So....Hillary's Pennsylvania backer Ed Rendell wants to Privatize the Penn Turnpike?

[Armstead]

Privatization and outsourcing of public services -- i.e. the selling off of our common resources -- is just one of the right wing mantras that have been inflicted on us by the free-marketeers. It is more of a Republican approach than a Democratic one -- or at least it used to be until the DLC made so many Democrats into Conservative Lite.

Now it seems that Clinton's chief backer in Pennsylvania, Gov. Ed Rendell, wants to lease out the Penn Turnpike to private interests.

In fairness, I don't know how Obama stands on such issues. But regardless, it leaves a bad taste in the mouth that Democrats are supporting the notion of selling off our "commons" to Wall St. and foreigners.

http://www.post-gazette.com/pg/07028/757183-28.stm

Seeing gold at the end of the privatized road
Push to privatize turnpike reflects shift in thinking about financing, and financial benefits of, highway ownership
Sunday, January 28, 2007



Today, Pennsylvania is casting into these same waters. At the invitation of Gov. Ed Rendell, four dozen investment and advisory groups have expressed an interest in leasing or otherwise getting a piece of the turnpike, a good signal that there's lots of appeal in the 537-mile highway system, especially the 359-mile mainline connecting Ohio and New Jersey, one of the most traveled roads in the Northeast.

Why would anyone want to lease the turnpike?


Quite simply: money.

It comes with a captive, cash-paying audience of a half-million daily motorists who have no time to drive north to catch Interstate 80 and no desire to take Route 22 or 30 across the state. Investors like products that create predictable cash flow, and thus, a reliable return for shareholders. It also helps that such leases require few immediate and large upfront capital expenditures, making the deals relatively easy to implement from a bank's perspective.

But if all that's the case, why are cities and states, including Pennsylvania, lining up to auction off their cash cows? And is it a good idea?

"The biggest question is, how do you know if you're getting enough?" said Cherian George, the managing director of the transportation division at Fitch IBCA, an international bond rating agency that has studied the Pennsylvania Turnpike and issued opinions on the turnpike's investment health for years.

"It's very valuable. And if it's very valuable, you ought to be very careful in how you do it."

Valuable, indeed. Mr. Rendell has estimated that the lease deal for the Pennsylvania Turnpike, which at current fare rates generates about $600 million annually in tolls, could bring Pennsylvania as much as $30 billion -- not to mention savings from no longer having to pay for upkeep, renovations and turnpike employees. That kind of cash would allow Pennsylvania to immediately undertake simultaneous highway and bridge upgrades, rather than putting projects on a 14-year waiting list, as is typical



......So how is that 50 years later, we are soon to be paying foreign investors for the right to drive across Mr. Eisenhower's vision of an American highway system? If our major highways are of such vital importance to the American public, should we be letting the private sector maintain them?

These are the primary philosophical objections of those who denounce such highway deals. Opponents also say they have financial objections: Are legislators and governors underestimating the value of the asphalt assets resting beneath their noses? Will a private company raise fares beyond what the Turnpike Commission would have? (Answers to both questions: yes, probably.)

"We see as pawn-shop sort of mentality," said Mr. Nofziger, of the truckers' group, whose main concern is increased tolls because truckers are typically paid by the mile. "You're hawking your assets now, and you're going to end up paying a whole lot more down the road," possibly in fares, and almost certainly in unrealized future revenues.

U.S. Rep. Peter DeFazio, D-Ore., has been a critic of highway privatization in general, and the Indiana deal in particular, saying Indiana Gov. Mitch Daniel, a former Bush administration official, was doing the president's bidding in shedding Indiana's toll road.

"What he has done with the 75-year deal is: He's given away an income stream that could have financed projects until the end of this century," said Mr. DeFazio, who leads the House Subcommittee on Highways and Transit. "Clearly, this is not about improving the nation's infrastructure" -- it's about making an ideological point, he said.

The big winners in the deal, he says, are the foreign banks. In the Indiana lease, for example, they fronted only a percentage of the $3.8 billion -- the rest of the capital was raised from other investors. "The finance houses love these things," Mr. DeFazio said. "It's a license to print money."

MORE

[GDAEx2]

1. I think this is a great idea

Seriously.
The turnpike should be leased as soon as possible and the revenues used to finance high speed rail across the state.
This is at a time when it's value may never be higher.

[Armstead]

2. It's a slippery slope

De we really want to put the nation's public highway system into the hands of big corporations -- including foreign investors?

[GDAEx2]

4. Why not?

if its destined to become obsolete.

[Armstead]

3. William Ayers wants to privatize the Pennsylvania Turnpike. So does Rev. Wright.