Privatization - Represent Consumers

Hold on to your wallets, the privatization circus is back in town

If public-private partnerships were such a good idea, our bridges and roads wouldn’t be crumbling and our middle class wouldn’t be facing extinction.

Because public-private partnerships, touted by President Obama in his State of the Union speech as a key tool in his administration’s second term, have been around for a long time.

Fifteen years ago, Pulitzer Prize-winning journalists Donald Bartlett and James Steele, after an 18-month investigation for Time Magazine, called public-private partnerships a form of corporate welfare and raised doubts about their effectiveness [no link].

Too often, public-private partnerships have meant local or state governments handing over valuable pubic assets to private control without adequate public oversight.

These partnerships come in many forms – governments leasing out parking lots, contracting with private firms to build toll roads, funding repairs of bridges with money from union pension funds repaid with public bonds.or the ever-popular public subsidy or tax break for the promise of new jobs or even just maintaining the jobs in a particular location.

In the wake of the financial collapse, politicians across the spectrum from economically strapped cities and states have latched on to public-private partnerships as a way to fund projects that were once paid for wholly out of public funds.

One city that has embraced the public-private partnerships with gusto is Chicago, President Obama’s hometown – with dubious results. In one notorious deal, the city leased its parking meters for 75 years to a Morgan Stanley-led partnership in exchange for $1.6 billion upfront. Later citizens watched as parking rates skyrocketed and the full costs of the deal to taxpayers emerged – the city was obligated to pay the Morgan Stanley partnership $11.6 billion over 75 years.

Another fan of private-public partnerships was the president’s former Republican opponent, Mitt Romney. As a private businessman, his firm, Bain Capital, benefited from many goodies bestowed by government officials, making “avid use of public-private partnerships,” the Los Angeles Times reported. While Romney liked to brag about the jobs Bain created at an Indiana steel mill, he didn’t mention the tax breaks and other subsidies taxpayers gave Bain to create those jobs.

As Chicago attorney Clint Krislov said of his city’s foray into public-private schemes: “I think this is just the latest way for people to make money off state and local governments. This is the new way the investment banks, their lawyers, and consultants squeeze the taxpayers....They’re going around making these deals, and it’s very lucrative. It’s like a circus coming to town.”

The most egregious example of a public-private partnership gone wrong is the 2008 federal bailout of the financial industry: after the bankers’ recklessness and fraud wrecked the economy, taxpayers came to the rescue, as government officials promised that the goal was not to enrich bankers but to restore Main Street. But bankers got billions without any conditions, while Main Street continued to suffer. When we hear the grand promises of everything that public-privatization can do for us, we should remember who won and who lost out in the bailout.

The American Flag Deficit Reduction Program

The US deficit is estimated at $1.5 trillion. In Washington, the debate is between raising taxes or cutting spending. Neither is necessary, if we take advantage of America’s greatest asset, the Star Spangled Banner.

In dire straits after the Wall Street debacle, many governments across the United States and throughout the world are being pressed to sell public assets – buildings, utilities, trains, even highways. Just last year, Governor Action Hero tried to sell off California courthouses and other historical landmarks to a private consortium for $2.33 billion. Naming rights on sports stadiums and convention centers have always been a revenue strategy for municipalities and closely associated private firms like Anschutz Entertainment Group, which wants to build a football stadium in downtown Los Angeles. In addition to seeking tax breaks from the city, the firm has already sold the stadium's naming rights to Farmers Insurance for $700 million.

Why not rent some or all of Old Glory on a daily basis to pay off the debt we have racked up to bail out Wall Street?

Here’s the math.

There are fifty stars on the flag (each one added when a state entered the Union). So if those stars were to be made “available” on a daily basis, there would be at least 18,250 “opportunities” every year (50 x 365).

Divide the deficit by 18,250, and we could eliminate the federal debt in one year if each star were offered up at the price of $82 million ($82,191,780.08, to be exact).

Sure, that’s hefty price, you might say. Who would pay it?

Answer: the folks who got America into this mess in the first place.

So let’s say J.P. Morgan Chase wanted the highly prestigious opportunity to occupy the entire flag for one day each year. Here’s what that might look like:

As a special inducement to pay $4 billion, companies that agreed to take the entire flag for a day could also be given the right to put some text on one of the stripes. It could be the company's most important message:

Or anything its CEO might desire:

Some may object that it is inappropriate to put the American Flag in the hands of big corporations. First of all, like the United States Supreme Court said in its Citizens United decision applying freedom of expression to corporations, all Americans will have equal freedom to buy access to the flag for $82 million per star. Corporations are Americans, too. Second, these companies own the United States anyhow, so what’s the biggie?

What about foreign countries? Should we rent the Stars and Stripes to our trading partners, the Chinese? If so, should we require them to write in English, or should we allow them to use Chinese characters?

That’s a tough question, and like all decisions concerning the American Flag Deficit Reduction Program, should be decided by the United States Congress.

Which, by the way, has a spectacular building in a prime location that would be highly attractive to certain firms. Consider this on the East Face of the Capitol Building:

"Congress. Brought to you today by Goldman Sachs."

Just think about it.