One topic guaranteed to trigger a heated debate among most groups of Americans is just how socialist America has become these days. Plenty of people believe programs like the Affordable Care Act, welfare, Social Security and food stamps have already made America too much of a socialist country.
Federal National Mortgage Assctn Fnni Me FNMA 1.01% and Federal Home Loan Mortgage Corp FMCC 0.52% are both socialist enterprises held in government conservatorship. The public school system in the United States is operated by the government, although there are plenty of private school options available as well. Even the U.S. Postal Service is run by the government.
The Problem With Going Private: Wall Street At Your Back Door
On the other side of the argument, a recent series of New York Times reports details just how much of a presence private equity has in U.S. government programs as well.
President-elect Donald Trump has pledged to engage private equity firms as a part of his strategy to overhaul America’s aging airports, bridges, tunnels and roads. However, some Americans are concerned about the premium Americans will pay for services of Wall Street firms like KKR & Co. L.P. KKR 1.95%. While government-run programs have a primary goal of providing services for citizens, private equity firms’ top priority is maximizing profits for investors.
For example, since private equity firm Kohlberg Kravis Roberts took over the water services in Bayonne, New Jersey, in 2012, local water rates have climbed 28 percent.
Wall Street is now increasingly taking ownership or management rights to many of the nation’s roads and parking garages. Fortress Investment Group LLC FIG 0.37% is even building its own train line from Miami to Orlando. New Media Investment Group, which controls local newspapers in 31 different states, is also associated with Fortress.
If you rent an apartment, there’s a good chance that Blackstone Group LP BX 0.3% is indirectly your landlord. If you have a mortgage, Blackstone Mortgage Trust Inc BXMT 0.06% may ultimately receive some or all of your monthly mortgage payment.
Even your 911 calls may be routed to one of 12 ambulance companies recently owned by private equity firms. Americans might assume the local fire department is paid for by taxes, but privately-run departments are now sending residents bills for tens of thousands of dollars for their services.
Private prison stocks Corecivic Inc CXW 1.56% and The GEO Group Inc GEO 0.39% are both up more than 50 percent since Election Day based on the likelihood Trump will renew their government contracts.
NASA, which is already a shell of its former self, is now contracting Boeing Co BA 0.25% and SpaceX to deliver the next group of American astronauts to the space station. At the same time, NASA has secured partnerships with 22 companies to work on the government’s space exploration goals for the future.
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