Privatizing Government Services

December 8, 2017 – Volume 27, Issue 43
Do business-run public services save taxpayers money? By Reed Karaim


1944–1976Modern privatization movement begins.
1944Conservative economist Friedrich von Hayek argues in The Road to Serfdom that big government is tyrannical.
1962Conservative economist Milton Friedman says privatizing government services introduces beneficial competition.
1971A study of New York's sanitation department convinces deputy city administrator E. S. Savas that privatizing the service would improve it. He goes on to become a leading privatization advocate.
1976The Reason Foundation, a libertarian think tank, begins advocating for privatization.
1980s-1992President Ronald Reagan vows to shrink the federal government; privatization grows at the state and local levels.
1980Frustration with inefficient and costly government services helps lead to Reagan's election.
1983Corrections Corporation of America, the country's first private prison company, is founded.
1987Reagan's budget includes more privatization proposals than recommended by any previous president. Congress blocks most of the plans.
1992City Academy in St. Paul, Minn., becomes the nation's first charter school; charter schools, which can be privately owned, receive public funds.
1990s-2008Privatization is embraced by both political parties with the election of Democratic President Bill Clinton.
1993Newly elected President Clinton promises to eliminate 100,000 federal jobs…. Government privatizes the U.S. Enrichment Corp., which contracts with the Department of Energy to produce enriched uranium for power plants.
1995A task force chaired by Vice President Al Gore recommends more privatization of federal services.
1998Clinton administration completes $3.6 billion sale of the Elk Hills Naval Petroleum Reserve to a private company.
2000The number of charter schools reaches nearly 2,000.
2001Following the 9/11 attacks, U.S. government creates Transportation Security Administration (TSA) to do airport screenings once done by private contractors.
2008A Congressional Research Service study finds that private contractors make up 67 percent of U.S. military forces in Afghanistan.
2010-PresentPresident Barack Obama reduces private contracting at the federal level; President Trump seeks to reverse that policy.
2010More than 128,000 men and women are held in private prisons at the state and federal level.
2011Republican congressional leaders unveil a plan to privatize part of Amtrak. The plan fails to get through Congress.
2012Obama administration promotes “insourcing,” which returns some privately contracted services to federal employees.
2016Obama administration announces plan to phase out private prisons after an audit finds they have more safety and security problems than government-run facilities (August)…. President-elect Donald Trump promises a massive infrastructure-building project that administration officials say will largely depend on private investors (November).
2017Trump administration rescinds Obama administration decision on private prisons, saying the U.S. Bureau of Prisons needs greater flexibility (February)…. Trump says he does not believe partnerships where private companies invest in and manage transportation infrastructure work, casting doubt on his administration's plans (September).

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Karaim, R. (2017, December 8). Privatizing government services. CQ researcher, 27, 1017-1040. Retrieved from
Document ID: cqresrre2017120804
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ISSUE TRACKER for Related Reports
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Air Safety and Security
Air Transportation
Consumer Behavior
Consumer Protection and Product Liability
Cost of Education and School Funding
Education Policy
Federal Courts
Motor Traffic and Roads
Outsourcing and Immigration
Party Politics
Party Politics
Powers and History of the Presidency
Privatization of Government Functions
Public Transportation
Regulation and Deregulation
Sentencing and Corrections
Supreme Court History and Decisions
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