Oregon State Land Board agrees to keep the 82,500-acre Elliott State Forest in public ownership, as Gov. Kate Brown (D) urged. The Oregonian said “the action showed foresight and respects the will of a public increasingly weary of natural resource privatization, particularly of distinctive forested settings. The Elliott is such a place, replete with old growth trees and wild species, and prime hunting and recreational grounds. Its capacity for logging, however, is diminished by waterway and species protections.”

16) Pennsylvania: The Pennsylvania Turnpike Commission is looking into a 30-year broadband ‘public private partnership.’ “PTC published a preliminary information memorandum describing the project as a 30-year concession agreement with a qualified developer that will design, build, finance and maintain a broadband infrastructure network spanning the 360-mile Pennsylvania Turnpike.” The deal would take place against a background of intense investment and M&A activity by private equity in the broadband sector. [Sub required]

17) Tennessee: Another state park that Gov. Haslam wanted to build a private hotel on fails to attract any bidders. “The Tennessee State Employees Association and park workers opposed it. In 2015, similar outsourcing plans at 11 state parks likewise yielded no interest from private vendors.”

18) Wisconsin: After a heated battle over whether a privately-run beer garden should be permitted in Madison’s Olbrich Park, the Capital Times will be holding a panel discussion on the question of privatization and park services on May 31 at the Central Library.

19) International/National: Credit Suisse urges President Trump and Congress to provide taxpayer guarantees for private financing of infrastructure. “Credit Suisse also called for federal action to encourage state and local governments to consider privatisation or use of P3s. The bank said that privatizing existing infrastructure could be a way to recycle capital into new projects, allowing for investment in new greenfield projects. Noting several infrastructure projects financed without government support that eventually filed for bankruptcy, such as Denver’s E470 and the Texas’s SH 130 toll roads, Credit Suisse called for expanded loan and guarantee programmes to ‘underpin private sector involvement.’” [Sub required]. In 2004Donald Trump’s casino business was bailed out by Credit Suisse for $400 million.

Legislative Issues

1) National: This Wednesday, the House Transportation and Infrastructure Committee will be holding a hearing on FAA and Air Traffic Control “reform,” which should include some fireworks over Chairman Bill Shuster’s (R-PA) efforts to privatize air traffic control. Last week, Reps. Peter DeFazio (D-OR) and Rick Larsen (D-WA) laid out the case against privatizing air traffic control

2) National/Texas: The Texas legislature has dealt a blow to the Trump administration’s plans to use ‘public-private partnerships’ as a centerpiece of its $1 trillion infrastructure proposal by rejecting P3 legislation. “Wary of public opposition to new highway tolls, the Texas House voted on May 5 to reject a bill that would have allowed the partnerships, known as P3s, to participate in 18 highway projects costing as much as $30 billion. The defeat leaves the second most-populous U.S. state unable to tap into the partnerships to finance the infrastructure improvements, even as Trump is proposing to expand their use.” JoAnn Fleming, Executive Director of Grassroots America—We the People [a Tea Party 911 group—ed.] said “a broad coalition of groups across Texas made it clear that they would not tolerate the expansion of private toll roads and the corporate welfare they represent to continue to spread like a cancer across the Lone Star State. We applaud the work of our champions in the House and thank the Governor for his leadership in firmly setting a new course away from debt and toll roads and moving forward with a new fiscally responsible, sustainable future.”

3) Louisiana: A House committee has pushed ahead with a “resolution asking for a study of privatization, an option not recommended by a host of other political leaders and analysts who have been pushing prison reform in recent months. (…) Louisiana recently concluded a 10-month task force study on how the state could reduce its highest-in-the-world incarceration rate and save money on incarceration. Privatization was not recommended. Nor has it been promoted by Democratic Gov. John Bel Edwards and Republican legislators who are pushing a criminal justice reform package in the current legislative session.”


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