Crony Capitalism; Private Prison Stocks Have Doubled Since the Election

Update 2-23-2017   
It's official. Jeff  Sessions overruled the Obama administration's ruling to phase out private prison contractors for federal prisons. 

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This is an update from a previous post about the explosive rise of the private prison industry. That article included a call to action for everyone to contact the Senate switchboard and protest Jeff Session’s confirmation. The Senate switchboard was overloaded with calls from like-minded activists, but Sessions was ultimately confirmed by the Senate to be the U.S. Attorney General. With that said, his confirmation was expected as the Republicans have the numbers. However, even the libertarian-leaning Rand Paul (R-KY) voted for Sessions. 

Meanwhile, the stock prices of the top two private prisons, GEO Group and CoreCivic (formerly CCA), have continued rising. Their share prices have increased by 100% and 140% respectively in the three and a half months since Election Day. 

(via Google Finance)

There’s no other way to look this development; it’s crony capitalism. Their industry is entirely dependent upon government contracting, which is influenced by strategic political donations. Both companies donated to Republicans over Democrats at a 9 to 1 ratio. 

For several years, neither company was held accountable for their poor track records. However, in August of last year, the Inspector General (IG) of the Department of Justice issued a comprehensive review of the private prisons that house federal prisoners. The IG report concluded that private prisons don’t offer significant savings to the taxpayers and there were more violent incidents in those facilities. One month later, a DOJ official announced that they planned to no longer issue contracts to private prison companies for federal prisons.

One day after that IG report was issued, a subsidiary of the GEO Group, GEO Corrections Holdings Inc, made a $100,000 donation to Donald Trump’s PAC, Rebuilding America Now. In reaction, a watchdog group, Campaign Legal Center, issued a formal complaint with the Federal Election Committee (FEC). Their group contends that the GEO Group violated a federal law that bars companies from making political donations while holding or negotiating a federal contract. 

A company spokesperson for the GEO Group pointed out that their subsidiary that made the donation, GEO Corrections Holdings Inc, which doesn’t have any federal contracts. The FEC has yet to make a decision. However, in the end, the GEO Group will likely avoid any penalties due to this technicality. Their company may not be guilty according to the letter of the law, but they are clearly guilty of violating the intent of the law. 

We can all agree that crony capitalism is alive and well in America. 

Private Prisons' Stocks Up 74% and 52% Since Election

(Charts via Google Finance)

As you can see from the charts above, the stock prices of the top two private prison corporations have exploded in the two months following the election. The shares of Corecivic (formerly Corrections Corporation of America) and the Geo Group increased by 74% and 52% respectively!

“I do think we can do a lot of privatizations and private prisons,” Donald Trump told Chris Matthews during an interview last June. “It seems to work a lot better.” He’s absolutely wrong. Nonetheless, the Trump administration will likely reverse a directive made by the Department of Justice last September in which all private prison contracts would eventually be phased out of the federal system. That announcement by the DOJ came after the Inspector General (IG) of the Department of Justice issued a comprehensive review of the private prisons that house federal prisoners. The IG report concluded that private prisons don’t offer significant savings to the taxpayers and there were more violent incidents in those facilities. That decision by the DOJ was a step in the right direction, but it applies to only a small portion of the prison population; most prisoners are housed in state facilities. On the other hand, private prisons house over half of all illegal immigrants who are held in detention centers.

Trump’s nominee, Jeff Sessions, for Attorney General is a hardliner in practically every category. He’s a proud supporter of stop and frisk programs, the drug war, and civil asset forfeiture. He’s also an advocate for privatizing prisons. In fact, two of his former staffers are working as lobbyists for the GEO Group. That’s particularly important because the Attorney General customarily appoints the Director of the Federal Bureau of Prisons.

We need a more moderate choice for the U.S. Attorney General’s Office. We need someone with a better record of human rights. The Attorney General must be someone who will respect states’ rights for legal marijuana, oppose civil asset forfeiture, and phase out private prisons. It’s now time for us to become active in the political process. The hashtags #StopSessions and #JustSayNoToSessions are being used on social media to motivate people to call the United States Capitol switchboard at (202) 224-3121. Let’s all get involved and have our voices be heard.