The austerity sharks are circling their wounded prey. The U.S. economy continues to collapse amid dwindling stimulus funds, while states are barely able to keep their heads above water. In addition to cutting vital services to taxpayers, and seeking tax increases, some states are also selling off public assets in the politically acceptable name of privatization. This mass looting is happening just below the surface where the public, buried by their own individual problems, can hardly tell that it is happening.
In June of this year Bloomberg reported that 46 states were facing bankruptcy with “Greek-style deficits,” where Dean Baker, co-director of the Center for Economic and Policy Research in Washington, was quoted as saying that “States are going to have to cut back spending and raise taxes the same way Greece and Spain are.”
State budget woes are a worsening drag on growth as the federal government tries to wean the economy from two years of extraordinary support. By Jan. 1, funds from the $787 billion federal stimulus bill will dry up. That money from Washington has helped cushion state budgets as tax revenue has plunged.
State leaders won’t be able to ride out this cycle the way they have in the past. The budget holes are too large. For the first time since 1962, sales and income tax revenue fell for five straight quarters, through December 2009, according to the Nelson A. Rockefeller Institute of Government at the State University of New York at Albany.
Despite the fact that average American citizens, much like the Greeks, had nothing to do with creating these massive “budget holes,” their Social Security is being raided, and public pensions have been invested in derivatives and other toxic time-bomb financial instruments. Now, they will surely face austerity measures of similarly reduced benefits and services accompanied by increased taxes to absorb the damage.
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Although spending cuts and smaller government through privatization might make sense when faced with growing deficits, we must be aware that austerity measures can also hide in the shadows of privatization.
Some politicians are touting the privatization of public services and assets as part of the economic solution. However, the public is being left out of the discussion about which services will be affected, what public assets are being sold, who is getting contracts or purchasing assets and, finally, to what benefit to the people. Given the self-serving track record of a crony corporate State, we can only assume the worst — that none of these actions will actually benefit average Americans, but only provide continued cover for more looting.
After generations of taxpayer-funded construction of buildings, highways, hospitals, jails, public water systems and the like, cash-strapped states are increasingly looking to sell off assets in order to meet budget shortfalls. This trend seems to be led by Governors like Chris Christie (R-NJ), with many candidates like Meg Whitman of California saying his privatization model for New Jersey is just what the doctor ordered for California. Meanwhile, California recently announced the sale of 24 government buildings to a private equity firm, following the “Economic Hitman” methodology where deliberately-suffocating public debt results in financial institutions ending up with all of the real assets at an extreme bargain.
Privatization can actually cost the government more in many cases, yet result in reduced pay and benefits for workers — a hidden form of austerity to be sure. Even seemingly innocent privatization of things like toll booths and zoos, appears to be nothing more than austerity ploys by the government absolving itself from providing benefits like healthcare. Incidentally, now that 29 of the largest private employers in the U.S. are conveniently exempt from the new healthcare mandates, it is likely that “Toll Booth Willie” will lose his benefits when his station is privatized. Greek austerity protesters stormed the Acropolis for less.
In turn, privatization of public assets is taking place during a time of severe economic distress, therefore these assets rarely fetch their true value for the taxpayer. As John F. Kennedy said in his inaugural address: “Let us never negotiate out of fear, but let us never fear to negotiate.” Too often we are being forced to negotiate out of fear — fear of losing our job or benefits, our home, our retirement savings, and even our lives. Government uses this full-spectrum fear to impose heavy-handed legislation like monopoly healthcare or illegal pre-crime techniques used to catch the “terrorists.”
Additionally, privatization of vital government services seems to make little sense when we wind up paying more for those services, or where companies perform Big Brother duties that previously required government officials to swear an oath to the Constitution and our personal liberties. For example, privatization of a war-making machine like Blackwater not only costs the public much more than the government’s own elite forces, but also poses the threat of unaccountable violence and even murder. Furthermore, what is to stop foreign companies from buying up critical public assets through “private equity firms,” or corrupting governmental duties and turning them upon American citizens?
A somewhat recently privatized sector exemplifies the corrupting influence of privatization if not applied correctly (or legally): the surveillance of American citizens. It has been reported that over 800,000 private-sector workers have top secret clearance in their roles to monitor “extremist” activities in America. To accentuate the insanity, even private foreign companies are getting Homeland Security contracts for these duties. In addition to draining American taxpayers of money and rights, the privatizing of these activities is critically dangerous to our individual and national sovereignty in a way never seen before. Even the most staunch small-government advocates must see the folly in such privatization.
The establishment would like to focus our debate toward public employees vs. private sector employees, unions or not, or big government vs. privatization; when in reality all possible solutions under the current corporate-state seem designed to suck the average citizen dry, while limiting services to just below riot-inducing levels. We’re told to be angry at a particular group that may get better pay and benefits than our own, all while the system and the Fed continue to inflate the cost of living for everyone through taxpayer-backed debt.
Whether it is called big government austerity, or small government privatization, it’s still a reduced standard of living and a blatant looting of the public. This looting is meant to use the divisions between our separate groups as a distraction to enrich those without concern over such loyalties.
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