Wednesday, July 16, 2008

Bush Appoints P3 Proponent While Claiming Executive Privilege

President Bush played the shell game on an unsuspecting American public as he cited executive privilege for Justice Department Chief Mukasey regarding the leak of CIA agent Valerie Plame's name. Never mind, Mukasey was nowhere near the Justice Department at the time of the White House engineered leak. Bush's claim keeps the public from noticing the shell with the pea. Thus they miss their taxes virtually guaranteeing hefty annual returns to private companies creating public infrastructure projects.

This pea came in the form of a political nomination intended to grease the skids for such deals. The White House website states:

The President intends to nominate Thomas J. Madison, of New York, to be Administrator of the Federal Highway Administration at the Department of Transportation. Mr. Madison currently serves as President of the Spectra Subsurface Imaging Group. Prior to this, he worked as Commissioner of the New York State Department of Transportation.

Mr. Madison took the job at Spectra in March 2007. By November he presented to an august body of private infrastructure contractors and government leaders. His PowerPoint presentation lauded the benefits of public private partnerships, also known as P3. In return for billions of dollars of private investment, corporations collect user fees for services. While the deals vary, many provide an exclusive franchise, guaranteed competitive advantages, and preferred financing arrangements. The politically connected Carlyle Group started an infrastructure fund, citing an expected, low risk 15% annual return.

At the Department of Transportation Thomas Madison joins Mary Peters and D.J. Gribben, other proponents of P3. That sounds like a trifecta for private equity underwriters (PEU's) like Carlyle. I can see them lining up at the cash-in window. And when the public wants to know the details of those deals, Bush may again cite Executive Privilege.