Worries grow over DOGE privatization push

• Because the priorities are different — public interest for the government and profits for businesses — privatization can mean everyday services run differently than people are accustomed to. But it can also mean they cost more and don't work as well.

Zoom out: "We should privatize anything that can reasonably be privatized," Musk said at a recent tech conference.

• Privatization doesn't always mean completely moving something into private sector hands. It can also mean more work is contracted out.
• Musk himself benefits from this kind of semi-privatization, like NASA's increasing reliance on SpaceX, says Michael Strain, an economist at the conservative American Enterprise Institute.

Where it stands: Thus far three entities — long targeted by conservatives — are in the administration's sights: Amtrak, the Postal Service and mortgage giants Fannie Mae and Freddie Mac, says Joe Brusuelas, chief economist at RSM.

• There's also been a drumbeat of reports warning that privatization is coming, from various news outlets.

Reality check: Musk's statements are not policy, and until Trump makes a real announcement it's hard to predict what happens next.

• The administration has yet to announce any formal plans. Much of this work would require Congress to go along, which has been a stumbling block in the past.
• The White House did not respond to a request to talk about privatization.

Zoom in: There are successful examples of government services, like rails and mail, being turned over to private companies in Europe, says Ernie Tedeschi, director of economics at the Yale Budget Lab.

• "Privatization has been wielded productively," says Tedeschi, who worked in the White House under President Biden.

• But even those sometimes run aground. The U.K. is in the process of renationalizing its rail service, which was privatized in the 1990s. In a recent report, Amtrak pointed to the U.K. as a cautionary tale.
• Taking rails private "resulted in higher fares, deterioration in service" and wound up costing the government more in public subsidies, according to the report.

Examples of successful U.S. privatization efforts are harder to come by.

• Fannie Mae and Freddie Mac, for instance, were once private sector companies carrying out a vital public service. They wound up in deep trouble in the 2008 financial crisis, and the U.S. government took over.
• The Post Office is already quasi-private, since it's mostly self-funded, relying on a very small subsidy from the federal government. Amtrak, meanwhile, runs on tracks owned by the private sector.

The bottom line: The real worry for most critics is corruption.

• Famously, the Russian oligarchy was born in the rush to privatize state-owned firms after the fall of the Soviet Union.