Trump Deportation Plan to Hand Windfall to a Dying U.S. Industry


(Bloomberg) -- In the hardscrabble desert hamlet of Milan, New Mexico, incarceration is the biggest game in town.

Not far from Interstate 40, among fragrant sage and creosote bushes, stands a sprawling outpost of CoreCivic Inc., one of America’s biggest for-profit prison companies. The 1,200-bed facility, formerly a lockup for car thieves and drug dealers, is being transformed into a detention center for immigrants fleeing Mexico and Central America. It will be opening just as Donald Trump becomes president.

Trump Deportation Plan to Hand Windfall to a Dying U.S. Industry

U.S. Customs and Border Protection temporary holding facility in Donna, Texas.

Photographer: Eric Gay/AP Photo

Immigrants are a growth business for Milan and the U.S. prison-industrial complex. Trump’s pledge to clamp down on illegal immigration and deport millions has given the private-prison industry its biggest boost in years. Since the Republican was elected, CoreCivic stock has jumped 78 percent. Rival private-prison company Geo Group Inc., is up 53 percent.

The reasons are clear. A crackdown like the one Trump has proposed would cost the federal government from $400 billion to $600 billion. Prison contractors would get a slice of the pie.

“You can anticipate a massive enhancement of the use of the criminal-justice system to combat immigration,” said John Sandweg, former acting director of U.S. Immigration and Customs Enforcement. He and others drew comparisons to the nation’s decades-long war on illegal drugs that led to mass incarceration.

Path to Profit

Stricter laws, tougher enforcement, more incarceration, longer sentences: for private prisons, that’s a path to profit. In Trump and his choice for attorney general, Senator Jeff Sessions, the prison industry now has important boosters in Washington.

Just a few months ago, the outlook wasn’t so bright. An August report from the U.S. Department of Justice recommended phasing out prison contractors because of poor performance, insufficient cost savings and falling inmate population. The agency found that private prisons were more dangerous and less hygienic than government facilities, citing higher instances of assault, inappropriate use of solitary confinement and inadequate medical treatment.

Trump Deportation Plan to Hand Windfall to a Dying U.S. Industry

The temporary holding facility in Donna, Texas.

Photographer: Eric Gay/AP Photo

With marijuana legalization and Congress’s easing of drug sentencing causing the first prison-population decline in three decades, it looked as if the government’s experiment of outsourcing the incarceration business was drawing to an end.

Nashville-based CoreCivic, formerly known as Corrections Corp. of America, announced it would idle the Milan facility, putting 300 jobs on the line. So important was the prison to the community of fewer than 13,000 that New Mexico’s Democratic U.S. Senator Tom Udall wrote a letter urging the Obama administration to reconsider.

Private Contractors

A few weeks later, CoreCivic signed a new contract with the Department of Homeland Security, which has said it’ll continue to use private contractors to house immigrants despite the Justice Department findings.

In two contributions this year, Boca Raton, Florida-based Geo gave a total of $225,000 to Rebuilding America Now, a pro-Trump super political action committee. The company also donated $200,000 to the Senate Leadership Fund, a Republican super PAC. Geo hired as lobbyists two former Sessions aides, David Stewart and Ryan Robichaux.

“Geo’s political activities focus entirely on promoting the use of public-private partnerships,” spokesman Pablo Paez said in an e-mail statement.

Jonathan Burns, a CoreCivic spokesman, said the company has provided “flexible, innovative solutions” to the challenges facing government. “CoreCivic does not draft, lobby for, promote or in any way take a position on proposals, policies or legislation that determine the basis or duration of an individual’s incarceration or detention,” he said.

Drug War

The private-prison industry sprang from the early days of President Ronald Reagan’s drug war. The 1986 Anti-Drug Abuse Act prescribed mandatory minimum sentences for small amounts of crack cocaine. Between 1980 and 2013, the federal prison population increased by almost 800 percent, according to the Justice Department, and the government turned to private contractors to alleviate overcrowding. 

Today, the U.S. houses nearly 23,000 federal inmates in private prisons, or about 12 percent of the total. The agency predicted in August it could shrink to fewer than 14,200 by next year under the new policy.

Trump Rhetoric

As the drug war fades, private-prison companies have shifted to the immigrant-detention business, a trend that accelerated after the terrorist attacks of Sept. 11, 2001. Laws on the books requiring mandatory detention of immigrants facing deportation have been interpreted more broadly. The government prosecuted more immigrants criminally for what used to be civil offenses.

Overshadowed by Trump’s sometimes incendiary rhetoric, President Barack Obama is leaving behind a legacy of the biggest law-enforcement immigration crackdown in modern American history. The U.S. keeps a daily average of 41,000 undocumented immigrants in detention, almost double a decade ago. Half the country’s criminal prosecutions now stem from immigration violations, outnumbering drug offenses, according to Syracuse University’s Transactional Records Access Clearinghouse.

The value of contracts awarded to Geo and CoreCivic by the Homeland Security Department, which oversees facilities for immigrants, increased 20 percent since 2009. At the same time, the companies’ contracts from the Justice Department, which handles federal crimes, declined 40 percent, according to data compiled by Bloomberg. Geo is the biggest ICE vendor, with $900 million in contracts since 2013; CoreCivic, with $330 million, is third.

New Contracts

At least three private prisons that lost their contracts with the Justice Department during the summer, including Milan’s Cibola County Correctional Center, have won new contracts to house immigrants.

“The immigration law-enforcement regime is as strong and heavy-handed as it has ever been,” said César Cuauhtémoc García Hernández, assistant professor at University of Denver Sturm College of Law who studies immigration and criminal justice. “President-elect Trump has promised to throw that into overdrive.”

As part of his “100-Day Plan To Make America Great Again,” Trump said he would work with Congress to build a southern border wall and establish two- and five-year mandatory minimum prison sentences for illegal re-entry into the U.S.

A five-year minimum for the offense would expand the federal prison population by 65,000 prisoners, which would require the government to build more than 20 prisons, according to a 2015 American Bar Association letter to Congress.

Profiting Twice

Trump’s immigration proposals may provide opportunities for corrections companies to profit twice. After immigrants serve a prison sentence for the criminal offense of illegal re-entry, they’re often transferred to immigration officials who lock them up again, sometimes in facilities run by the same company, until they’re deported.

In recent months, border crossings have skyrocketed -- in October, 46,000 people, 40 percent more than the previous October -– partly because of worsening conditions in Central America. Also, Trump’s election has given human traffickers in the gang-weary region a new sales pitch: Go north before a more hard-line U.S. president takes office.

Saulo Padilla, an immigration advocate based in Goshen, Indiana, said he recently phoned his niece in Guatemala. She told him she was thinking of coming to the U.S. before Trump’s term begins. Padilla said he replied that even if she completed the 1,200-mile (1,930-kilometer) trek before Inauguration Day on Jan. 20, she’d have a good chance of ending up detained under Obama just long enough to be handed over to Trump.

Padilla told her to stay home.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.