It’s “infrastructure week” in the U.S., with the Trump administration rolling out a flurry of events to show they’re on target to advance a campaign promise (while distracting attention from “bad news” like James Comey, etc.). Trump has proposed spending $200 billion over the next ten years on infrastructure, while attracting at least $1 trillion in private sector investment money.
The plan is led by Trump’s chief economic adviser Gary Cohn (a former Goldman Sachs executive), who is Director of the powerful National Economic Council – with members Mike Pence, Rex Tillerson, Steven Munchin, Rick Perry, Wilbur Ross, Sonny Perdue, Ben Carson, Elaine Chao and Tom Price.
Trump’s proposed budget puts a heavy emphasis on “market solutions” for infrastructure, with clear government goals of cutting regulatory “red-tape” and facilitating privatization. As The Washington Post put it, there are “two driving themes” of Trump’s initiative: “Government practices are stalling the nation’s progress; and private companies should fund, build and run more of the basic infrastructure of American life.” [1]
Gary Cohn has said that “infrastructure week” will reveal Trump’s desire for some “targeted transformative projects,” including privatizing the air traffic control functions of the Federal Aviation Administration – the focus of Trump’s Rose Garden speech June 5. [2] In introducing that event, Vice President Mike Pence said, “Welcome to the beginning of a new era for American infrastructure.” [3]
A New Era
In my book Beyond Banksters: Resisting the New Feudalism (published six months ago.), I predicted that “with a new administration coming into the White House, the privateers have their eye on more federal assets, including the U.S. Postal Service, Amtrak, the air traffic control system, water utilities, federal electricity infrastructure, interstate highways, bridges, seaports, airports, and even federal lands – including national parks.”
Since then, Amtrak is scheduled to lose federal financial support for its long-distance train service – a major step in its eventual privatization. [4] The federal Power Marketing Administration, including its power lines, towers and substations, is set to be sold off. [5] Interstate highways are slated to become tolled, while major power facilities are to be privatized. [6] And those are just the assets that have been mentioned in the U.S. media so far.
I also predicted that these privateers (extensively identified in my book) would likely use the same jargon that they’ve used in Canada, Australia, and other countries to try to get federal, state, and provincial governments to sell off their public assets. They call it “asset recycling” – selling off so-called “mature” or “legacy” infrastructure (like airports, seaports, electricity transmission systems) in order to get money up front to pay for new infrastructure.
As I write in Beyond Banksters,
“In 2013, the right-wing Australian government established its ‘Asset Recycling Initiative’ – a program by which states and territorial governments decide which infrastructure assets to sell to the private sector, while the federal government grants 15 percent of the sale price to the states/territories. The federal funds and proceeds from the sales are then used to fund new infrastructure projects. Australian critics of ‘asset recycling’ say it is basically ‘selling a hospital to build a road,’ with the federal government bribing local governments with incentive payments in order to sell off public assets.”
After I and others in Canada started writing about and explaining the term “asset recycling,” the privateers dropped that jargon and have been scrambling around for another term ever since.
I notice the same thing is happening in the U.S.
Michael Laris of The Washington Post explained “asset recycling” in a May 23, 2017 piece: “Trump advisers said that to entice state and local governments to sell some of their assets, the administration is considering paying them a bonus. The proceeds of the sales would then go to other infrastructure projects. Australia has pursued a similar policy, which it calls ‘asset recycling,’ prompting the 99-year lease of a state-owned electrical grid to pay for improvements to the Sydney Metro, among other projects. … Transportation Secretary Elaine Chao says such projects should be encouraged.” [7]
Just a week later, however, the term “asset recycling” seemed to have disappeared from mainstream coverage. For example, a June 3 Bloomberg article noted: “For the $1 trillion plan, Trump has proposed $200 billion in federal spending on ‘targeted federal investments’ in rural areas and for projects with regional or national priority, as well as for ‘self-help’ incentives to spur states, localities and private entities to generate more of their own revenues for projects.” [8] Apparently, “self-help incentives” is one piece of new jargon replacing “asset recycling”.
Billionaires’ Initiative
As far as I can determine, during 2016 the only major organization in the U.S. that was lobbying for “asset recycling” (by that name) was the Reason Foundation, which receives major financial support from the conservative billionaires David and Charles Koch. The Reason Foundation website ran a couple of pieces advocating this way of funding infrastructure, with glowing references to its “success” in Australia.
By 2015 in Australia, however, economist William Mitchell was calling asset recycling and public-private partnerships “public robberies” and “devious transfers of public wealth and funds to the private sector,” after dozens of ports, electricity systems, rail lines and water-treatment plants had been privatized. [9]
Following the U.S. presidential election, Donald Trump’s selection to oversee the transition for the Transportation Department was Shirley Ybarra, a policy analyst with the Reason Foundation. [10]
Another Koch ally, Pennsylvania GOP Rep. Bill Shuster has long advocated the privatization of air traffic control and met with Trump and Elaine Chao (now Secretary of Transportation) after the election. [11]
Like other billionaires close to the Trump administration, the Koch Brothers are eager to buy up the already-built public assets that will give them tolls, user fees, and rents for decades to come.
Of course, the latest U.S. infrastructure twist is that the Saudis want in on the bonanza. During Trump’s recent trip to the Kingdom, the Saudi Public Investment Fund announced a $20 billion investment with Blackstone, the private equity giant whose CEO, Stephen Schwarzman, chairs the Strategic and Policy Forum advising Trump. Blackstone will match those funds and use the $40 billion to leverage the purchase of U.S. infrastructure. [12]
The Saudis are expecting a decent return on their investment: billions in profits from tolls and user fees. Just how Trump will explain that to his base remains to be seen, but I doubt it will be mentioned during “infrastructure week.”
Notes.
[1] Michael Laris, “Trump advisers call for privatizing some public assets to build new infrastructure,” The Washington Post, May 2, 2017.
[2] John Wagner, “Trump plans week-long focus on infrastructure, starting with privatizing air traffic control,” The Washington Post, June 3, 2017.
[3] Emily Tillett, “Trump says nation’s air traffic control system will enter ‘new era of aviation’,” CBS News, June 5, 2017.
[4] Michael Laris, “Proposal shifts air traffic control outside federal government, cuts funding for transit and Amtrak,” The Washington Post, March 16, 2017.
[5] Henry Grabar, “Trump’s Infrastructure Plan: Let Wall Street Build and Operate America,” Slate, May 24, 2017.
[6] Laris, “Trump advisers call for privatizing some public assets to build new infrastructure,” op. cit.
[7] Ibid.
[8] Mark Niquette and Alan Levin, “Trump to Kick Off Infrastructure Drive With Air-Traffic Proposal,” Bloomberg.com, June 3, 2017.
[9] William Mitchell, “Privatisation failure – the micro analogue of fiscal surplus obsessions,” billy blog, January 6, 2015.
[10] Dr. Gary G. Kohls, “Donald Trump, Draining the Swamp? The Alt-Right Backlash…”, Global Research, November 16, 2016.
[11] Alex Kotch, “The Koch Brothers Are Smiling: The White House Will Be Packed With Some of Their Most Loyal Servants,” Alternet, January 10, 2017.
[12] David Dayen, “Trump’s ‘America First’ Infrastructure Plan: Let Saudi Arabia and Blackstone Take Care of It,” The Intercept, May 27, 2017