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Pigs at the Trough: Privatization of the Public Good

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Donald Trump has assembled a Cabinet distinguished by capitalist oligarchs, hedge-fund scammers and failed military officers.  However, these officials – some have yet to receive Senate approval – share a common belief that the federal budget is a bottomless pig’s feeding trough to be plundered for private corporate and, ultimately, management and shareholder personal enrichment.

There are a host of ways that those with political power and/or influence — whether at the federal, state or local level — use public resources for their private gain.  One example is the use of executive orders to further an individual corporation’s goals.  This was evident in the get-rich spirit of Trump’s recent signing of two executive orders permitting TransCanda to construct the Keystone XL pipeline and Energy Transfer Partners to build the final portion of the Dakota Access Pipeline.

Trump’s orders signify the triumph of short-term capitalist gains over the long-term national interest, let alone the health and wellness of people along the pipeline routes.  He is backing capital, supporting investments schemes costing hundred-of-millions of dollars to build these “infrastructure” developments; they do not simply put people at risk who live along their paths, but are unnecessary as energy prices decline and newer sources (including solar and wind) undercut the need for Canadian crude.

A second methods that companies use to work the system is through tax breaks and direct subsidies.  Trump’s real-estate development business reported avoided paying taxes on as much as $916 million in income over an 18-year period.  Subsides include the billions of dollars paid through the Depts of Agriculture and Energy to assure food and energy availability.

Questions have been raised about Trump’s pick for Sec. of Health, Rep. Tom Price (R-GA), and his reputed conflicts of interest regarding investments in Zimmer Biomet (a medical-device company) along with pharmaceutical companies Eli Lilly, Bristol-Meyers Squibb, Amgen, McKesson, Biogen and Pfizer.  Rick Perry, the proposed Sec. of Energy and former Texas governor, served on the board of the company building the Dakota Access Pipeline.  And Betsy DeVos, the proposed Sec. of Education, has more than 100 potential conflicts of interest including Performance Business Services that the Education Department sub-contracts to collect defaulted federal student loans.

It’s no surprise that Rex Tillerson – the former ExxonMobile CEO and now proposed Sec. of State – long championed the Keystone pipeline.  “It was a matter of putting politics before our already rigorous regulatory permitting process,” he asserted in April 2013 speech.  “There are hundreds of thousands of miles of pipeline across the country that have a record of being safe and sound.”  Trump’s pipeline orders were expected; how long will it take the president and Tillerson to end the sanctions against Russia blocking a $500 billion Exxon venture?

However, a third – and the most lucrative — way to profit feeding at the public trough is through a federal “award.”  The U.S. Government reports that in 2016 total federal “outlays” were $3.5 trillion and it expended $3.1 trillion in awards.  These outlays were broken down as follow: contracts ($471.3 billion), grants ($656.1 billion), loans ($2.4 billion) and “other” financial assistance ($1.9 trillion).

 

How much social good did this enormous amount of economic redistribution of taxes accomplish?  Did this spending increase or lessen economic inequality?  Little attention has been paid to these issues.

Some agencies – e.g., Health, Social Security and Education – seem to benefit ordinary people in their daily lives.  Some agencies – e.g., Agriculture and Energy – appear as “necessary” scams, subsidies to ensure that primary public needs for food and electricity/oil/gas are met.  (Why health care is not one of these “necessary” needs met through a form of single-payer is a testament to the power of the medical/health sector.)  However, some agencies – Veterans Affairs, Defense and Homeland Security – fulfill Pres. Dwight Eisenhower’s warning raised in his legendary 1961 Farewell Address:

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.

 

It is becoming increasingly clear that the power of the military-industrial complex has never been greater.  The U.S. functions in a perpetual state of antiterrorist national-security readiness that stretches from the Pentagon to the local police station.  Equally ominous, other corporate sectors have learned from its success and aggressively moved to ensure their position as pigs at the federal trough.

***

The U.S. budget is a cash-cow and the fix is in.  In 2016, the U.S. government awarded $3.1 trillion through 24 agencies and 50 other entities.

Eight of the ten biggest federal agencies — and their respective outsourced award budgets — were:

#1 Dept. of Health & Human Services — $169.2 billion

#2 Social Security Administration — $158.7 billion

#3 Dept. of Education — $33.3 billion

#4 Dept. of Veterans Affairs — $23.8 billion

#5 Dept. of Agriculture — $22.5 billion

#6 Dept. of Defense — $17 billion

$7 Dept. of Energy — $11 billion

#8 = Dept. of Homeland Security — $4.2 billion

The awards made by each federal contracting agency is a story unto itself.  Those made by five key agencies in 2016 – Health & Human Services, Veterans Affairs, Defense, Energy and Homeland Security — make it clear that American tax dollars serve principally the interests of the military-industrial complex and allied sectors.

The Dept. of Health & Human Service’ top five contacts were awarded to:

#1 Merck — $563 million

#2 Pfizer — $308 million

#3 Glaxosmithkline — $204 million

#4 Comprehensive Health Holdings — $95 million

#5 Interpublic Group — $93 million

The Dept. of Veterans Affairs’ top five contacts were awarded to:

#1 McKesson — $5.5 billion

#2 TriWest Healthcare — $1.2 billion

#3 Lockheed Martin = $451 million

#4 Health Net = $416 million

#5 Cardinal Health = $358 million

The Dept. of Defense’s top five contacts were awarded to:

#1 Lockheed Martin — $43.1 billion

#2 Boeing    — $20.3 billion

#3 General Dynamics — $14.5 billion

#4 Raytheon = $13.5 billion

#5 Northrop Grumman — $9.0 billion

The Dept. of Energy’s top five contacts were awarded to:

#1 Lockheed Martin — $1,241 billion

#2 Consolidate Nuclear — $1,182 billion

#3 Bechtel — $1,1074 billion

#4 Los Alamos — $900 million

#5 Lawrence Livermore — $761 million

The Dept. of Homeland Security’s top five contacts were awarded to:

#1 CSC Government Solutions — $496 million

#2 Bollinger Shipyards — $364 million

#3 Securitas — $351 million

#4 Unisys — $264 million

#5 General Dynamics — $251 million

***

Pres. Trump considers himself, first and foremost, America’s dealmaker-in-chief.  His decisions, statements or executive actions are like the practices of a compulsive gambler playing the roulette wheel at one of his hotel casinos; every encounter is a roll-of-the-dice chance, a potential get-rich(er) scam.  As president, he is playing craps with the nation’s future.

Trump is sitting on the greatest jackpot of his dubious career.  His past is a series of stepping stones to the Oval Office.  Real-estate developments, TV shows, branding for hotels, luxury condos, fashion lines, and even a questionable college served to prepare him to plunder the federal jackpot.  He now oversees $3.5 trillion in spending.

It’s only a question of time before a major scandal over a conflict of interest erupts involving Trump (his family or confidants) or a member(s) of his Cabinet.  Trump’s likely political scandal follows the whoppers of previous presidents, including Ulysses S. Grant, Warren Harding and Richard Nixon.

Grant was at the center of two scandals, Crédit Mobilier and the Whiskey Ring scandals of the late-1860s and early-‘70s.  Crédit Mobilier involved awarding of stock in the Union Pacific Railroad to Grant’s vice president and numerous Congressmen; the elected officials approved federal subsidies to build the railroad.  The Whisky Ring scandal involved Grant’s private secretary and other officials who cheated the government out of whisky tax revenues.

Harding’s presidency witnessed a series of bribery scandals during 1921-’22 that involved his decision to transfer the naval oil reserves at Teapot Dome (Wyoming) to Mammoth Oil Company and at California’s Elk Hills and Buena Vista Hills reserves to the Pan American Petroleum Company.  The then-Sec. of Interior received both cash and no interest “loans” for services rendered.

“Tricky Dick” Nixon’s Watergate scandal involved the arrest of five operatives from his 1972 reelection campaign who broke into the Democratic Party’s headquarters at Washington, DC’s, Watergate complex.  The break-in and attempted cover-up culminated in Nixon’s impeachment and resignation.

However, there is a second — and far more troubling — dimension to political pigs ripping off federally-financed corporate welfare.  The Urban Institute raises a challenging question: What is the relationship between the federal government’s “lack of budgetary focus on opportunity and greater inequality in private earnings and wealth”?

It reports that the two principle means to achieve some level of income equality through federal funding — income maintenance programs and opportunity programs – are being squeezed to maximize private corporate enrichment. Income maintenance programs include health care and retiree benefits; opportunity programs “aim to encourage or help individuals increase their private earnings, financial wealth, and human and social capital” and include programs for children’s health and nutrition as well as support for homeownership and private pensions.

Trump’s presidency signals a new era in corporate welfare as evident in his proposed increases in military spending and the $1 trillion infrastructure scam. These proposed huge increases in the federal feeding trough will likely lead the pigs to gather in greater number and devour as much as they can, their gluttony culminating in death by overeating.

David Rosen is the author of Sex, Sin & Subversion:  The Transformation of 1950s New York’s Forbidden into America’s New Normal (Skyhorse, 2015).  He can be reached at drosennyc@verizon.net; check out www.DavidRosenWrites.com.

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