You Know What Doesn’t Work So Well? Private Prisons

The myth put forth by private prison corporations like Corrections Corporation of America (CCA) and the GEO Group that private prisons are cheaper than public prisons is shattered by a new report from In the Public Interest, thus undercutting the primary rationale for prison privatization efforts across the country. When pushing for contracts with the many states that use private prisons, these corporations claim they are the better option because they can run prisons more cheaply than the government can. But this report not only dispels that idea, it highlights some of the less-than-savory activities the corporations engage in because of the perverse incentives created by these contracts.

The report details several methods through which private prison companies mislead governments and the public about their supposed cost savings, particularly hiding costs of private prisons, inflating public prison costs, benefiting from mandated occupancy minimums and delaying cost increases until after contracts are signed.

Numerous studies have shown that private prisons are more expensive than their publicly run counterparts. The report details a series of meta-analyses of individual studies conducted on the comparative costs between public and private prisons, and all of them found that cost savings, at best, were minimal for private prisons—in many cases, private prisons were more expensive. One of the few studies that showed private prisons to be more cost-effective was funded by the prison companies and is currently the subject of an ethics inquiry at Temple University. A close examination of many of the states that have invested heavily in prison privatization has shown the failure of the “private prisons are cheaper” idea:

  • Arizona: The state found private prisons can cost up to $1,600 per prisoner per year, despite private prisons often only housing the healthiest prisoners.
  • Florida: Three separate multiyear studies found the majority of the private prisons in the state failed to meet the legally mandated 7% cost savings, while half of the private prisons failed to save any money at all.
  • Georgia: In 2011, private prisons cost the state $45.81 per prisoner per day, compared with $44.51 per prisoner per day in publicly run prisons.
  • Hawaii: The state found the projected savings of using private prison contractors were based on bed capacity rather than the actual number of people incarcerated and that indirect administration costs were not included.
  • New Mexico: Over a five-year period, the state saw its annual spending on private prisons increase by 57% while the prisoner population only increased 21%. A significant portion of the increase was because of automatic price increases included in contracts with the private prison corporations.
  • Ohio: The state expected the private operation of the Lake Erie Correctional Institution would save the state $2.4 million a year, but it has turned out to instead cost the state $380,000 to $700,000 a year.

As the report notes:

To maximize returns for their investors, for-profit prison companies have perverse incentives to cut costs in vital areas such as security personnel, medical care and programming, threatening the health and safety of prisoners and staff.

There are several different reasons that savings fail to materialize. CCA and other companies explicitly seek to increase their profits by changing the details of previously signed contracts. They do this by raising the per diem rates the state pays for each prisoner or by requiring occupancy rates of 90% or higher or the state pays for the empty cells in order to reach the required level. Private prison companies cherry pick their inmates and refuse to house more expensive prisoners. Many contracts exclude those higher-cost prisoners, such as those in maximum security, on death row, female prisoners or prisoners that have serious medical or mental health conditions. Companies also make their costs look lower by inflating the cost of public incarceration when making their sales pitch. They can do this by leaving out overhead costs in their prisons, not including costs the state has to pay in either public or private scenarios in the private prison cost but keeping them in the public prison cost calculation, and leaving out the additional costs of overseeing and monitoring private prisons that the state must engage in if it properly oversees its contractors.

At its national convention last year, the AFL-CIO came out in opposition to the privatization of prisons and the profit motive being used to increase incarceration.

Read the full report.

Reposted from AFL-CIO NOW

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9 Reasons Why We’re Giving a ‘Thumbs Down’ to the Ryan Budget

Liz Lemon, 30 Rock

House Republican leaders passed Rep. Paul Ryan’s (R-Wis.) budget this week by a vote of 219 to 205, with no Democrats voting in favor. The Ryan budget is chock full of so many terrible ideas that it’s hard to single out the biggest stinkers, but here goes.

1. Raising the Medicare Eligibility Age from 65 to 67.  Not only would raising the eligibility age shift costs to 65- and 66-year-olds and to seniors who still qualify for Medicare benefits, but it would actually *increase* overall costs throughout the health care system. Worst. Idea. Ever.

2. Giving Corporations More Tax Breaks for Outsourcing Jobs. The Ryan budget calls for a “territorial tax system,” which would eliminate U.S. taxes on the offshore profits of companies that send jobs overseas. Second worst idea ever.

3. Costing 4 Million Jobs. And that’s only in two years! According to the Economic Policy Institute, the Ryan budget would cost 1.1 million jobs in 2015 and 3 million jobs in 2016. Millions more jobs would be lost in subsequent years.

4. Giving Millionaires a $200,000 Tax Cut. The Ryan budget would cut the top marginal income tax rate from 39.6% to 25%, giving people who make more than $1 million per year tax cuts averaging between $200,000 and $330,000.

5. Turning Medicare into a Voucher Program. The Ryan budget once again proposes to end the Medicare guarantee, which would raise premiums for seniors who choose traditional Medicare and leave traditional Medicare to “wither on the vine” as private plans capture the healthiest seniors.

6. Gutting Education. The Ryan budget would slash funding for kindergarten to 12th grade education by$89 billion and higher education by $260 billion over 10 years, making college less affordable and increasingstudent indebtedness by $47 billion.

7. Gutting Investment in Transportation. The Ryan budget would slash transportation investments by$52 billion in 2015, costing jobs and making America less competitive.

8. Gutting Medicaid. The Ryan budget would cut Medicaid funding by $732 billion over 10 years by turning Medicaid into a block grant program. It would further cut Medicaid funding by repealing the Affordable Care Act, for a total cut to Medicaid of some $1.5 trillion.

9. Slashing Tax Rates for Profitable Corporations. The Ryan budget would slash the corporate tax rate from 35% to 25%, squandering $1.2 trillion to $1.5 trillion in tax revenue over 10 years.

Reposted from AFL-CIO NOW

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The Latest Republican Plan to Outsource Jobs

House Republicans are proposing another enormous tax break for corporations to outsource jobs. The latest Republican outsourcing plan is very similar to the one promoted by former Gov. Mitt Romney in the 2012 presidential campaign, which President Barack Obama said would cost 800,000 jobs.

The outsourcing plan was included in a “tax reform” proposal unveiled recently by the chairman of the House Committee on Ways and Means, Rep. Dave Camp (R-Mich.).

Poll after poll shows America’s working families strongly oppose tax breaks for outsourcing that already exist under current law. This is hardly surprising, since between 1999 and 2010, U.S. corporations eliminated 1 million jobs in the United States while creating 3 million jobs overseas.

Here’s how the House Republican plan would promote even more outsourcing: it would allow outsourcers to pay almost no U.S. taxes on their overseas profits when they send jobs overseas. To be precise, outsourcers would be taxed at a rate of 1.25% on most offshore profits. Obviously, if outsourcers can pay taxes at a lower rate when they send jobs overseas, they’re going to have more of an incentive to outsource.

Here’s how Obama described this terrible idea during the 2012 campaign:

“There’s a new study out by nonpartisan economists that says Gov. Romney’s economic plan would in fact create 800,000 jobs. There’s only one problem: The jobs wouldn’t be in America. They’d be in other countries. By eliminating taxes on corporations’ foreign income, Gov. Romney’s plan would actually encourage companies to shift more of their operations to foreign tax havens, creating 800,000 jobs in those other countries.”

The technical name for this idea is a “territorial tax system.” Why is it called “territorial”? Because the United States would only tax American corporations on their profits within the “territory” of the United States, not on their profits overseas.

A “territorial tax system” is a terrible idea for lots of reasons. As Obama explained during the 2012 campaign, it would encourage job creation abroad instead of at home, lowering U.S. wages in the process and opening up opportunities for multinational corporations to avoid paying their taxes by playing accounting games to pretend their domestic profits are earned in foreign tax havens.

Camp claims several features of his plan would keep multinational corporations from avoiding their taxes.  However, as Citizens for Tax Justice (CTJ) explains, “[I]t is impossible to believe they would work since his overall proposal would dramatically increase rewards for any American corporation that can make its U.S. profits appear to be earned in offshore tax havens.”

Unfortunately, the Republican outsourcing plan has not gotten all the bad press it deserves. Why not? Partly because it has been competing for attention with all the other problems with the House Republican “tax reform” proposal. For example, the proposal would increase the deficit over the long term.

In February 2014, the AFL-CIO took a strong position against a “territorial tax system,” arguing that it would increase the tax incentive for shifting jobs and profits overseas. Instead, the AFL-CIO called for the elimination of all—not just some—of the existing tax incentives for outsourcing. What does this mean in practical terms? It means taxing offshore profits no differently than domestic profits—that is, taxing both kinds of profits at the same rate and at the same time.  Legislation that eliminates all tax incentives for outsourcing would generate $583 billion over 10 years, and this is the benchmark by which any international tax reform proposal should be measured.

Although prospects for the House Republican “tax reform” proposal are uncertain, the idea of a “territorial tax system” has wide support among Republicans in Congress, was recently endorsed by Sen. Marco Rubio (R-Fla.) and has attracted interest from some Democrats as well. It would be very dangerous to allow this terrible idea to pick up steam.

Reposted from AFL-CIO NOW

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Company Turns to IBEW and Brings Jobs Back from China

Neutex Advanced Energy Group, a Houston-based maker of LED lights, light bulbs and fixtures, brought its core manufacturing operation from China back to the United States last year and turned to the Electrical Workers (IBEW) to staff its facility.

Paul Puente, assistant business manager of IBEW Local 716, approached John Higgins, president and CEO of Neutex, to discuss his needs and concerns and how they could work together.Higgins agreed to make the facility an IBEW union shop, and the Electrical Workers agreed to provide training for its workers and help the company market its union-made products. Neutex will employ 250 to 300 IBEW members in its 15,000-square-foot facility.

“The partnership with the IBEW, it’s giving us credibility when we’re growing in leaps and bounds,” says Higgins. “We should be able to bring this [to the United States] and still be able to make a much better quality product, in better time and help our middle class.”

This post originally appeared on AFL-CIO’s @Work site. Read more @Work stories here

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Working Coloradans Mobilize to Hold Rep. Mike Coffman Accountable for Privatization Efforts

Working America members will be launching the “Rep. MikeCoffman: Who Do You Work For?” campaign to educate their fellow Coloradans about the representative’s radical legislative agenda to privatize programs like Social Security and Medicaid, and most recently, his efforts to privatize the work of the Department of Defense.

“Rep. Coffman seems to feel that it’s more important to give tax breaks to corporations and focus on unnecessary privatization than try to bring jobs to his district,” said Working America State Director Kevin Pape. “He’s not looking out for Coloradans, and it’s time we let constituents know who he really works for.”

During the campaign, members will be collecting petition signatures fromCoffman’s constituents telling him that they do not support his privatization efforts and will hold a public event for petition delivery. They will also be hosting media events and submitting letters to the editor educating Coloradans about Coffman’s attempts to sell off public assets and shift tax dollars to the huge corporations that funded his campaign.

Working America has more than 125,000 members in the state of Colorado.

For updates, follow @WorkingAmerica on Twitter.

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Stop in the Name of Love—of Country

Guest post by Leo Gerard, International President, United Steelworkers. This post originally appeared on The Huffington Post.

The conduct of the New York State Metropolitan Transit Authority (MTA) in rehabilitating the Verrazano-Narrows Bridge can only be described as anti-American.

The MTA plans to send $235.7 million of Americans’ hard-earned toll dollars to China for foreign steel and foreign fabrication to renovate a bridge over the Hudson River that Americans built with American steel and American fabrication 50 years ago.

The MTA must stop. It must stop converting this American landmark — the longest suspension bridge in North America – into a foreign-made object. The MTA must stop. It must stop eroding American manufacturing, spurning American workers and wounding the American economy. The MTA must immediately stop stimulating the Chinese economy, employing Chinese workers with American toll dollars, transferring technological skills overseas and heightening Chinese power over America by enlarging the trade deficit. The MTA must stop, now, and buy American.

It’s the MTA’s contention that it can dodge buy American requirements because it is repairing the bridge with toll dollars, not tax dollars. The MTA used this contrivance to buy 15,000 tons of steel plate from state-owned and subsidized Anshan Iron & Steel Group of China and fabrication work from the China Railway Shanhaiguan Bridge Group.

Responding to criticism that MTA, a government agency, shirked buy American requirements, the authority’s executive director Thomas F. Prendergast said American corporations and workers weren’t capable of doing the work. America is not number one, Prendergast said. American manufacturers and American workers are just not as competent as the Chinese, according to the MTA.

This is exactly what Caltrans contended when it purchased Chinese steel and Chinese manufacturing for the Bay Bridge construction in California – after refusing federal aid so it could duck buy American provisions. Americansjust couldn’t do the work, Caltrans contended. And yet, American firms that bid on the project said they could. Caltrans ended up sending dozens of experts to China to babysit its contractors there; inspectors repeatedlydiscovered defects in welds, and the steel arrived from China 15 months late.

Caltrans said the bid from the consortium of American firms was too high, and the proposal would have delayed the project. But with hundreds of millions in cost overruns and a year’s delay attributable to the foreign purchases,the difference between the two bids at this point is negligible.

But it’s too late now. Caltrans denied American corporations the contracts, American workers the jobs, the American economy the boost. Caltrans contributed to the bleeding of American manufacturing jobs, 6,000 of which were lost just last month. MTA plans to join Caltrans in thwarting the Obama administration’s effort to create 1 million new manufacturing jobs.

With precious little effort, the United Steelworkers found two American bridge fabricators that said they could meet MTA’s requirements for specialized orthotropic steel decking for the Verrazano-Narrows Bridge. Both are located in eastern Pennsylvania within 100 miles of the Verrazano-Narrows Bridge site.

One was cleared by a bonding company, lined up financing and prepared to meet the MTA’s construction schedule.Also in eastern Pennsylvania, Lehigh University’s Advanced Technology for Large Structural Systems Center tested full-scale prototypes of the orthotropic steel panels for the Verrazano-Narrows Bridge.

Both American bridge fabricators were prepared to use American-made steel, which would employ Americans in good, family-supporting jobs in mills that are required to control emissions and that wouldn’t have contributed to pollution by hauling steel halfway around the world.

MTA ignored all that and went to China for the steel and fabrication. It ignored Americans’ strong desire for government agencies to buy American, with 90 percent of Republicans and Democrats supporting buy American for public works projects. MTA ignored untold hidden costs of buying foreign — including pollution, quality concerns and delays.

And while claiming American companies and American workers are not up to snuff, MTA overlooked the fact that Ansteel of the Anshan Iron & Steel Group has never before produced steel plate of the type required for the Verrazano-Narrows Bridge project. And the Verrazano-Narrows Bridge linking Staten Island and Brooklyn would beonly the second in the United States for China Railway Shanhaiguan Bridge Group. In fact, Anshan officials toldthe Wall Street Journal that the Verrazano-Narrows Bridge project would be a test to determine whether its steel bridges “can go out into the world.”

The MTA decided to go to China even though eight bridges collapsed in China in little over a year, including one of the longest in Northern China, the Yangmingtan Bridge in Harbin last August. That $300 million span was only nine months old.

The MTA has tried to reassure protesters, including Republican and Democrat New York state lawmakers, that there is no risk. Prendergast told them all not to worry, no problem. “The safety of the public is always our paramount concern,” Prendergast contends – exactly what Caltrans said.

MTA officials and construction management staff went to China to make sure everything is ok, Prendergast says. Steel was tested with “good results.” Not great results. But, you know, good ones. Further tests will be done in the United States, Prendergast says. He pledges that MTA will maintain at the Chinese plant “a full time quality assurance presence,” whatever that means.

The upshot is that MTA and its construction manager will pay to send experts and staff to China to try to ensure good quality work, the same way Caltrans did. That’s a costly proposition. In addition, it means that these American professionals will transfer their technical knowledge and skill and expertise to a Chinese company. China won’t have to steal it. MTA plans to give it away.

These same MTA experts and consultants could have been sent less than 100 miles to one of two Pennsylvania firms to oversee quality control and collaborate with American manufacturers.

Any technical skill transfer then would have stayed within the United States, increasing American companies’ ability to complete such infrastructure projects in the future.

The MTA needs to stop this project right now. Think it over, Prendergast.

You can take action on this issue by visiting the New York State AFL-CIO Facebook page and sharing one of their graphics to voice your opposition to this project.

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Report: Lowering Corporate Tax Rates Won’t Boost Economy

new report from the Economic Policy Institute (EPI) shatters several bits of conventional wisdom embraced by the media and many in Washington, D.C., including the oft-repeated Republican mantra that lower corporate taxes boost the economy. The analysis found no evidence that changes in the statutory or effective tax rate on corporations are correlated with economic growth.

The report also finds that:

  • The corporate tax rate in the United States is not high compared to other countries. While it is true that the United States has the highest tax rate on paper, because of loopholes in the system, including offshoring, few companies pay that rate. The effective corporate tax rate of 27.7% is close to the average of the wealthy countries that are comparable to the United States, with those countries averaging 27.2%.
  • The current tax rate in the United States is not high compared to historical levels. The current statutory rate of 35% is lower than the rate of over 50% that was statutory in the 1950s.
  • The current rate, either statutory or effective, is not impeding corporate profits. Both before-tax and after-tax corporate profits are at post-World War II highs as a percentage of national income.

The report’s author, Thomas L. Hungerford, argues that the current focus in policy and media circles makes little sense:

Given widespread concerns about federal budget deficits, it seems odd to call for tax changes that lower rates. The putative impetus for these calls is the belief that the statutory corporate income tax rate is too high—placing an excessive burden on U.S. corporations that leads to poor economic performance.

Read the full report.

Reposted from AFL-CIO NOW

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Working America Helped Put Colorado Jobs Bill Over the Top

We had some good news for American workers out of Colorado last Friday. Gov. John Hickenlooper (D-CO) signed House Bill 1292, the “Keep Jobs in Colorado Act” into law.

This marked the successful conclusion to a two-year campaign waged by Working America, the Colorado AFL-CIO, and numerous other pro-worker organizations in the Centennial State.

It’s exactly the kind of bill that states should be passing.

When they assign projects, under the new law state agencies must take into consideration a contractor’s labor practices – wages, benefits, how they treat their workers – not just cost of the bid.

Plus, state-funded construction projects have to have at least 80 percent Colorado workers. Makes sense, right? Colorado projects should have Colorado workers? That requirement has been on the books for 80 years, but finally it has teeth – now there are penalties for contractors that don’t follow it.

A similar bill was first brought up in 2012. Since that time, Working America members and organizers had over 13,000 conversations, wrote over 1,000 handwritten letters, and collected over 1,300 petition signatures in communities around Colorado.

This is the type of commonsense legislation we hope to see elsewhere. Taxpayer funds should be used to hire local workers at good wages by contractors with good labor practices. Why Republicans in the legislature opposed this bill for two years is baffling, but thanks to the Colorado AFL-CIO working with pro-worker legislators and the advocacy of thousands of Coloradoans like you, it’s finally the law of the land.

Image by SenatorMikeJohnston on Flickr.

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Texas Legislature Passes Major ‘Buy American’ Measure

Reposted from AFL-CIO NOW

Thanks to what Texas AFL-CIO President Becky Moeller calls a “historic, robust bipartisan effort,” the Texas Legislature approved on Monday a “Buy American” provision for water projects that establishes a preference for iron, steel and manufactured goods produced in the United States. Says Moeller:

For the first time in memory, Texas, under this legislation, will give strong priority to American goods and products in the course of major construction projects. The Texas Legislature deserves high commendation from working families for sending a message that buying American creates jobs. This bill will benefit our economy.

The Buy American provision included a major water development bill (H.B. 4) and includes a requirement that iron and steel products and manufactured goods used in the project be produced in the United States. The bill received overwhelming support, passing 141-4 in the House and 30-1 in the Senate.

Earlier in the session lawmakers approved a “Buy Texan, Buy American” bill that applies to state purchases of manufactured goods. Texas AFL-CIO Communications Director Ed Sills says both bills ”have the potential to create jobs in Texas and in the U.S.”

The labor movement has always been about good jobs. In a legislative session that had the look of potential disaster on several fronts at the start, seeing two “Buy American” ideas succeed in bipartisan fashion is a signal accomplishment that is at the core of what we do.

Texas Gov. Rick Perry (R) is expected to sign the bill.

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How Corporations Use Offshore Havens to Avoid Paying Their Taxes

Reposted from AFL-CIO NOW

Current laws in the United States allow corporations to use offshore havens to avoid paying their taxes and, if it’s up to many in Washington, the problem will only grow larger, particularly if the so-called “territorial” tax system is passed. The details of the use of such tax havens were discussed in a conference call with Campaign for America’s Future (CAF), Americans for Tax Fairness (ATF) and Citizens for Tax Justice (CTJ).

Current tax laws encourage the offshoring of America’s jobs, manufacturing and profit centers, which has led to the hollowing out of the middle class, manufacturing and much of the country, according to Dave Johnson of CAF. Changes in the tax code in recent decades have led to a series of dangerous statistics for America’s working families:

  • Corporate tax revenues as a share of GDP are at near historically low levels.
  • In 2009, the U.S. share of GDP made up of corporate tax revenues was only 1.7%.
  • The top corporate tax rate in 1970 was 52.8%, now it is 35% (although the effective rate is much lower).
  • The United States has the third-lowest effective corporate tax burden in the world.
  • Corporate taxation as a share of total tax revenue was 26.4% in 1950 and was down to 7.4% in 2010.
  • Personal income, Social Security and Medicare taxes were 51.4% of total tax revenue in 1950, now they are up to 83.4%.

Congress is now proposing lowering corporate taxes even more and even, possibly, eliminating taxes on earnings reported as having been earned outside the country.

ATF has been working to highlight the massive corporate tax loopholes big corporations exploit, says the organization’s campaign manager, Frank Clemente. Those loopholes allow some corporations, such as General Electric—who had an effective corporate tax rate of 12% in 2011—to pay less in taxes than individuals. There are currently $1.6 trillion in corporate revenues waiting offshore. The corporations who own those revenues want Congress to pass a new tax holiday (previous holidays taxed those profits at only 5%, instead of the standard corporate tax rate) or a territorial tax system, wherein U.S. corporations would pay no taxes on foreign profits. Clemente says that would create an incentive for corporations to ship more and more revenues overseas, as well as shipping manufacturing, patents and jobs to countries with no corporate taxes.

CTJ works to give ordinary people a greater voice in the development of tax laws. It focuses on exposing corporations that pay little or no taxes. CTJ argued that the tax code needs to be reformed, but in a way that ends incentives to shift profits and jobs offshore. Currently, corporations have heavy incentives to disguise U.S. profits as offshore profits to avoid paying taxes.

An example of this problem is a report from the Congressional Research Service that found in 2008 that American multinational corporations reported earning 43% of their $940 billion in foreign profits in five tiny tax-haven countries that house only 4% of their foreign workforce and 7% of their foreign investments.

The three organizations say they have three basic policies they favor to deal with tax havens and the offshoring of America’s profits and jobs.

  1. Rejecting revenue-neutral tax plans that close loopholes and lower statutory tax rates. Instead they favor revenue-positive tax proposals that would increase government revenue.
  2. Closing tax loopholes that encourage the offshoring of profits, and making sure foreign profits for U.S. corporations are taxed at the same rate as domestic profits. One example of legislation that would accomplish this is a bill by Sen. Bernie Sanders (I-Vt,), the Corporate Tax Fairness Act, that would require corporations to pay the same tax rate on domestic or foreign profits and would raise $590 billion over 10 years.
  3. Rejecting the territorial tax system, which they call “tax havens on steroids.”

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