(Slate) — Almost lost in the deluge of news out of Wisconsin was a paragraph tucked into Gov. Scott Walker’s original “budget repair bill” giving the state government the right to sell state-owned power-generation facilities—which supply heating, cooling, and electricity to Wisconsin’s government buildings—essentially without any oversight, checks, or balances. As the bill put it, any such sale would, by definition, be “considered to be in the public interest.” The blogosphere erupted in a storm of speculation—and New York Times columnist Paul Krugman joined in—that the sale of the plants was intended as a gift to Koch Industries, the mammoth private company run by the Koch brothers, the billionaire Tea Party Medicis who provided conservative support for Walker’s agenda.
But the language didn’t make it into the final bill. So what had been just a local Wisconsin issue is now a nonissue, right? Actually, the privatization of state and, especially, local government assets is a very real, very national issue, albeit one in which the left’s favorite villains in Wisconsin—the Koch brothers—don’t figure as prominently as the left’s other favorite villain—the banks. The deep budgetary woes of states and cities around the country have made the quick (but one-time) infusion of cash resulting from an asset sale a handy temporary solution. The big banks advise cities about whether privatization is a wise choice. They also control the ability of states and cities to access the market for their financing needs. But the banks’ investment funds may also stand to make money off privatizations. As Josh Rosner, a managing director at the research firm Graham, Fisher who was a prescient critic of the housing boom, says, “Given what we’ve seen [in other deals], I have concerns that the banks will or could use their lending power” to push privatization deals that get done via closed bids, aren’t publically debated, and may not be in the public interest.