In 2012, the Corrections Corporation of America (CCA) sent letters to 48 state governors offering to buy the state prison systems outright. All CCA required in return was a 20-year management contract and guaranteed 90% occupancy rate. This was a stunning offer from a company that was barely three decades old, and it highlights just how successful the private prison industry has been in penetrating the “marketplace” of public prisons. How did they do it? How does anything get done in today’s political environment? With money, lobbying, and insider influence.
Need to catch up?
- Part 1: Profit & Politics in Alabama Prison Reform
- Part 2: History of Prison Privatization – Making Crime Pay
- Part 3: Who Profits from Prison Privatization?”
- Part 4: Private Prisons & Government – A Revolving Door of Influence & Insiders
- Part 5: Sweetheart Contracts Fill Beds & Pad Profits
- Part 6: Prison Shouldn’t Be A Picnic, But Also Shouldn’t Be A “Hell on Earth.”
CCA was founded in 1983, but its roots can be traced to the late 1970s. Tom Beasley, chairman of the Tennessee Republican Party, was at that time serving on a committee charged with choosing a new state corrections officer. Beasley’s research revealed a system plagued by high turnover, tight budgets, and overcrowding. The experience made him begin to wonder if there might not be a private sector solution to this growing public sector problem.By 1983, Beasley was convinced that the application of a few simple business practices could transform the corrections system from an inefficient bureaucracy into a profitable enterprise. He recruited his former West Point roommate, Doctor (“Doc”) Crants, as well as Terrell Don Hutto to help bring the concept into being. The troika’s talents and experience melded excellently. Beasley had vital political connections. Crants brought an M.B.A. and a law degree, both earned at Harvard, to the table. Hutto possessed sterling corrections credentials, having not only directed two state prison systems, but also served as president of the American Correctional Association.[…]“We’re on the ground floor of a multibillion-dollar industry,” Beasley gushed to Financial World in 1985.
For years Williams, who worked as a warden for GEO Group before joining Gov. Bill Richardson’s cabinet, has not collected penalties against his old employer and Corrections Corp. of America (CCA) despite increasing evidence that both firms regularly violated a contract rule requiring certain staffing levels at the four facilities they operate.
The pay at the Otter Creek prison is low, even by local standards. A federal prison in Kentucky pays workers with no experience at least $18 an hour, nearby state-run prisons pay $11.22 and Otter Creek pays $8.25.
CCA pays correctional officers only $10 to $12 an hour while correctional officers in Arizona state prisons earn $18 to $20 an hour, said Chuck Foy, executive director of the Arizona Correctional Peace Officers Association. The Phoenix-based union has about 3,500 members.
CCA, which is publicly traded on the New York Stock Exchange under the ticker symbol CXW, took in nearly $1.7 billion in revenue in 2013, 100 percent of which came from taxpayers via government contracts. It had profits of $300 million in the same year–almost double the previous year’s profits. In early 2013, CCA transformed itself into a real estate investment trust (REIT), a restructuring designed to reduce the payment of federal income taxes. In the first quarter of 2013, the firm realized a $137.7 million income tax benefit related to the company’s recent conversion into a REIT.
In New Mexico, in 2013, CCA sought exemptions from state & local taxes and even sought a refund of the previous three years’ worth of payments to the state.
The dispute was over a prison in Torrance County that housed federal inmates, and withdrawal of local taxes could have cost local governments tens of thousands of dollars per month. The largest city in the county was already operating on 4-day weeks as a “cost-saving” measure.
In 2012, The GEO Group’s Political Action Committee received $470,564 and spent $331,425 on federal races. 72% of its contributions went to Republican candidates. The GEO Group spent $240,000 on lobbying Congress and federal agencies in 2012.
Since 2008, the Corrections Corporation of America has spent at least $970,000 a year on lobbying, however, in all of its federal lobbying reports it includes a disclaimer that it does not lobby for or against policies that would determine whether an individual is incarcerated. GEO has been less consistent in its lobbying efforts and has spent anywhere between $240,000 to $660,000 a year on lobbying since 2008.
Republican State Rep. Jerry Madden of Texas chairs the Public Safety Task Force and although he is disappointed the committee is disbanding, he said many of the issues will be transferred to other committees.“ALEC’s decision won’t impact the important issues we’ve worked on,” Madden told The Christian Post. “But I will say this, these groups are targeting ALEC because when conservatives get together, we influence state and federal policy in a major way and these groups are scared of us – and should be.”