When Donald Trump was running for president, he made it clear that one of his priorities was to slash the size of government. On his first day in office, cameras clicked as President Trump signed what he said were 100 executive orders putting his stamp on the U.S. government, many of them calling for cuts to federal agencies. And last week, the Trump administration very publicly told all government employees they had until Feb. 6 to take what amounts to a buyout — or potentially be fired or transferred.
But just out of the limelight, the Trump administration has been pursuing plans to privatize huge swaths of government services. While taking the agencies off the government’s books may appear to cut costs, it simply transfers payments to the private sector — and usually with a hefty premium, better known as a profit margin.
Trump and his circle have made no secret of their ambition to sell off the government. In his first administration, Gary Cohn, then the director of the National Economic Council, told business executives at a White House meeting, “Take a project you have right now, sell it off, privatize it, we know it will get maintained, and we’ll reward you for privatizing it. The bigger the thing you privatize, the more money we’ll give you.”
We took a look at Trump’s public statements and past actions, and at steps outlined in what is increasingly apparent as the playbook for his administration, the conservative Heritage Institute’s Project 2025. That 900-page document was overseen by Russell Vought, Trump’s nominee to run the White House Office of Management and Budget, which prepares the budget request that the administration sends to Congress.
In December, after news reports focused on plans in Project 2025 to privatize the Postal Service, Trump made clear that offloading the government-owned corporation was in the cards: “There is a lot of talk about the Postal Service being taken private,” Trump said. “It’s a lot different today, between Amazon and UPS and FedEx and all the things that you didn’t have. But there is talk about that. It’s an idea that a lot of people have liked for a long time.” The Postal Service lost $9.5 billion last year, of which only $1.8 billion was linked to operations. The rest went to fund future pension obligations, under a unique order from Congress. Reporting its results, the Postal Service noted that 80% of its spending is beyond management’s control.
Adding to the stress is its obligation to reach every home in America six days a week. That’s why FedEx and UPS have contracts with the Postal Service for last-mile delivery to remote areas. Any effort to privatize would likely result in shutting Post Office locations, which lawmakers usually oppose. And any change would have to be in line with the Constitution, which gives Congress exclusive power to establish a postal system.
It’s complicated, but celebrity doctor Mehmet Oz, Trump’s nominee to lead the Centers for Medicare and Medicaid Services, has been calling to further privatize Medicare for years. And Project 2025 calls for pushing more people to private Medicare Advantage plans. Medicare privatization would mostly involve shifting more older Americans to these private supplementary plans, which often have big gaps, especially for those who can’t afford the premiums. One big winner if more people are moved to private Medicare supplement plans: UnitedHealth, the largest private health insurance corporation in America, and the largest issuer of privatized Medicare Advantage plans, with 7.8 million people.
Again, look back to Project 2025. It calls the National Oceanic and Atmospheric Administration, which oversees the National Weather Service, “one of the main drivers of the climate change alarm industry,” and calls for hiving it off from the Commerce Department to make it more commercial. The changes are opposed by one of the Weather Service’s biggest clients. AccuWeather CEO Steven R. Smith said the company “does not agree with the view… that the National Weather Service should fully commercialize its operations.”
Not every privatization amounts to a straightforward sale. For decades, conservative local governments have offered parents the choice of taking the money their town or county would have spent schooling their child and applying that cash to a private school, religious school, or homeschooling. Such vouchers hurt public schools, forcing them to spread the same costs over fewer students and less income, but they do help subsidize private schools whose students come largely from wealthier families. Studies show vouchers reduce educational achievement across the board. As one report noted, voucher proponents “ignore the collective societal benefits of a well-educated populace, such as a thriving economy and democracy.”
One particular form of de facto privatization will be turning over some government functions, such as screening tax returns, to artificial intelligence models. OpenAI has just introduced ChatGPT Gov, which lets government agencies access non-public sensitive data. It’s not clear how well this would work. A recent IRS effort to scrutinize tax returns with AI showed the model was flagging Black taxpayers more often than whites and improperly denying tax credits. The IRS canceled the program.
Under intense grilling by senators last week, Doug Collins, Trump’s pick to lead Veterans Affairs, promised he has no plans to privatize VA health care. Still, his answer left some wiggle room, and Defense Secretary Pete Hegseth has publicly promoted shifting more veterans to VA-funded private care. VA hospitals already complain that they are overburdened and underfunded, as aging veterans of the first Gulf War and this century’s wars in Iraq and Afghanistan require ever more care, particularly for conditions such as traumatic brain injuries, orthopedic care, and opioid abuse. In 2022, more than 40% of enrolled veterans received care from private doctors through the Veterans Community Care Program, and a recent report on the VA healthcare crisis found that as referrals to private doctors rise 15-20% per year, the cost, at almost $30 billion in 2023, may threaten funding needed to support the VA’s own direct care system.
Before terrorists steered four passenger jets into the Twin Towers, the Pentagon, and a field in Pennsylvania on Sept. 11, 2001, most airport security was performed by private companies. The 9/11 Commission later found that those companies hired inexpensive, poorly trained people who missed the folding knives and other weapons that the Sept. 11 terrorists used to take control of the planes. The creation of the federal Transportation Safety Administration was intended to put aviation security on par with other federal law enforcement agencies. Now, there’s talk of re-privatizing the agency, largely as a way to both save money and as an opportunity for private security firms to win airport security contracts from the government.
After the deadly collision of an Army helicopter and a passenger jet landing in Washington last week, Trump suggested re-examining the country’s air traffic control system. That’s in line with plans from the right-wing Cato Institute to privatize flight control. Air traffic control in the U.S. has been hobbled by Congress’ reluctance to fund new computerized systems, hire more controllers, and pay wages that retain experienced controllers. The Cato plan calls for the U.S. to adopt Canada’s system, where air traffic control is a government-supervised cooperative, funded and owned by the airlines and airports.
Back in the Great Depression, the Roosevelt administration created Fannie Mae, the Federal National Mortgage Agency, whose job was to stimulate the moribund housing market by allowing local lenders to lower the risk of holding mortgages. Freddie Mac came along in the 1970s to help. But after the 2008 mortgage crisis, which started with banks offering mortgages to overstretched borrowers, the two had to be bailed out by the government, which now controls them under a conservatorship.
Fully privatizing the institutions would put some cash in federal coffers, but would likely decrease oversight, increase risk, and make lending more expensive — and decidedly less expansive. Moody’s economist Mark Zandi estimated that full privatization of Fannie and Freddie would cost the typical American taking out a new mortgage between $1,800 and $2,800 per year, with people with lower incomes and credit scores paying the most.
The government is there to provide services that the private sector can’t or won’t provide at a price that keeps them accessible to citizens, who are effectively the shareholders of the country. As Rep. Gerry Connolly, the Northern Virginia Democrat who is the ranking member on the House Oversight Committee, tweeted recently, “When you go private, the profit motive is everything.”
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