Category: Infrastructure

Bipartisan is a Synonym for Scam

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Why am I not surprised that the “Bipartisan” Senate infrastructure plan is primarily about giveaways to politically connected operators through privatization.

Privatization is where private operators are paid to take ownership of public assets.  (Think Chicago parking meter deal fiasco)   

It’s always about sacrificing the public weal to the altar of private profit:

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But the really scary piece is labeled “Public private partnerships, private activity bonds, and asset recycling.” In the name of building world-class infrastructure, these lawmakers would sell it off in fire sales to private financiers. We have lots of experience with infrastructure privatization that strongly suggests it should be avoided.

There was a time when Democrats did oppose such schemes; it was during the Trump administration. To the extent that Trump had an infrastructure vision, it was rooted in privatization. Wilbur Ross and Peter Navarro, who would each take high-level jobs in the Trump administration, wrote a paper before the 2016 election outlining their vision: $1 trillion in investment provided by private bond buyers, who would be guaranteed a tax credit to buy the bonds, interest on the debt, and an equity stake with dividends (with up to a 10 percent profit margin). It adds the usual song and dance about how private enterprise is so much more efficient than the public sector, therefore saving money overall.

It takes about two seconds to recognize how ridiculous this is. The government doesn’t require a 10 percent margin on equity, tax credits, and interest payments. That’s a layer of profit that gets built into the expenditure. Governments usually contract out design and construction to private contractors, but there are only two ways for these companies to reduce ownership and operation costs below what the public sector would spend, while still being profitable. They can cut back, either on safety or labor or maintenance; or they can extract a lot of profit from users of the infrastructure (think toll roads). If the infrastructure isn’t inherently profitable, like a bridge in New York City or a toll road in southern California might be, the upgrade probably won’t get built.

Democrats rightly and loudly objected to giving up public assets to private investors at the time. The biggest money-makers would be favored, they said, and less lucrative projects in rural or impoverished areas shunned. Governments would not only lose ownership but democratic control over roads, water systems, electrical grids, and who knows what else. As companies manage costs, it could lead to less resilient, more dangerous infrastructure. And the public would have a high likelihood of being gouged.

Bipartisanship is most often a beard used to defraud the taxpayers,

Of Course They Did

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A bipartisan group in the Senate has come up with a new infrastructure bill. 

Why am I not surprised that whenever you add Republicans to a group, their first move is to put the kibosh on any tax increases for the rich?

Basically, the Republicans in the group with the acquiescence of the corporate “Democrats” in the group, are determined to make their bill as meaningless as possible:

A bipartisan Senate group is taking tax increases off the table as lawmakers try to craft an infrastructure proposal after GOP talks with the White House collapsed Tuesday.

Raising taxes on high-income earners and corporations has been a key part of President Biden‘s infrastructure plan, making it nearly impossible to garner enough GOP support for legislation that can clear the Senate.

Sen. Jon Tester (D-Mont.), who is in the bipartisan group, said tax increases are not under consideration as senators attempt to reach consensus on how to pay for their plan.

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Sen. Mitt Romney (R-Utah), another member of the bipartisan group, also told reporters on Wednesday that Republicans won’t agree to tax increases as part of infrastructure talks.

The group is expected to be looking at a proposal of around $900 billion, but they’ve been careful not to publicly release a number, saying the level of spending isn’t yet locked in. Biden’s initial infrastructure proposal exceeded $2.2 trillion.

This is why you don’t waste your time trying to cut a deal with Republicans. 

They are never going to agree to raising taxes on the rich, one of the most popular policies in the United States right now, and they don’t want the country to succeed, because it would hurt their electoral chances.

Negotiating in good faith is in opposition to core Republican values.

 

This is a Very Good Thing

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Did you know that investors are pissed off because Biden’s infrastructure plans do not include any public-private partnerships? (PPPs)

They want to see public private partnerships, where the private participants are guaranteed a profit, and then borrow money at inflated rates from Private Equity, and ding the taxpayers for decades for user fees for doing basically nothing at all.

I feel pretty good about this:

Finance executives are lamenting being frozen out of plans to bolster America’s dilapidated infrastructure, as the Biden administration pushes a tax-and-spend approach to building projects.

President Joe Biden’s “American jobs plan”, unveiled last month, calls for $2tn of investment in highways, electrical grids and other basic infrastructure.

At the same time, the White House put forward corporate tax reforms that it said would generate enough money to pay for the investment spree within 15 years.

That has disappointed some investors and asset managers who once expected public-private partnerships would be a lucrative financing opportunity.

“I would love to put money into infrastructure projects,” said Christopher Ailman, chief investment officer of Calstrs, the retirement system that pays the pensions of California teachers.

The $290bn fund has held sporadic talks with the US Treasury about investing in infrastructure projects since the Obama administration, Ailman said. “A lot of long-term investors . . . look at infrastructure as being a source of stable long-term returns,” he said.

They are upset that they won’t have the opportunity to loot the taxpayers to buy another yacht. F%$# them with Cheney’s Dick.

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While Biden’s infrastructure proposal revives some of the unfulfilled ambitions of his predecessor, it does not envisage a role for the private investors who had once expected to be in the driving seat.

“This is a very traditional ‘the government is spending on infrastructure’ plan,” said a lobbyist who regularly represents private equity firms in Congress.

Just kill yourself, you bloody parasite, it will be the best thing you ever do for society. 

Some of the executives say that PPPs can, “Impose commercial discipline and generate savings elsewhere,” only they never have, and they have to pay much higher interest rates on what they borrow than the government does, which means that they can’t.

Instead they are efforts to get money today at the cost of tomorrow, as Richie Daley’s incredibly corrupt parking meter deal in Chicago shows.

There never are any savings, just guaranteed profits with some of the vigorish skimmed off the top and returned to the politicians as bribes and campaign donations.

https://twitter.com/DanielaGabor/status/1381665203524415488

see full thwitter thread 

Today in Evil

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After discovering that municipal broadband is better and cheaper than what you can get from the incumbent carriers, House Republicans introduce legislation banning the practice, because there is not enough opportunity for graft campaign donations the private sector when the government does the job better and cheaper.

Everyone hates their private ISP, the Dems should run on this, but the moderates want to continue to extract protection money campaign donations from the Baby Bells as well:

House Republicans this week proposed legislation that would ban the creation of municipal broadband networks at a federal level, and shutter networks in areas where some private competition exists – purportedly to improve internet access across the US.

Dubbed the CONNECT Act (Communities Overregulating Networks Need Economic Competition Today), the bill [PDF] says: “A State or political subdivision thereof may not provide or offer for sale to the public, a telecommunications provider, or to a commercial provider of broadband internet access service, retail or wholesale broadband internet access service.”

The CONNECT Act would also ban states from operating municipal broadband networks in areas where two or more private operators exist. The language here is fairly vague, and it doesn’t state how affected operators should dispose of their existing infrastructure. It’s also fairly limited about what constitutes a “private operator”, deferring only to the barebones definition in the Code of Federal Regulations (CFR).

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Twenty-two states have passed laws that either prohibit municipal broadband entirely, or impose restrictions that make municipal broadband projects significantly harder to launch and operate. Minnesota, for example, requires municipalities to obtain a supermajority (65 per cent) of voters in a referendum before providing telecommunications services. Montana and Pennsylvania only permit projects if there is no private competition. Texas and Missouri have outright bans on municipal broadband.

The Democratic response should be to pass legislation preempting the state bans and offering subsidies (which would be smaller than those given to the likes of AT&T and Verizon) for the establishment of municipal broadband.

They should, but they won’t.