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The Financing of Detention

Posted by: Jessica Silver-Greenberg on June 17

The private prison industry has moved its sights, from bread and butter incarceration, to the new gold rush: immigrant detention. You might have thought that a seemingly left-leaning Obama administration would shut off the spigot of government dollars flowing to private prison contractors, especially given the spotty track record many of these firms have. But Obama is actually upping the ante, by funding a newly minted project called “Secure Communities.” This immigration policy started in December is based around databases. It deputizes local law enforcement to run a federal back-ground check on any local arrests. The aim is to target immigrants with serious crimes on their record, and deport them.

In his 2010 budget, Obama ups funding for the program by 30%. He’s also continuing to fund Immigration and Custom Enforcement’s already existent Operation Streamline, started by the Bush administration in 2006. When it passed in 2006, it marked a transition from the old policy of catch and release. Under Streamline, immigrants illegally crossing the border would be charged with low-level criminal charges and detained in these U.S. detention centers. Obama has already pledged $1.4 billion to immigration enforcement. ICE expects detentions to rise this year, moving up 25% in 2009.

Obama’s immigration policy could translate into huge profits for prison contractors. The private prison companies promise that they can detain immigrants more efficiently than their public counterparts. ICE already allocates roughly half its budget to detention, and out-sources most of its detention responsibilities to the largest private prison operators. In January, the prisons bureau awarded a huge detention contract to Corrections Corporation of America, to operate a 4,000 person facility devoted to housing criminal aliens. In a conference call with investors, CCA’s president Damon Hininger said, “We believe this suggests that ICE will continue providing meaningful opportunity for the industry for the foreseeable future.” It’s at work to build a 2,172 bed facility in San Diego, and has already won four new federal contracts this year. GEO Group, CCA’s competitor is reaping considerable gain as well. In a recent conference call CEO George Zoley said, “Turning to the federal market, the primary driver for growth continues to be the detention of criminal aliens."

How durable are the cost savings, which in some cases cost half as much as federal prisons? (in Hawaii, Geo Group has ratcheted up its cost-per-prisoner by over 30% and the state, which hasn’t built its own prison capacity, will likely oblige). At what expense – be it safety of prisoners or treatment of workforce – are these cost savings achieved? And how does the industry defang oversight efforts? (One former CCA auditor has accused the company of keeping two sets of records of prisoner violence – one for internal use and one to present to federal regulators. I think these are questions worth considering

Reader Comments


June 19, 2009 08:51 AM

These "cost savings" are illusory.

In Arizona, CCA continues to pay as little as possible to its high-turnover guards. It neglects to do adequate background checks. Training is minimal.

CCA spends three million yearly lobbying in D.C. It hires officials from whom it has been receiving contracts upon their retirement from government service. It, and GEO Group, are essentially driving federal immigrant policy.

Federal monitors seem more anxious to keep contractor deficits from public view than they are in doing their jobs.

Outside the defense department, there is probably no area of government policy and operations where contractors are less accountable. There are no visible initiatives to contain this self-dealing and potential for or reality of staggering corruption.

The industry has been so far successfully fighting citizen oversight in the absence of federal divisions professionally performing audit functions that could come from it being subject to FOIA requirements.


June 19, 2009 03:03 PM


Even if one does not ask or pretends not to see the rope and the flashing red flag draped around the philosophical question standing solemnly at attention in the middle of the room, it remains apparent that the mere presence of a private “for profit” driven prison business in our country undermines the U.S Constitution and subsequently the credibility of the American criminal justice system. In fact, until all private prisons in America have been abolished and outlawed, “the promise” of fairness and justice at every level of this country’s judicial system will remain unattainable. We must restore the principles and the vacant promise of our judicial system. Our government cannot continue to "job-out" its obligation and neglect its duty to the individuals confined in the correctional and rehabilitation facilities throughout this nation, nor can it ignore the will of the people that it was designed to serve and protect. There is urgent need for the good people of this country to emerge from the shadows of indifference, apathy, cynicism, fear, and those other dark places that we migrate to when we are overwhelmed by frustration and the loss of hope.

My hope is that you will support the National Public Service Council To Abolish Private Prisons (NPSCTAPP) with a show of solidarity by signing "The Single Voice Petition"

Please visit our website for further information:

–Ahma Daeus
"Practicing Humanity Without A License"...


June 21, 2009 06:23 PM

If the price is right, we may even sell our Kids and Parents to these private companies


June 24, 2009 03:09 PM

If our government could do it efficiently and cheaply. these companies would not exist. AKA Fed X and UPS...wake up! There is nothing wrong with profit you socialist! How do you think this country that you probably claim to love has been built. Check your assumptions.
Ahma_daues- your fight is with a government that is so cumbersome and slow that it cannot run a machine. You probably want national health care too. FOOL.

Thank you for your interest. This blog is no longer active.



BusinessWeek's Adrienne Carter, Jessica Silver-Greenberg, and David Henry deconstruct the mysteries of high finance, Wall Street, and hedge funds for pros and ordinary investors. E-mail them directly if you've got tips about big deals, a hedge fund, or even securities industry gossip.

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