Privatizing Government Services

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


Continuing Pressure

Outsourcing, forming public-private partnerships and selling public assets to private companies are a significant part of how the U.S. government operates. No privatization expert sees that halting over the next five to 10 years, but some believe the trend may slow or face more pushback.

“I can imagine a state of equilibrium developing,” says Baruch College's Savas. “The last time I looked, about 30 percent of American cities had outsourced one or more of their major municipal services. Is that going to grow? I suspect it's going to grow slowly.”

That could change, he adds, depending on the resolution of a case to be heard by the U.S. Supreme Court next year. The court will decide whether unions can require everyone in a unionized workplace to pay union fees. Previous courts have held that mandatory fees were justified because benefits negotiated by a union affect everyone in the workplace.87 The current court is widely expected to overturn that ruling, allowing employees to opt out of paying union fees, which could seriously weaken public employee unions.

“If the Supreme Court ruling makes every state essentially a right-to-work state … it would become easier for cities and states to exercise good managerial judgment and make good policy decisions about when it makes sense to introduce competition into public services,” Savas says. While such a decision would not directly result in more privatization, it could eventually weaken public unions, making more outsourcing possible.

Even though Trump's comments have cast doubt on his commitment to public-private partnerships for rebuilding infrastructure, the Reason Foundation's Poole hopes the administration moves ahead with its original plan to seek significant private investment in new infrastructure.

“The money is sitting there. It's waiting,” he says. “I see this big shortfall particularly of transportation infrastructure. It's a problem waiting to be solved by private investment if we can just get a clear path to let it happen.”

The Cato Institute's Edwards says budget pressures will force the federal government to embrace more privatization. “There's always going to be resistance to tax increases. There's going to be less and less federal money as entitlement programs continue to expand,” he says. “I think there's going to be continuing pressure on the United States to look to privatization.”

In the near term, he believes, successful privatization in one area could lead the government to embrace more of it elsewhere. “To me, air traffic control, if they do that, it will spur lots more similar efforts,” Edwards says.

But UCLA's Michaels says several of Trump's cabinet appointments of people openly hostile to the government agencies they now head, such as Environmental Protection Agency administrator Scott Pruitt, have created a backlash against anti-government rhetoric and privatization.

“Last year, I would have said … there's going to just be this slow trickle away, until one day we wake up and say, ‘Wow we don't have a government,’” Michaels says. “Now, I think people are starting to rally behind the bureaucrats, as silly as it sounds…. We're seeing a rediscovery of an appreciation of a strong, independent civil service.”

The Roosevelt Foundation's Banerji agrees that the Trump cabinet, which includes several members who worked in the industries they are now regulating, is energizing opponents of privatization. More of the public, he says, is aware that “there is this collection of people profiting off government.”

Still, he believes opponents are unlikely to change the federal approach, especially with regard to privatizing air traffic control and other government functions. “I think what we're likely to see in the next five years or so, at the state and local level, is people pushing back very strongly against the privatization of public services,” Banerji says. “But at the national level, we're likely to see the opposite.”

However, Cohen, of In the Public Interest, says it will be difficult to slow down corporate efforts to promote privatization at the local level. “All these companies are bigger and more capable,” he says.

“Twenty-five years ago they didn't know how to work city halls and state governments,” he continues. “Now they know how to do it. There's a whole industry of lobbyists and deal-doers, … and if you're a mayor and they say, ‘I can take your trash off your hands and it will save you money and it will save you headaches,’ you say, ‘Sure.’”

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[87] David Savage, “Supreme Court poised to deal a sharp blow to unions for teachers and public employees,” Los Angeles Times, Sept. 28, 2017,

Document APA Citation
Karaim, R. (2017, December 8). Privatizing government services. CQ researcher, 27, 1017-1040. Retrieved from
Document ID: cqresrre2017120807
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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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