Privatization At The Heart Of Divisive Battles In Wisconsin
WASHINGTON -- Milwaukee's Mitchell Airport is in good shape. Last year, it was the fastest-growing airport in the United States and one of the top airports in the world. It's been picking up business from northern Illinois and is marketing itself as an alternative to Chicago's busy O'Hare International Airport.
But in 2008, Scott Walker, Wisconsin's Republican governor who was then the Milwaukee County executive, was pushing hard to sell off the airport, arguing for a deal that would generate $25 million annually for the county transit system.
This was hardly an isolated incident.
In his January 2010 "state of the county" speech, Walker called for more privatization. "We will continue to streamline county government by contracting out for services, consolidating departments and enhancing the use of technology."
During his tenure as county executive, Walker proposed privatizing park maintenance, the county zoo, psychiatric staff and other sectors.
Most of the time, his ideas never went anywhere, but in March 2010, he was finally able to privatize courthouse security guards. The plan ended up backfiring and costing the county extra money when a judge ordered to reinstate the guards and give them back pay, meaning the government had to pay both the public workers and private guards for a period of time.
More than a hundred years ago, Wisconsin progressives launched a movement founded on the opposite principle: If the risks inherent in life in the modern age can be shared and distributed, they can be lessened for all. That insight led to a first-of-its-kind statewide unemployment insurance system and movement toward a state-funded pension and compensation for injured workers.
When President Franklin Delano Roosevelt began crafting the New Deal, he hired top Wisconsin officials and instructed them to replicate on a national level what they'd accomplished back home.
Walker, as the nation would come to learn, wasn't content to sell off assets at the local level. The project that he embarked on as a freshman governor in 2011 is little more than an extension of the philosophy he displayed as county executive: Walker is trying to undo the social contract and replace it with a private one.
Jack Norman, research director at the left-leaning Institute for Wisconsin's Future, said Walker tends to take "a real economic challenge and exaggerating it into the crisis of the century, in order to justify his outlandish proposals to privatize."
"The only difference between his strategy as county executive and as governor is that he has a cooperative legislative body now," he said. "Whereas, when he was county executive, he did not have a cooperative county board."
It's no coincidence that Walker's only equal in raising the ire of progressives this past year is Rep. Paul Ryan (R-Wis.), who similarly argues that people should not organize together at the government level to guard themselves against the risks inherent in old age, but instead should be given a voucher by government and left to purchase private health insurance from whomever will sell it.
While Walker's efforts have served his political career well, the projects themselves haven't done anywhere near as well. Walker is learning that people are just as unwilling to give up their union rights or lose their Medicare as they are to sell off their airport, their water or their exotic animals.
Yet proponents of privatization feel a wind at their backs.
The issue has even hit the 2012 Republican presidential campaign. Former Minnesota Gov. Tim Pawlenty recently said he wants to privatize any government service for which a private solution can be found "on the Internet." He pointed to the post office and Amtrak, while critics quickly noted that the U.S. military and public firefighters would also have to go under a President Pawlenty.
During the New Hampshire GOP presidential debate at St. Anselm College, former House Speaker Newt Gingrich suggested that the U.S. space program could be better run in private hands, saying, "NASA has become an absolute case study in why bureaucracy cannot innovate," going on to suggest that private enterprises would have created moon stations by now with the same amount of funding.
The American Legislative Exchange Council is one of the groups most actively advocating privatization nationwide. It has 2,500 legislative members, which is about a third of all state lawmakers around the country. One of its most valuable functions is crafting model legislation that lawmakers can then use to propose real bills in their own states. In the past few years, ALEC-inspired legislation has been popping up with increased frequency around the country.
The group just launched "Publicopoly," a Monopoly-like board game as part of an "initiative to provide solutions for a more effective, efficient government and a thriving economy." Visitors to Publicopoly are able to learn about privatizing seven sectors: government operations, education, transportation and infrastructure, public safety, environment, health and telecommunications.
State Senate Majority Leader Scott Fitzgerald, a Republican, is just one of the Wisconsin legislature's proud ALEC members. "It's very well run, probably a little bit conservative, but many Democrats are members, too," Fitzgerald told The Cap Times. "It's a great organization."
But ALEC Senior Director for Public Affairs Raegan Weber insisted to The Huffington Post that the group hasn't been involved with Walker or collective bargaining "in any way shape or form," even though it is encouraging states to look at privatization initiatives.
"ALEC believes that in most cases, public-private partnerships are something that could be useful in terms of building the local economies and growing back infrastructure," Weber said. "It creates competition, can grow the economy and find those efficient services for governments to provide for the citizens of their state. So it is something that we encourage consideration for, but... making sure it's prioritized in the right places that make sense for that state and those citizens."
While pushing privatization is a top issue for conservatives who campaigned on a pledge to reduce spending and balance budgets, stopping it has become the goal of many grassroots activists. These issues have energized progressives and the labor community in a way not seen in recent years, raising the possibility that Republicans may have overstepped and set off a backlash ahead of the 2012 elections.
When Walker was county executive, grassroots groups had a strong ally in the Milwaukee County Board of Supervisors, which consistently rejected Walker's budgets that contained significant privatization plans.
But now, Walker has a friendly legislature, so grassroots progressives have to work twice as hard.
The labor unions have been some of Walker's biggest foes at both the state and local level, aggressively pushing back on his privatization plans. Lee Saunders, secretary-treasurer of the labor union AFSCME, said what Walker is doing is "a power play, pure and simple."
"They want to diminish the power of public sector workers," said Saunders. "They want to diminish the power of the unions representing public sector workers, and one of the ways to do that is to limit collective bargaining, which they're trying to do in a number of states. Another way to do is to threaten to privatize services and reduce the number public sector workers on the job."
Already, Republicans have been taking heat for supporting Ryan's Medicare plan, which would privatize the system by giving senior citizens a voucher to purchase health care on the market. At town hall meetings across the country, worried constituents have confronted GOP lawmakers. Democrat Kathy Hochul recently beat Republican Jane Corwin in the N.Y.-26 congressional election, a race in a heavily conservative district that focused on the GOP plan to change Medicare.
Within Wisconsin, thousands of people turned out in February and March to protest the governor's budget repair bill that proposed, among other measures, to strip the collective bargaining rights of public employees. A piece of legislation with the anti-union provisions passed in March and, after a court challenge, is now going into effect. Not only would it give the unions less control over benefits, salary and hours, but it would allow the government to contract out services more easily.
That grassroots activism continues today. Protesters have erected a tent city called Walkerville around the Wisconsin state capitol to pay witness to the legislature's budget negotiations.
"It's pretty tough for these politicians to ignore us when we're right there," said Peter Rickman, a University of Wisconsin-Madison law student and Teaching Assistants' Association member who is helping to organize the event. "It is a galvanizing, symbolic action of working folks standing up and saying 'enough is enough.'"
It's too early to tell what effect this push for privatization will have on the 2012 elections, although six Republicans and three Democrats are likely to face recall elections over the collective bargaining debate. (There have been only four recall elections in the state's history.)
But there have already been some small successes at the state level, with controversial privatization measures being scaled back after public scrutiny and objections. Perhaps more significantly, what all this has already done is ignite a spark in a struggling grassroots progressive movement and labor community in a way that few people thought would be possible after the 2010 elections. The question now is whether Walker is winning battles but losing the war.
Walker's office did not return a request for comment.
PRIVATIZING PUBLIC ASSISTANCE PROGRAMS
Walker is not the first governor to try to privatize the state's services and assets, although he is continuing and expanding the push. Last year, Wisconsin had 106 private employees working in its public assistance programs; it now has more than 400.
A state audit released this month found Wisconsin's privatization occurred with insufficient oversight from the legislative branch and may have violated federal rules. State officials paid two contractors $27.6 million over two years to handle enrollment in food assistance and health care programs for low-income individuals.
"[The state Department of Health Services] appears to have established and rapidly expanded the Enrollment Services Center with little organized planning, limited legislative oversight, and no formal efforts to determine the appropriate mix of contract and state staff," read the report's conclusion.
Walker's predecessor, Democrat Jim Doyle, started the Enrollment Services Center to sign up childless adults in the state's FoodShare and BadgerCare Plus health services. In January 2010, the U.S. Department of Agriculture warned the state not to further expand the program.
But Walker proposed even more privatization, offering a plan where residents would no longer be able to apply in person for FoodShare and Medicaid programs and county-run centers. The elimination of these centers across the state's 72 counties was expected to result in 270 public employees losing their jobs.
This plan was scuttled by a coalition of county officials and organizations, as well as state Republican lawmakers. The new plan would consolidate county staff and services into 10 county-run centers.
Dane County Executive Joe Parisi told The Cap Times that no county workers will be laid off, although no new hires will be made either. "If you dial back a few weeks, we were facing a faceless, corporate system," he said. "Now our citizens will continue to receive the services they need."
PRIVATIZING ROAD CONSTRUCTION
As state lawmakers work on passing a budget, one proposal regarding the privatization of highway construction workers is drawing opposition from some members of both parties.
The measure, which recently passed the Republican-controlled Joint Finance Committee on a party-line vote, would require local governments to contract with private road builders for projects costing $100,000 or more in certain situations, rather than using their own public employees.
"The only ones who seem to benefit are the road builders," said state Senate President Mike Ellis (R-Neenah) in a statement. "Last session I criticized Gov. Doyle's unnecessary and costly auto insurance changes as a payoff to the trial lawyers. It doesn't look any better when Republicans insert just as unnecessary and costly provisions that appear to benefit their friends."
"This motion was passed in the darkness of night, but in the light of day the public is realizing just how shortsighted this decision was,” added State Sen. Bob Jauch (D-Poplar), who called it a "rush to privatize." He added that not only were local officials concerned about job layoffs, but also about how it would affect their ability to maintain and plow their roads.
Terry McGowan, the business manager for the International Union of Operating Engineers Local 139, argued, however, that it was "blatantly unfair and offensive to have government-subsidized operations competing against private companies and their workers at precisely the time our politicians are telling us, 'It's all about jobs and the economy.'"
Last month, the public advocacy group WISPIRG criticized Walker's decision to spend billions of state money on four highway construction projects, which were first proposed by Doyle. Walker has proposed a 13 percent increase in state funding for highway capital projects, even though the state is facing a $3.6 billion budget deficit and local roads are in need of repair.
“This is spending gone wild on questionable projects at a time when we should be prioritizing maintaining our existing infrastructure and transit,” said report co-author Bruce Speight. Wisconsin ranks 13th in the nation on transportation spending per capita.
Phineas Baxandall, a federal tax and budget policy analyst with U.S. PIRG, said that there are cases where privatization may be the better option. But in this case, the Walker administration hasn't provided enough evidence to show the benefits.
"The governor seems to be really bold about trying to privatize all kinds of things, perhaps because they feel like they have a small electoral window where they can get things through without debate," he said. "It would be one thing if it said 'look, here's the cost comparison, this is what it's like doing it private, this is what it's like doing it public.' ... That's not at all what's happening."
SELLING OFF POWER ASSETS
Tucked away in the state's budget repair bill was a provision that would allow the state to sell or contract out any state-owned energy asset in no-bid deals with private corporations.
"The department may sell any state−owned heating, cooling, and power plant or may contract with a private entity for the operation of any such plant, with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state," read the legislation.
Questions were immediately raised about whether the arrangement would end up disproportionately benefiting GOP campaign donors, such as the Koch brothers -- speculation that Walker quickly denied.
The provision was eventually removed after receiving significant scrutiny and criticism, but Walker's administration has said it is still looking at "a range of options regarding the power plants moving forward."
In April, Walker released a video as part of his "Brown Bag Lunch Series" explaining that the plan could end up being a better deal for taxpayers and help upgrade those assets.
"It would only be successful if we were able to save the taxpayers money and protect ratepayers into the future," said Walker, adding that the the money raised from selling or contracting the power assets would be used to pay down the state's deficit. He also said that Wisconsin's government didn't have the money to make necessary upgrades to its facilities -- something that private utility companies could do.