Here’s our weekly analysis of privatization in the news and in communities nationwide. Not a subscriber? Sign up.
This week’s highlights
- Why we need to rethink the role of government because of COVID-19.
- New Yorkers stuck at home can now download over 300,000 e-books from the New York Public Library for free.
- Ed-tech startups and investors are shifting into overdrive to take advantage of the coronavirus crisis.
Rethinking the Role of Government Because of COVID-19
For five decades the conservative movement, backed by the immense wealth of major sectors of corporate America and an omnipresent right wing media, has undermined public trust in the role of government. In 1958, 73% of Americans expressed trust in government. By 2019 the figure was down to 17%, an historic low.
Part of this drive, beginning in the 1970s with support from the oil-enabled Koch brothers for organizations such as Cato and the right wing Scaife, Bradley and dozens of other corporate-backed foundations (including the Kochs) for the Heritage Foundation, has been to promote privatization of public structures and social services. The right’s stigmatization, defunding, and outsourcing of critical, democratically accountable governmental functions has led us into a position where now—when confronted with the greatest threat to the general welfare seen in decades, if ever—public structures have been so hollowed out that the capacity of governments at all levels to respond has been disastrously undermined. Is it any surprise that when crunch time came such an enfeebled public health system couldn’t just “step in” as the libertarians have long preached?
The conclusion is inescapable: Joseph J. Thorndike, director of the Tax History Project at Tax Analysts, says Americans are getting a hard lesson in why government—and taxes—actually matter, and this could deliver a fatal blow to the views of anti-government anti-tax extremists such as Grover Norquist. “In the short term, the coronavirus pandemic has radically altered the patterns of everyday life,” Thorndike writes. “But it seems likely that it will also transform the more permanent institutions of American state and society. For fans of limited government, like Norquist, those changes may not be happy ones.”
But this deepening crisis has also had another effect. It has called forth the most powerful pro-public response for action since the New Deal and the Great Society. This will grow, and In the Public Interest will be part of it.
If the right wing’s onslaught on public action started with Margaret Thatcher’s absurd declaration that “there is no such thing as society,” the current crisis is showing that our society is real and will make its collective voice heard. As Jamelle Bouie of the New York Times says, “in forcing people to stay away from each other, the outbreak has made our mutual interdependence clear.” The Washington Post’s Helaine Olen says “our moment of crisis is decades in the making, the endgame of decades of embracing the idea that we are not interconnected, that it is each man and woman for themselves.”
The reaction against anti-government politics has been broad and deep, from policy wonks to average folks, and has sometimes come from surprising quarters. For example we have John Hood, chairman of the John Locke Foundation: “I am a conservative,” Hood says. “Civilization requires government.” Thatcher’s own political party is now making a “bonfire” of her anti-government ideology. The meaning of her famous “There Is No Alternative” mantra now applies to the vital need for more government.
Princeton Prof. Eddie S. Glaude Jr. says, “We have witnessed 40 years of policies that have, in effect, shredded the social safety net and divested in the public sector. We now face a crisis that shows that the role of government involves much more than maintaining the economy or providing for the national defense.”
Farhad Manjoo, an op-ed columnist for The New York Times, says “the coronavirus crisis should be our wake-up call. The brands can’t help us. The brands won’t help us. The most comforting words I can think of now, amid so much uncertainty, chaos and confusion, are these: ‘I’m from the government, and I’m here to help.’” [It’s worth noting that the original title of the piece, “It’s Time to Bring Back Big Government” was subsequently changed by the Times editors]
New York Times columnist Jamelle Bouie wrote a couple of days ago that “the era of small government is over.”
Alex Pareene of the New Republic says “conservatives won their war on Big Government. Their prize is a pandemic. (…) These are all the predictable consequences of giving power to people whose only understanding of the role of government is to protect investment portfolios. A long boom market was seemingly enough to convince the people who check their 401(k) balances regularly that things were more or less fine; that, even if the guy in charge was a clown, the country was resilient and broadly functional. It turns out that, outside of its bloated military and management of the world’s reserve currency, the United States was barely a country at all.”
Cary Bozeman, a commissioner for the Port of Bremerton and former mayor of Bremerton, Washington, says local government can mobilize us in crisis. “We cannot simply set by and wait for the federal or state government to help us through this, our local leaders need to step forward, put a plan together, and support those most in need in this very difficult time. We can do this!”
Adam Tooze of the European Institute at Columbia University writes, “In making the difficult choices that lie ahead we have at least gained one degree of freedom. The big idea of the 1990s that “the economy” will serve as a regulating superego of our politics is a busted flush. Given the experience of the past dozen years we should now never tire of asking: which economic constraints are real and which imagined?”
David Kristjanson-Gural, a professor of Economics at Bucknell, says government is not the problem. “Without new regulations supporting the ability of working people to organize, and without a more progressive tax system, inequality will continue to rise. (…) Government policies to support unions, regulate financial markets and provide a real safety net for unemployed and sick or injured workers were a big reason that during the post-war period workers’ income and wealth rose as their productivity went up. Government is not the problem, government on behalf of the wealthy is the problem.”
Former Treasury Secretary Lawrence Summers agrees, saying the problem is instead declining worker power. “Declining unionization, increasingly demanding and empowered shareholders, decreasing real minimum wages, reduced worker protections, and the increases in outsourcing domestically and abroad have disempowered workers with profound consequences for the labor market and the broader economy,” Summers and his co-author Anna Stansbury write in Declining Worker Power and American Economic Performance. [Read the 96-page paper here]
Governing for the Common Good
So what should democratic governments do? Following are some suggestions people have made, actions being taken, and resources to stay abreast of the issues.
1) National: Doug Henwood offers a few suggestions for how to deal with the crisis and its aftermath going forward. “To recover from this, we need to do many things, both short- and long-term. To deal with the health crisis, we obviously need testing kits and a rapid mobilization to build hospitals, ICUs, and ventilators. It will take state action to do that properly; The Market will never do it on its own. It may not be socialism, but if we do it well, it will legitimate a public sector badly in need of legitimation.”
2) National: The AFL-CIO has published a list of steps they think should be taken: Protect front-line workers; Mitigate the broader public health crisis; Sustain people through the crisis; Sustain workers in severely affected sectors; Sustain state and local governments; and Rebuild the economy and put people back to work.
3) National: Democratic presidential candidates Joe Biden and Bernie Sanders have released plans to deal with the coronavirus pandemic and its impact.
4) National: Jeremy Mohler of In the Public Interest says, “As we care for each other during this crisis, we can’t forget about the teachers educating kids online, the postal workers sorting our mail, the municipal staff keeping our drinking water clean, and the millions of other public workers still on the job. We must #ProtectALLWorkers.”
5) National: Local governments across the U.S. “are releasing thousands of inmates in an unprecedented effort to prevent a coronavirus outbreak in crowded jails and prisons,” the Wall Street Journal reports. “Jails in California, New York, Ohio, Texas and at least a dozen other states are sending low-level offenders and elderly or sickly inmates home early due to coronavirus fears. At other jails and prisons around the country, officials are banning visitors, restricting inmates’ movement and screening staff. The 2.2 million people behind bars in the country, and the guards who work with them, face unique risks due to the tight spaces in crowded conditions and strained health-care systems, according to experts. ‘We’re all headed for some dire consequences,’ said Daniel Vasquez, a former warden of San Quentin and Soledad state prisons in California. ‘They’re in such close quarters—some double- and triple-celled—I think it’s going to be impossible to stop it from spreading.’ Prison staff in Pennsylvania, Michigan, New York and Washington state have tested positive for the virus, resulting in inmate quarantines. In Washington, D.C., a U.S. marshal who works in proximity to new arrestees tested positive for the virus, meaning dozens of defendants headed for jail could have been exposed. Two federal prison staffers have also tested positive” [Sub required].
For more on the national campaign for prisoner and migrant release see below.
6) National: The Labor Department has issued a directive to provide states with instructions for implementing the Families First Coronavirus Response Act, Public Law (Pub. L.) 116-127, specifically Division D, the Emergency Unemployment Insurance Stabilization and Access Act of 2020 (EUISAA).
7) National: The National Association of State Budget Officers (NASBO) has a useful webpage on coronavirus resources. “NASBO is monitoring budget and fiscal implications as well as broader issues that states are addressing related to the coronavirus (COVID-19). Below you will find links to information compiled by NGA and NCSL, federal agencies, as well as state emergency declarations and news articles highlighting state responses. NASBO staff will continue to add relevant information to this webpage and provide weekly updates in our Washington Report e-publication.” NASBO has also provided a useful list of state legislative efforts to deal with the coronavirus pandemic.
8) National: Pew has published a piece on efforts by state lawmakers to pass paid leave, which are being resisted by right wing outfits such as the Employment Policies Institute. “Paid leave supporters say the pandemic demonstrates the importance of allowing workers to take time off when they or a family member is sick. In Colorado, for instance, a paid leave proposal that seemed doomed a few weeks ago may face new consideration. ‘House and Senate Democrats are committed to passing a paid family and medical leave program,’ said Colorado House Speaker KC Becker, a Democrat, in an email to Stateline. ‘This has been a priority for several years, and the spread of COVID-19 has only increased our commitment and the urgency to get something done.’ The Colorado legislature has adjourned for two weeks, however, and its schedule for the rest of the year is unclear.” The Wall Street Journal says that with unmandated sick leave, the U.S. economy is more vulnerable to pand emics. [Sub required]
9) National: Pew has also published a webpage covering latest state actions on the coronavirus pandemic, and the National Conference on State Legislatures has a daily update page on state legislative actions.
10) National: The U.S. Conference of Mayors has sent a letter signed by over 300 mayors to federal congressional leaders calling for immediate action on the needs of cities during the crisis, including $250 billion in supplemental aid. “This will empower the nation’s mayors to immediately take the bold actions necessary to protect the American public from both the pandemic and the subsequent economic fallout. Direct fiscal assistance to cities will ensure that mayors can continue to provide vital public services (including public safety, water, sewer, solid waste, and municipal electricity) and that local governments are not forced to make cuts that further exacerbate the economic impact of this crisis. This funding will support those most critically impacted by the crisis—financially vulnerable residents, small businesses on the margins, and community-based organizations—and will protect public health, human services and the economy in this extraordinary time.”
The Economic Policy Institute says “the coronavirus pandemic requires state and local policymakers to act, in addition to demanding a strong federal response.”
11) National: The U.S. Air Force flew half a million coronavirus test swabs from Italy to Tennessee last week. Similar missions are expected in the coming days as the military ramps up its support for pandemic-response efforts.
12) National: Leaders in several states are working to find college dorms that can be converted into temporary medical centers. “States cannot build more hospitals, acquire ventilators or modify facilities quickly enough,” NY Governor Andrew Cuomo has written. “At this point, our best hope is to utilize the Army Corps of Engineers to leverage its expertise, equipment and people power to retrofit and equip existing facilities—like military bases or college dormitories—to serve as temporary medical centers. Then we can designate existing hospital beds for the acutely ill.” Nick Macchione, the director of the San Diego County Health and Human Services Agency, “said that they were actively working with universities to identify dorms that could be used as recovery beds for those who test positive for coronavirus.”
13) National: Nine States have reopened Affordable Care act insurance enrollment to broaden health coverage. “The states have reopened their health insurance exchanges this month to help ease consumers’ concerns about the cost of health care so that the sick will not be deterred from seeking medical attention. Patients need care for various health needs, regardless of their ability to pay, the rationale goes. And, on the public health side, uninsured patients who are avoiding needed medical care and get infected with the virus are more likely to inadvertently spread it.”
14) National: Dean Baker and Paul Krugman agree: “One cardinal rule for policy is NOT to give a deeply corrupt administration discretionary power to reward friends and punish enemies.” At the White House, “they’re calling the $500 billion available to Mnuchin, ‘the fund for the re-election of President Trump.’”
15) National: Let’s not forget the role of the Federal Reserve in propping up state and local financial systems. “The Federal Reserve Board on Friday expanded its program of support for the flow of credit to the economy by taking steps to enhance the liquidity and functioning of crucial state and municipal money markets. Through the Money Market Mutual Fund Liquidity Facility, or MMLF, the Federal Reserve Bank of Boston will now be able to make loans available to eligible financial institutions secured by certain high-quality assets purchased from single state and other tax-exempt municipal money market mutual funds.”
16) Florida: Amid COVID-19 downturn, the state will proceed with record spending plan.
17) New York: Those New Yorkers stuck at home can now download over 300,000 e-books from the NYPL for free.
18) National: Ed-tech startups and investors are shifting into overdrive to take advantage of the coronavirus crisis. “Several startups have even raised funding amid the crisis. “School districts across the world are closing in-person schools and attempting to move online due to the spread of the new coronavirus. Schools have closed in 39 U.S. states, affecting at least 41.7 million students, according to data from education news outlet Education Week. Jason Palmer, a general partner at New Markets Venture Partners, which invests in ed-tech companies, said some portfolio companies are paying more as they ramp up usage of cloud services like Amazon Web Services and Microsoft Azure to meet the higher demand.” [Sub required]
19) Indiana: Auditors are warning the Steel City Academy charter school in Gary is in significant financial distress and may be unable to continue as a going concern. “‘These factors contribute to a heavy burden of current obligations that the school does not have liquid assets to pay, which therefore raises substantial doubt about the school’s ability to continue as a going concern,’ the audit said. In response, school leaders told auditors they have an ‘aggressive recruiting plan’ to increase student enrollment, from the 475 students currently in kindergarten through 2nd grade and 7th through 12th grades to 550 students by the 2020-21 school year.”
20) Tennessee: Grassroots activists are winning the battle against “school choice,” The Progressive reports. “Another factor making it difficult for vouchers to move smoothly through the process in Tennessee has been grassroots resistance. Ahead of the voucher vote, parent groups and civil rights organizations joined together to express opposition. But those groups didn’t stop just because a group of powerful white men got their way the first time around. Rather, they kept organizing. Using social media to stay connected, groups like Tennessee Teachers and Parents Against School Vouchers and Tennessee Strong focused on the long game—stopping implementation of a voucher plan expected to cost as much as $335 million.”
21) National: Massive outflows from the bond market have paralyzed state and local public finances, which is critical for infrastructure investment. Since last Monday, a record $108.9 billion has flowed out of bonds, $55.3 billion of which was from investment grade bonds. Last year, “new issue supply accelerated dramatically in the second half of 2019, for a robust total of $423.4 billion. Taxable municipal bond issuance showed the greatest increase, mainly to pre-refund existing and outstanding tax-exempt bonds with higher coupons. Refunding issuance ramped up to $159 billion, a dramatic 52% increase from 2018.”
22) National: Bond investors are looking at early repayments for credit lines as the earthquake produced by the coronavirus financial meltdown threatens liquidity. “Institutions such as underfunded pensions could face a liquidity crunch in the coming weeks and months following a rout in the public markets and slowdown in private market exit activity. Q1 is expected to be a write-off for sales, with Brookfield Asset Management among those shelving deals following disruption to travel and market stability.” But “the specter of diminished liquidity could make early loan repayments an unappealing prospect for some LPs.”
23) National: Infrastructure Investor’s Bruno Alves has weighed in with an overview of “Infrastructure investing in the age of COVID-19.” The pandemic will stress test the resiliency of the asset class, potentially like never before, he says, shaking up the attractiveness of various sectors. Airports, whose revenues have been massively impacted by cancellations and travel bans, will take a hammering. “If the pandemic turns out to be prolonged, it will likely test public-private relations like never before. At the moment, there are too many ‘what ifs’ to speculate further. As we wrote yesterday, this is the time to pause; hunker down; wait and see; take a measured approach; watch the markets closely; get through this. [Sub required].
Looks like those “privately-owned” assets (e.g., Heathrow, Gatwick and Manchester airports in the UK) are going to come back onto the public balance sheet once they stop making money for investors. But, says Alves, “The current crisis will also—like every other crisis—create opportunities.”
24) National: 575+ Groups are demanding that governors stop all power and water shut-offs now; invest in distributed energy and equitable water; and establish “percentage-of-income payment plans for water, sewer and stormwater bills, with arrearage forgiveness for low-income households.” Read their letter.
25) Pennsylvania: Pennsylvania American Water has suspended non-payment service shutoffs. “Our priority is and has always been the well-being and safety of our customers,” said Pennsylvania American Water President Mike Doran. “During this public health crisis, we must ensure everyone, especially our most vulnerable citizens, has access to clean, safe and reliable water service. We also are providing relief for those customers who may experience financial hardships as a result of this public health emergency.”
Criminal Justice and Immigration
26) National: Because of the threat of coronavirus turning ICE detention into “Death Camps,” Groups are rallying across the country to free families. “The agency’s detention centers are known for their danger in spreading deadly disease to prisoners and it’s a matter of when—not if—the disease arrives at a facility and infects hundreds or thousands of people. ‘ICE is making the pandemic more dangerous for everyone,’ tweeted The Real News on Sunday. A lawsuit filed in Washington, D.C. by legal groups RAICES, Rapid Defense Network, and ALDEA—The People’s Justice Center is demanding the government immediately release families detained at the agency’s Family Residential Centers (FRC).” Read about the lawsuit.
The New York Times has reported that “it started with a jails investigator in an office three miles from Rikers Island. Then, a correction officer at a security checkpoint near the entrance to the jail complex got it. Hours later, it was an inmate in a crowded housing unit. Within days, the investigator had died and three more correction officers and two other staff members had tested positive for the coronavirus, confirming fears that the highly contagious disease had arrived in the nation’s second-largest jail system, endangering 5,300 inmates and twice as many guards.”
In an emailed statement, Gamaliel is calling for pressure on Congress. “In jails, prisons, and detention centers, especially those that are overcrowded, it is impossible for inmates to adhere to the kinds of ‘social distancing’ measures that public health experts recommend to stop or slow the spread of the dangerous and highly infectious coronavirus. In this time of emergency, you must take aggressive and immediate steps to reduce the number of people being held in these locations. It is a public health imperative!”
27) National/Texas: RAICES has reported the death by suicide of one of its clients at the Karnes Detention Center, which is owned and operated for profit by GEO Group.
28) Wisconsin: The vacant Appleton private prison owned by CoreCivic that some politicians have been trying to get the state to use may be turned into a “COVID-19 care center.” The Grand Forks Herald reports that “the facility is being provided to TCMC at no cost—meaning no financial benefit to CoreCivic. Appleton Area Health, CCM Health in Montevideo, Johnson Memorial Health Services in Dawson, Madison Healthcare Services and Swift County Benson Hospital announced this information in a news release Saturday afternoon, saying they are working together to create a critical care facility for patients in and near Chippewa, Lac qui Parle and Swift counties who have confirmation of COVID-19 virus. Appleton is about 150 miles west of Minneapolis.”
29) National: AFSCME says the coronavirus pandemic exposes the urgent need for fully funded public services. Its president, Lee Saunders, said in a statement, “Over the last decade, public services in public health and other areas have been chronically underfunded, with staffing levels never rebounding to where they were before the Great Recession. The shortsightedness of those austerity measures is now being exposed, and it’s up to the federal government to step in. The first two bills passed by Congress have been important initial steps. But we need to think bigger and act more boldly. I am calling on the House and the Senate to move quickly on a stimulus package that would include robust general grant assistance to states and municipalities, so they can maintain services now and into the immediate future, when they are needed most.”
30) National: Transit agencies are in desperate need of federal assistance as ridership and revenues have plunged. “‘As more people stay home following the advice of medical experts, the MTA is now facing financial calamity,’ said Patrick Foye, who leads New York’s Metropolitan Transportation Authority, which operates the subway, trains and buses in the New York City region.” The Washington Post quotes Jim Mathews, president and chief executive of the Rail Passengers Association saying, “We really could set back transportation in this country by decades if we don’t act. The risk is insane.” The Post reports, “as Congress works on coronavirus response legislation, transit and rail systems are also seeking billions of dollars in federal assistance. The White House has outlined a $1 trillion bailout package for the country, including $50 billion for airlines and $500 million for Amtrak. Advocates say transit and commuter rail should be at the forefront of any rescue plan because of the vast numbers of people they serve.”
31) International: The Australian government has abandoned a billion dollar plan to privatize its international visa system—after already spending tens of millions of dollars of taxpayer money. “The move comes after a decision on the politically sensitive tender process to choose the successful bidder was last year delayed amid political conflicts of interest within cabinet. Prime Minister Scott Morrison and Immigration Minister David Coleman recused themselves from cabinet discussions on the issue because of their long personal and professional relationships with Scott Briggs, who was previously leading one of the bids.”
32) National: If you’ve got time on your hands and feel like watching Netflix, @Miranda13341679 has a privatization-related suggestion.