As Much as $300 Billion worth of Infrastructure Could Go to Private Investment Firms
There has been a lot of promotion of the Bipartisan Infrastructure Bill on cable news networks, mainstream media, but there hasn’t been much discussion about the Trump-backed provisions in the bill. Did you know the bill allocates a third of it towards privatized infrastructure? Or that there’s a system like it in Australia that led to inadequate transportation service?
A provision in the bill outlines public private investment section from pages 416 through 421 explains that there are requirements for the public partner but no requirements if the private partner fails to meet their end of the agreement. Everything would be commodified from public power to public roads to things we take for granted like water.
Here’s some of the key provisions in the bill that is not being discussed by the corporate media.
Asset recycling was a policy passed by Conservative Prime Minister Tony Abbot in 2013 and here’s how it worked. The government would auction off public roads and electrical likes to private companies in exchange for securing funding for new infrastructure. Gary Cohen working with the Trump White House pitched the idea of giving states lump sums of money to sell off public infrastructure to private investors.
“Take a project you have right now, sell it off, privatize it, we know it will get maintained, and we’ll reward you for privatizing it” — Gary Cohen told a room of corporate executives in 2017
Much like Trump’s real estate company the plan for this joint venture is this: privatize all public assets by allowing investment firms and greedy hedge fund managers to wrestle infrastructure away from the public good and towards a get rich quick scheme. Donald Trump liked this idea until he ran into strong headwinds from Congress.
The problem with asset recycling in Australia was it led to a scandal where a major Chinese investment firm bought the Port of Darwin for a 99 year lease, essentially they auctioned it off to foreign companies who could not be held accountable. Several years in revealed that areas that made the most money from toll roads were prioritized while roads that were not profitable were not managed.
Privatization of Public Infrastructure Leads to Price Gouging
In 2012 the city of Bayonne, New Jersey had trouble with aging water and waste management system so they signed a forty year lease with KKR with Suez Environment. Essentially giving control to private companies under the guise of modernizing utilities. But when you give corporations an inch they’ll happily Nickle-and-dime you which is what happened. Residents experienced huge hikes by as much as 13.25% in a year. By 2019 water rates had doubled. To this day the city is experiencing price gouging during the pandemic as one resident with no lawn or grass experienced a jump from $600 to $900.
“After the deal took effect, water rates jumped 8.5%. A four-year rate freeze promised by the city never materialized: rates were steady in 2014, but increased by 4% again in 2015. In 2016, rates jumped a whopping 13.25%, followed by a 3.5% increase in 2017, 4.5% in 2018, 9.1% in 2019, 4.1% in 2020, and 4% this year.”
In 2011 global investment firm Carlyle Group purchased the water system of Missoula, Montana for $102 million. The agreement in writing was that when the town was under better financial footing in a few years they would be able to buy back their water system. When Missoula tried buying it back Carlyle Group vehemently refused claiming they never meant to sell it back. In 2014 the city sued and in a rare win for the public the court sided with Missoula residents stating the corporation had lied to them and had price gouged them in the process.
The plan calls for Public-Private Partnerships on road projects, but there’s a major problem. The private investment firms would love nothing more than to commodify a road you take for granted every day which is why they get a sweetheart deal from this bill. And private equity firms from Wall Street salivate at any chance they get to enter an agreement with the government at the expense of the common good. And there are a few ideas of what our infrastructure would look like under this lucrative agreement.
In 2014 then Governor Mike Pence signed an agreement where the government would have a public-private partnership with Isolux Corsan (a European investment firm) to build Interstate 69 under the guise it could complete it within one year. Three weeks later nine of the officials from the firm were charged for embezzling funds from a high speed rail expansion project in Spain. By 2017, the project was two years behind schedule with barely half of the project completed, commute times increased and along with traffic accidents. The state in the end brought 21 mile stretch of highway was brought back under public ownership to complete the rest of the project.
Often when private investors enter an agreement with the state on a joint venture it almost always puts a greater financial burden on tax payers. With no investment in our infrastructure in the last forty years and all the money flowing to the top, tax payers are stuck with the bill.
This Bill Is Not Paid For
The CBO estimates that the Bipartisan Infrastructure Plan which 17 Senate Republicans voted for is NOT paid for. According to Sahil Kapur of NBC News the bill adds $256 billion to the national debt, contradicting narratives from Joe Manchin and Kyrsten Sinema that their bill is responsible while the previous $350 billion reconciliation bill was not.
These are all Trump-backed measures which places the burden from state and local governments unable or unwilling to finance infrastructure projects and instead auction off our public utilities and infrastructure to Wall Street. Four years ago the Democrats shot down the measure as being a non-starter, now they have done an about face and are happily promoting a bill they denounced as a private handout. If you like being price gouged then by all means go ahead and vote for this POS bill, the investors will be happy but the American people will hate you for it.