Trump wants to privatize highways and charge more tolls

Overdrive Online - A 2018 fiscal year budget plan released by the Trump Administration proposes slashing the Department of Transportation’s budget by nearly $17 billion annually by 2022, as well as allowing more tolls on U.S. Interstates and boosting efforts to draw private investors to fund highways.

Trump’s budget does not explicitly call for removing the Interstate tolling ban, but rather would allow states “to assess their transportation needs and weight the relative merits of tolling assets.”

The House’s Congressional Progressive Caucus, a group of Democrats, said they, too, plan to release an infrastructure proposal. It would counter Trump’s push for greater private spending by calling for ramped-up federal spending on highways and other infrastructure projects.

The Hill, January 2017 - Public-private partnerships – which have been advocated by both Democrats and Republicans – allow private firms to bid on transportation projects, build and maintain the project for a set amount of time, and recover costs through tolls or set state payments.

Critics ... say critical infrastructure needs like repairing aging pipes, deepening ports or fixing existing roads and bridges may go neglected under Trump’s private financing plan.

“The vast majority of the critical infrastructure projects needed to move the country forward are a combination of repairs and incremental expansions,” Kevin DeGood, director of infrastructure policy for the Center for American Progress, wrote in a blog post last month.

“Unfortunately, the Trump infrastructure plan does nothing for these repair and incremental expansion projects. By focusing federal tax subsidies on revenue-generating megaprojects in large urban areas, the plan leaves the rest of America’s infrastructure needs behind.”

Our Future, 2015 - The Indiana Toll Road begins at the Illinois border, just west of Hammond, and runs past a series of cities that have been hard-hit by the collapse of American manufacturing. ...The toll road was privatized in 2006 to great fanfare, but the new owner has since gone bankrupt – the victim of bad judgement, a bad swaps deal, and a struggling economy. The winning bid in 2006 was $3.8 billion, $1 billion higher than the next highest offer. The new offer is $5.72 billion. Has this property, located in an economically challenged state, really appreciated by more than 50 percent? Or is something else going on?

The Indiana Toll Road is more than a highway. It is an infinite loop through the neoliberal world order, the mirror of a recursive economy in which every step toward corporatization creates more hardship – and every increase in hardship calls for more corporatization. Indiana is winning headlines today for enshrining bigotry into law in the name of religious freedom. But its toll road fiasco deserves a headline of its own...

Australia-based IFM Investors has been announced as the winning bidder to assume the remainder of Cintra-Macquarie’s lease. But how has the economy of Indiana, and the broader national economy, fared in this deal? Angie Smith and Payton Chung examined the deal closely and found “an opaque agreement based on proprietary information the public cannot access; a profit-making strategy … divorced from the actual infrastructure product or service; and faulty assumptions … which can incur huge public expense down the line.”

TaxPIRG’s Melissa Cubria outlined some of the hidden costs of roadway privatization. Cubria notes that “road privatization contracts in Texas can instead stipulate that the public must pay steep compensation for the company’s loss of profits,” and that firms can “stipulate that the public must pay steep compensation for the company’s loss of profits” by “designating a wide range of state actions as potential ‘adverse actions.’”

In other words, privatization deals often limit the ability of people to govern themselves.

San Diego’s bus privatization has not performed as promised. Most of the savings came from crude cuts in service, not from privatization or the much-vaunted “efficiency of the private sector.” The city’s privatized South Bay Expressway, another toll road managed by Indiana co-owner Macquarie, went bankrupt in 2010. (Do we sense a pattern here?) In other California privatization failures, costs for San Francisco’s Presidio Parkway more than doubled, while Orange County’s Highway 91 went bankrupt and required a $207 million public bailout.

The Congressional Budget Office found that bankruptcy proceedings for Macquarie’s failed South Bay Expressway ultimately “imposed a loss of 42 percent on federal taxpayers.”

There are other problems with privatization. Private companies also charge far more for water and sewer services than governments do. (Food and Water Watch found that their rates were 33 percent higher.) Private prisons appear to cost more, as the New York Times reported, while the ACLU found that higher incarceration rates lead to windfall profits under privatized prison systems.

Privatization is often a bad deal for investors, too, as the Congressional Budget Officenoted in 2012. The CBO studied eight highway projects and found that, with one exception, “private equity investors’ expectations of profitability for the projects have been unfulfilled.”

Under privatization, the goal is no longer to provide publicly funded services effectively and efficiently. Nor is the goal to make a profit for investors. The deal itself is the goal, because that’s where intermediaries make their profits.