Privatization of Public Infrastructure leaves both Americans and Decarbonization Efforts Vulnerable

By Logan Solomon, July 15th 2021

Due to the U.S. Chamber’s opposition to Biden’s proposed corporate tax increase, congress has resorted to considering privatizing our current infrastructure in order to pay for new infrastructure. Specifically, the bipartisan infrastructure framework calls for public-private partnerships, private bonds, and asset recycling. Policies that privatize our infrastructure hinder the fight for meaningful climate action as these contracts guarantee a continuing carbon legacy that rips off ordinary Americans and the government simultaneously, jeopardizing our health and safety. 

Our Waterways Are Targets

In 2012, KKR and Suez Environnement bought Bayonne, New Jersey’s waterways netting an “11 percent annual return which resulted in residents' water rates going up more than half in 2019.” 

In 2011, Carlyle Group purchased a water system in Missoula, Montana under an agreement that left open the possibility for the city to buy the system back in a few years. When the city attempted this in 2013, Carlyle refused to sell instead asking for a water rate increase. In 2014, the city of Missoula filed and won a lawsuit where the court said “the water utility had enriched itself at the expense of maintenance to the system.”

A Food & Water Watch report published in March found “privately owned drinking water services are 59% more expensive than local government’s.” Following talks of privatization, 200+ organizations urged congressional leaders in a letter to oppose “any provisions in the pending infrastructure proposals that would pave the way for the privatization of water.”

As the southwest US is in a decades-long megadrought linked to climate change, we can’t fund decarbonization through increasing ordinary American’s water bills and neglecting waterway maintenance. Rather, we should implement policies like the WATER ACT, which provides the full funds to address the urgent water crisis. 

Contracts for Privatizing Built Infrastructure are Contracts for Carbon Lock In

With concern over a municipal deficit in 2009, Chicago sold 36,000 parking meters for $1.15 billion in a deal that Chicago’s Inspector General said the city “significantly undersold the asset.” It’s estimated that Chicago drivers will pay $11.6 billion in fees over the 75-year life, ranging from a 200% to 800% parking fee increase. The city has paid $31 million in consortium funds to the investor group due to expanding bike lanes and sidewalks as they are projects that “compete” with meters. 

Signed off in 2014, an Indiana toll road was extended and updated by a European infrastructure investment firm. The highway project (predicted to be under budget and ahead of schedule) fell two years behind schedule, resulting in more traffic delays and accidents. Ultimately, this resulted in the state taking back control of the project, having to take on more debt to finance its completion. This was done even after the city had already paid the European infrastructure firm $450,000 in penalties after state officials broke contract by waiving tolls during a flood emergency.

To tackle the climate crisis, focus needs to be directed towards decarbonizing our transportation sector, not signing contracts that guarantee a profitable and long life cycle for carbon infrastructure. Privatization schemes should be added as a democratic party non-negotiable (like a gas tax is currently considered) as it acts like a regressive tax and induces flawed incentives which directly hurts American consumers and hinders the government’s ability to decarbonize our nation’s infrastructure. 

Blame the Chamber

Privatization is being considered as republicans and moderate democrats are against raising corporate taxes. This is due to politicians representing their large donors, like the Chamber of Commerce who strongly oppose raising corporate taxes. The Chamber wants privatization, not just because it means no new corporate taxes, but also because it creates further economic reliance on big business for American’s infrastructure needs. Seen from New Jersey to Montana, this reliance results in consumer exploitation and policy that lock us into carbon based infrastructure. Big business is leveraging its lobbying power to take advantage of the urgent need for a wide spectrum of decarbonization policies, positioning themselves with a long footing in our nation's infrastructure. Privatization will prolong old infrastructure, therefore hindering decarbonized, safe, and healthy communities. 

Remind Politicians

When Trump in 2017 considered an infrastructure package funded primarily through privatization, multiple democrats voiced concern. Democratic Rep. Jamie Raskin of Maryland called it a "plan to give away billions of dollars to Wall Street banks and foreign investors” while Democratic Leader Chuck Shummer rightfully pointed out “a private-sector-driven infrastructure plan means tolls, tolls, tolls — paid by average, working Americans.” 

Tell your friends, tell your family. Call and email your representatives, tell them of the dangers of privatization schemes and tell them of the overwhelming majority of Americans who support an increase of corporate taxes in order to fund Biden’s infrastructure and climate investment. The time for bold climate policy is now, but it can’t be done with this kind of infrastructural corporatization.