1) National: As Beltway players, experts, and industry heavyweights dominate media coverage of Trump’s infrastructure initiative, Sebrina Owens-Wilson of the Partnership for Working Families reminds us that “communities and workers all need to be a part of the conversation” around infrastructure. Trump’s infrastructure privatization proposals, she says, can lead to a loss of public control, erode wage standards by eliminating project labor agreements, and harm the needs of communities. With radio talk show host Rick Smith. [Video]
2) National: Last week was the Trump administration’s Infrastructure Week, promoting their $1 trillion infrastructure initiative, which, as economist James Galbraith writes, “doesn’t really exist.” As Trump tries to shift the burden of infrastructure financing and development onto states and localities, Galbraith says “There are just two problems. First, not every state or city can issue new debt at reasonable cost, even if it wants to. The cities with the greatest needs (think Flint, think water) are the poorest, oldest, blackest ones, not the new and the rich and the white. Second, local governments fund local projects. They don’t think about national problems, let alone those of the planet. You will never get the green energy equivalent of the transcontinental railroad or the interstate highway system in this way. And local governments are controlled by developers. So what we will get from this, if anything, is more toll roads, toll bridges, more sprawl, more cars, more rake-offs and in the end, more financial trouble and more bail-outs. We might also get more reckless deregulated electric utilities (think Enron), more private water systems, more pay-through-the-nose communications. Of course, there will be some economic growth along the way. But in the meantime? Trust me, I live in Texas, well known as ‘Mississippi with roads.’ We’ve been pioneering this sort of scam for years and years.”
3) National: The Trump administration’s plan to “leverage” $800 billion in private money by putting in $200 billion of federal money would require capital markets to now pony up almost six times the amount of money they have already committed to infrastructure funds. “Last year, investors world-wide committed a record of about $59 billion to private-infrastructure funds, pushing to more than $140 billion the amount of ready-to-invest cash in such funds, according to Preqin, a provider of investment-fund data. Much of that money is likely to be spent outside the U.S.” And all this in the midst of a “dearth of attractive investments.” [Sub required]
4) National: Yves Smith of Naked Capitalism pulls together several critiques of Trump’s infrastructure plan, including of the “Australian Asset Recycling Model” that the Trump administration says is a template for the United States. But “the Australian asset recycling program was widely seen as a big failure, even among the Liberals, as in the conservative, pro-business party.”
5) National: John Podesta, former head of the Center for American Progress, chair of Hillary Clinton’s 2016 presidential campaign, and counselor to President Obama, pans Trump’s plan to privatize the public air traffic control system. “Somehow, it gets worse. On Monday, the president laid out his most concrete proposal so far: the privatization of the air traffic control system, handing over the publicly paid-for assets of the system to a nonprofit corporation controlled by the airlines. Supporters argue that privatization could expedite improvements to the system—even though most delays today are the result of weather and airline errors, not the air traffic control system. Worse, the ‘improvements’ could in fact hurt consumers and businesses: To pay for the system, airlines could jack up airfares, cut service to smaller airports and infringe upon civil aviation, all without any public transparency or accountability. Anyone who thinks they’d do otherwise hasn’t flown commercial lately. Finally, all signs indicate that Trump’s other infrastructure proposals are likely to be little more than tax breaks for wealthy Wall Street investors and giveaways to polluters.”
6) National: As President Trump proposes gutting environmental and project safeguard rules for infrastructure, critics from both parties push back, saying Trump uses inaccurate figures to describe delays. “Sen. Rob Portman (R-Ohio) and Sen. Claire McCaskill (D-Mo.), who teamed up on a 2015 law that created a federal permitting improvement council, said in a statementthat it was ‘perplexing that the Administration has not taken full advantage of the powerful tools Congress gave it.’ They also said a Trump administration executive order speeding environmental reviews for key projects ‘is confusing and makes the permitting process even more complex.’ Details of the new penalties for delays remain unclear but would be a major change.” On a related front, on Friday Virginia governor Terry McAuliffe warned that climate change is threatening his state’s infrastructure.
7) National: President Trump’s plan to shift infrastructure financing and funding from the federal government to private capital has state and local officials worried about how they can sustain their infrastructure. “The sudden uncertainty has left local officials who had long anticipated federal support for their projects worrying whether they will get it. In previously unreported letters, officials at the Department of Transportation last week told project managers for a bus corridor in Pittsburgh and rail projects in Phoenix and New York that the administration’s budget plan for next year ‘proposes no funding for new projects’ under an existing federal program known as the Capital Investment Grant. Robert Rubinstein, who received the letter as executive director of the Urban Redevelopment Authority of Pittsburgh, said the proposed cancellation of funding would effectively kill the project, which has been in the works for 10 years.”
8) National: The Washington Post fact-checks the Trump administration’s inflated and dodgy numbers for its commercial deals and private infrastructure investment. “An additional $40 billion comes from a Blackstone partnership with the sovereign wealth fund for infrastructure investments in the United States, though the State Department valued the Saudi investment at $20 billion
in its news briefing. The official announcement made it clear the deal was still a long way from fruition: ‘Blackstone and the Public Investment Fund (PIF) signed a nonbinding memorandum of understanding for the project, which will depend on further negotiations.’” See also David Dayen’s report on the Saudi-Trump deal in The Intercept.
9) National: Goldman Sachs is all excited by Trump’s infrastructure initiative, which is heavily dependent on private financing for public infrastructure and, at least in its earlier incarnations, proposed enormous tax benefits for corporations stashing profits abroad. “Blankfein’s most recent foray into social media is particularly interesting because New York-based Goldman Sachs has become a big player in the world of funding for infrastructure projects. On its website, Goldman Sachs said it ‘is one of the largest infrastructure fund managers globally’ and has raised more than $10 billion since 2006 for such projects. Goldman Sachs, for example, is part of a team that paid more than $1 billion in 2011 for a 40-year contract to operate two toll roads in Puerto Rico. Trump’s infrastructure plan is being developed by a task force led by former Goldman Sachs president Gary Cohn, who now serves as director of the National Economic Council.”
10) National: Nuveen, the investment management arm of TIAA-CREF, issues a report making the case for infrastructure investment. “Opportunities representing core investments with stable income streams include contracted renewable energy, midstream pipelines with volume guarantees, liquefied natural gas storage, regulated utilities, and transportation. One example is a privately-operated toll road, I-595 Express LLC in southeast Florida used by more than 180,000 vehicles daily. Built through a public-private partnership, the highway includes express lanes that charge tolls, with predictable cash flows to investors specified in a 35-year concession agreement that reduces traffic demand risk.”
11) National: As the Trump administration aggressively pushes private financing of infrastructure and in the wake of rumors that tax exemption for municipal bonds might be ended, municipal bond supporters were assured last week in a 45-minute discussion that the Trump Administration will not do anything to harm the municipal bond market. Representatives of the Municipal Bonds for America coalition met with Ja’Ron Smith, director of urban affairs and revitalization policy for the White House Domestic Policy Council. Smith is a former director of external affairs at the Koch-sponsored Generation Opportunity.
12) California: An audit performed by the state’s Fiscal Crisis & Management Fiscal Assistance Team finds that charter school chain manager Tri-Valley Learning Corporation’s “management may have ‘diverted, commingled and/or misappropriated funds with various private entities, including tax-exempt bonds totaling $67 million and contributed to an environment of significantly deficient internal controls.’ It also said that TVLC management failed to disclose numerous conflicts of interest. ‘The lack of internal controls coupled with financing schemes designed to divert millions of dollars by [TVLC chief executive officer Bill Batchelor] and others through relationships fostered between board members, close associates and other professionals with his nonprofit public and private companies created an environment that made it possible for the essential elements of fraud to occur,’ according to the audit.” [Sub required]
13) California: Gurtin Municipal Bond Management, a muni-focused asset manager, is offering investors a “suite” of investments in so-called social impact bonds. [Sub required. See also ITPI’s “A Guide to Evaluating Pay for Success Programs and Social Impact Bonds”]
14) District of Columbia: Concern grows that Trump’s plan to sell off the Washington Aqueduct could drive working families’ water bills through the roof. “Water bills are likely to rise anyway in coming years, because any owner of the aqueduct would have to invest hundreds of millions of dollars to pay for needed upgrades to handle new kinds of contaminants such as pharmaceuticals and antibiotics fed to animals. They would probably go even higher with a private operator. A 2016 study by Food and Water Watch, an advocacy group, found that on average, private, for-profit water utilities charged households 59 percent more than government ones, a difference of $185 a year for a typical household. D.C. Water General Manager George S. Hawkins said he doubted that a private company could run the aqueduct more efficiently than the Corps.”
15) Florida: After community pressure, a mixed-use ‘public private partnership’ project in Miami-Dade County includes affordable housing and gets the go-ahead. “Ms. Llahues told commissioners of a January community meeting at which West Grove neighbors adamantly called for more affordable housing. She said developers have applied for state tax credits to help include more affordable units. In addition, she said, the county agreed to a mix of up to 40% of the units dedicated as affordable and workforce housing. The promise of workforce housing and other items will be included in a covenant that will run with the land, said officials.”
16) Indiana: Donald Cohen of In the Public Interest reports that just as Vice President Mike Pence goes around the country pushing Donald Trump’s plan to use ‘public private partnerships’ as a model for national infrastructure renewal, a P3 he oversaw in his own state is in financial crisis—and taxpayers will likely be on the hook. “Public-private partnerships are far more expensive than public financing and —without very strong protections — can hand control of infrastructure to private investors. Trump’s plan wouldn’t rebuild America; it would encourage communities to make shortsighted deals with Wall Street and global corporations like Isolux Corsan.”
17) Iowa/National: The Des Moines Register pronounces the Republican-led Kansas and Louisiana “supply side” austerity models dead, and says Iowa needs to learn the lesson. “Some of the most conservative Republicans in the Kansas Legislature, who had long defended the tax cuts amid complaints about welfare cuts, the privatization of Medicaid, a $200 millio
n cut in the schools budget, and the elimination of 2,000 state jobs, aligned themselves with Democrats in overriding Brownback’s veto of a billion-dollar tax increase. Sadly, however, it wasn’t a sudden epiphany, or the steady drumbeat of constituent complaints, that caused the conservatives to see the error of their ways. It was a $900 million hole in the budget and a Kansas Supreme Court decision that effectively ordered lawmakers to adequately fund the public schools. (…) Let’s hope [Iowa Gov.] Kim Reynolds is paying attention.”
18) New York: On Friday New York Communities for Change and a number of other group held a “Blackstone Station” ribbon-cutting ceremony and march to highlight “President Donald Trump’s scheme to privatize public transit in New York City.” [Video]
19) New York: Questions have arisen over contracting practices in the New York City subway system’s signaling system evaluations. “Does it matter that the outside contractors paid for the study that both city newspapers rely on (there does not appear to have been another study and none is referenced by the newspapers) and that the MTA did not provide an independent evaluation of the system they chose? It does.”
20) New York: New York City’s pension fund becomes the first to divest from private prisons, and have pulled $48 million from GEO Group, CoreCivic, and G4S. “This sends a strong message that New York won’t support corporations that are locking up members of our communities,” added Jesus Gonzalez, an organizer with Churches United for Fair Housing, in a statement Thursday. Gonzalez’s group is part of a recently-launched campaign to single out companies that stand to profit under the Trump Administration, including banks that finance private prisons like JPMorgan Chase and Wells Fargo.
21) International: This past weekend in Barcelona, mayors, local councilors, and activists from over 40 countries met to build the “new international municipalist movement.” The movement “is made up of an ecosystem of organizations working within and beyond electoral politics at local level. It’s a movement defined as much by how it does politics as by its goals, and it is this insistence on the need to do things differently that gives municipalism its unique strength in the current context.” Among its goals are remunicipalizing public services and ending austerity.
22) International: In a dramatic election result, Labour’s anti-privatization candidate Jeremy Corbyn leads his party to a 29-seat parliamentary gain as the pro-privatization Conservative Party loses its parliamentary majority. Corbyn’s voters were “junior doctors, ditched in their struggle by the British Medical Association, students who will spend a lifetime repaying their university fees, workers on zero-hour contracts, users of an increasingly privatised NHS or local authorities, people who can not afford the rents in London and, yes indeed, the Muslim voter.”
The infrastructure industry greeted Labour’s political gains positively, voicing concern that Theresa May’s Conservative-DUP alliance would be hard pressed to get anything done legislatively, whereas “a coalition involving Labour—now or after another general election, if it happens—would be more promising for the UK’s project pipeline,” according to David Lea, a senior analyst at Control Risk. “The performance of the Labour Party suggests that there’s probably a bit of demand out there for some ‘priming of the pump’, to borrow a phrase that put Donald Trump in trouble a few weeks ago.”
23) Think Tanks: The Economic Policy Institute’s Josh Bivens and Hunter Blair write that Trump’s infrastructure plans are empty promises not backed by money. “Where does the rest of the funding come from? In a word, nowhere. There is hand waving about leveraging the private sector and vague claims that federal ‘divestment’ from infrastructure provision will somehow empower state and local governments to do more (but without any new funding source for these governments!).”
24) Think Tanks: The Performance Institute, a private, for-profit company that specializes in outsourcing government functions and personnel and bringing in private contractors, has lined up to cash in on the Trump administration’s radical program for slashing government. On July 17-18 it will be holding a “forum” on “Strategic Planning and Reorganization Initiatives in Government.” On June 20-23 it will hold another “forum” on “Data Analytics and Performance Budgeting for Government.” Its founder, Carl DeMaio, spearheaded a dogged effort to outsource, downsize, and corporatize San Diego government, and is reportedly mulling a run for California governor.
1) National: What started out as a process promising bipartisan cooperation to launch a major national infrastructure investment program has lapsed into legislative inaction as the Trump administration fails to engage Democrats. Senate Minority Leader Charles Schumer (D-NY) tweeted last week that “President Trump pitched a $1 trillion infrastructure plan on the campaign & in the days after the election. Democrats welcomed it. We offered to work together. We offered our own infrastructure plan to the WH to spark discussion. Months passed. We heard nothing back. Now the few details we have of POTUS’ plan show it’s private-sector driven, has minimal investment & ignores huge sectors of infrastructure. ”
“It’s not the kind of fulsome outreach that one might have hoped for and expected,” said Sen. Tom Carper (D-DE), the top Democrat on the Environment and Public Works Committee.” The result has been that Trump has stuck to his idea of using $200 billion to “leverage” $800 billion in private money. “Democrats have largely panned this approach as insufficient in federal support and naive in its hopes for private funding. At best, it might lengthen the timeline for projects that were already underway during the Obama administration, such as another tunn
el under the Hudson River. At worst, Democrats contend, it will give away tax cuts to private corporations for projects that would have happened anyway. ‘This is literally the opposite of an infrastructure package,’ said Sen. Brian Schatz (D-Hawaii), a member of the Senate Commerce, Science and Transportation Committee.”
2) National: But the view among some Republican lawmakers and construction-types on the possibility of an actual infrastructure plan emerging is more optimistic. Public Works Financing reports that “the Senate has undertaken the legislative legwork on an infrastructure bill. Speaking at a Transportation Construction Coalition legislative briefing, Environment and Public Works (EPW) chairman John Barroso (R-WY) was quoted by Politico as saying he’s working with ‘every Democrat’ on the committee on a statement of general principles. ‘We are going to work with the White House, but we’re not going to wait,’ he said, adding the EPW was ‘fully’ focused on an infrastructure package. The House is tied up in knots over health care and tax reform (plus infrastructure does not seem to be a priority for Speaker Paul Ryan). ‘So somewhere between EPW, Senate Finance, Minority Leader Chuck Schumer and, perhaps, the Senate Banking Committee, lies the narrow path to a real proposal.” [Public Works Financing, May 2017; sub required]
3) Pennsylvania: Bipartisan legislation passes the state house to put the beleaguered Pittsburgh Water and Sewer Authority under oversight by the Pennsylvania Public Utilities Commission. The Pittsburgh Post-Gazette backs the move: “PUC oversight is another responsible step, one that could afford outside expertise and guidance not unlike what the state-appointed financial overseers have provided to Pittsburgh for more than a decade under Act 47. Although far from perfect, oversight has helped the city to regain its financial footing. It hasn’t hurt the city or forced officials to privatize assets. The only serious attempt at privatization—former Mayor Luke Ravenstahl’s proposed long-term lease of parking garages and meters for a pension bailout—was defeated by city council in 2010. The last point is important because some are balking at PUC oversight out of fear that it would put the agency on the road to privatization. House Speaker Mike Turzai, R-Marshall, who co-sponsored the PUC oversight legislation with Rep. Harry Readshaw, D-Carrick, has expressed interest in privatization in the past but says it’s a ‘non-issue’ now. Democrats surely would kick up a fuss if privatization were to come up down the road. Mayor Bill Peduto has no problem with PUC oversight, but he’d fight tooth and nail to prevent a sale of city assets. The bottom line is that there’s no reason to deny PWSA help now because of concern about a privatization attempt that might never come and would face substantial resistance if it ever did.”
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