Infrastructure, Part Two

Yesterday, I shared Adam Gopnik’s “take” on Republican objections to infrastructure investments. But it turns out that he is not the only one considering the ideological roots of the Right’s disinclination to invest tax dollars in public goods like  roads, bridges, and railroads.

A lengthy post at Daily Kos ticked off some specifics.

Over and above the general animus toward government, manifested in a desire to “starve the beast,” the post pointed to the Right’s continuing romance with privatization.

More than anything else, this privatization fetish explains Republicans’ efforts to gut and discredit public infrastructure, and it runs the gamut from disastrous instances of privatizing parking meters to plans to privatize the federal highway system.

There has been a good deal written about these and other efforts to outsource what we used to consider public functions, but there has been much less information available about a financing mechanism that makes these privatization deals much more lucrative–private activity bonds.

As the New York Times recently explained,

These deals involve so-called “qualified private activity bonds,” which state and local governments issue on behalf of corporations. The bonds allow companies to borrow at low rates, while the bondholder doesn’t owe federal tax on interest. (If a corporation issued its own bond, it would pay a higher rate and the bondholder would owe tax on interest.) As an article in today’s Times explains, the justification for this sort of treatment is that a private project will fulfill a public need. In practice, it often looks like pork by another name, worth roughly $5 billion a year to corporations that could afford to invest without a subsidy, or to vanity projects — like a winery in North Carolina, a golf resort in Puerto Rico and a Corvette museum in Kentucky.

Meanwhile, across the board spending cuts threaten needless hardship and real suffering, and congressional Republicans won’t even talk about ending or trimming private-activity bond subsidies — or, for that matter, any individual or corporate tax breaks, which total $1.1 trillion annually. $1.1 trillion. That’s more than Medicare and Medicaid combined. It’s more than Social Security. It’s nearly two thirds more than the total cost of all non-defense discretionary spending, the category that includes infant formula for poor mothers and infants. Corporate welfare has never been so costly.

I have a friend who lobbies for socially-responsible organizations–environmental groups, human services nonprofits and the like. When I ask him why the legislature has done thus-and-so he just smiles and tells me to “follow the money.”

These days, greed–masquerading as “creative financing” or “economic development”– consistently trumps the common good.


  1. These days, greed–masquerading as “creative financing” or “economic development”– consistently trumps the common good.

    Referring to the above copied and pasted last paragraph of this blog, the New York Times term “qualified private activity bonds” and other right-wing activities – or inactivity – aren’t they all based in loopholes of the law which allows them to slip through cracks in the system? I seem to be in good company with my oft repeated comment, “follow the money.”

  2. I read nothing from anybody that claims that we need less infrastructure or that our tax rates are excessive compared to our competition, other countries. So the argument from the right that we have a government problem is without cognitive support. It’s a religious belief in that it is an assumption about what is not known for a fact (at least by those who adhere to the religion).

    In fact, the only “excess” spending claims that I hear about are the old “welfare queens” memes with never a hint of solutions for poverty. Apparently people who don’t think believe that poverty is voluntary (of course they’re just as likely to believe that imposing our will on the world militarily is free).

    The real drive behind those of us who don’t believe that the current ratio of socialism to capitalism (35% S, 65% C) here now is approximately right is the belief that nobody is profiting from the 35%. They see it as an opportunity for the few to take more advantage of the many. This is what Ayn Rand preached.

    Most animals behave like cannibalism, preying on your own kind, is evolutionarily dumb if there is any other means for survival. They compete with other species, not their own.

    Why do many of us apparently disagree that this is smart?

  3. Not to mention the roads bridges and other infrastructure were built with tax dollars and meant to benefit us all. What private investor would step up with that kind of financial commitment

  4. Thanks for the education about Private Activity Bonds. I had no knowledge of their existence. And now…. I am completely speechless……….

  5. More has been written and broadcast on Deflatgate than has been written or broadcast on the Trans-Pacific Partnership trade bill (TPP) or Trade Promotion Authority (TPA). Just one more example of the Mega-Medias idea of what is important to America.

    More than 250 Tech companies signed a letter opposing the New Trade Agreements. If you believe in “Follow the Money” Apple, Google and Facebook are not opposing it. Apple and AT&T are part of the president’s International Trade Advisory Committee which advises the Oval Office on matters relating to industry.

    Critics of the Trade Agreement claim the trade bill would hand national sovereignty to large Multinational Corporations. Details of the plan are a secret. Among the Critics are Elizabeth Warren, and Bernie Sanders. Senator Elizabeth Warren renewed her attack on the pact this week, issuing a scathing report on past trade deals, Hillary Clinton is silent on the issue.

    The President is for the Trade Deal and he has a strange bedfellows – “The president has done an excellent job on this,” McConnell said in an interview with ABC’s “This Week.” John Boehner also backs the Trade Deal.

    All of this fits together, corporations that off shore their operations, corporations that hide their profits off shore and now want to further expand their power over the state. The guiding principle is that Profits trump human rights, clean and clean water and national sovereignty.

  6. I wish that I knew more about the TPP/TPA. So far what I read is mostly about who is for and who is against. Mostly useless info. When I ask myself why would Obama and Warren disagree so much when their understanding of and objectives for government are typically aligned so well, I think there must be an understanding difference. Who’s closer to complete in their understanding? I have to go with Obama.

    Trade agreements are typically tough to figure out. Too many stakeholders. Business, labor, consumers, U.S. Companies doing business overseas and foreign businesses doing business here, governments ours and theirs trying to get a leg up, etc.

    I try not to be for something ’cause Obama is or against because Republicans are for but sometimes due to the lack of my understanding partisanship is the only thing that I’ve got.

    Empowering the Executive to pursue their responsibilities with sufficient fast track flexibility to give the US a leg up in negotiations seems good to me. Giving Congress some oversight in normal times is good but these aren’t normal as the Tea Party and the Koch Bros have rendered Congress useless.

    When I can’t figure out the big picture the best that I can personally do is to stick with who brought me to the dance and that’s the President.

  7. So far, both sides are hiding facts regarding TPP. With no transparency, how do they expect support or lack of support without facts in evidence? Do those involved in this decision have all facts? What kind of game plan is this; what are the rules, are there any rules?

  8. The ostensible reason for privatization is cost savings, and I suppose to a small extent these arrangements do deliver that. Among the ‘true believers,’ though, this is an ideology-driven program of change that isn’t really interested in results at all.

    Among more ‘practically minded’ privatizers, the main impetus behind these arrangements (aside from diversion of public money) is the avoidance of accountability. Private companies can go bankrupt & don’t appear to have the deep pockets that government supposedly does, and the people running these companies can start new ones to bid on the very same contract they just screwed up. Transparency is virtually non-existent; good luck with a FOIA request when a private contractor is involved. And the politicians can always say ‘it wasn’t my fault’ when their law-school classmate messes up something that the state has been doing just fine for decades.

    Time to emigrate I guess.

  9. JoAnn and Pete – The TPP And TPP are secret in fact – anyone who has read the text of the agreement could be jailed for disclosing its contents!!!!!!

    Read more:
    you might give this a try on TPA and TPP –

  10. When you look at the list of attempts at privatization, it’s important to remember that many of these services are not just the hiring of some guy off the street to replace another guy off the street with private money. Some of these infrastructures, as evolved, are actually very fragile, built carefully over time with commitment and tears, meticulously adding civic-minded people over the years who are well trained and educated. I’m thinking primarily of the public schools, which have been foolishly bad-mouthed using twisted data. Public school people are teachers, not demagogues or political in-fighters, so the demagogues roll over them. These fools think you can just hire someone off the street, because they have no vision of education and what it means to be educated. This reductionistic view of education, and what it means to be educated, leads to simplistic assumptions and travesties. Go down the list of what has been privatized, and you will see many other examples where a service is viewed as “nothing but…”, so “nothing but…” service is delivered, without soul, without intelligence and vision, and people wonder why quality is not longer important, and the services are not the way “things used to be”. Well, they’re not.

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