US Private Prisons to Benefit from Trump’s Mass Deportation Plan | 2024 election

If there was one industry that was particularly interested in the results of the US election, it was that of private prisons. The economic effects of Donald Trump’s return to the White House will be widespread, but in the case of this sector, which lives on public contracts to house the overpopulation of prisons – and looks forward to becoming a detention center for millions of undocumented immigrants that the president-elect promised to deport—the difference between a Democratic victory and a Republican triumph was something like the distance between staying afloat and getting rich.

This is how investors interpreted it: summer, when there was an assassination attempt on Trumpthe two main US private prison corporations, GEO Group and CoreCivic, soared as the shooting was understood to have emboldened the Republican candidate and brought him closer to victory. Once the polls closed and it became clear that the results were good news for Republicans, the explosion came: shares of the two companies rose, ending the first post-election session with gains of 42% and 29%, respectively.

Those numbers, which are highly unusual for a single day, have continued ever since, sparking something close to euphoria among senior executives, who are talking about increasing capacity for millions of inmates if necessary. “GEO Group was created for this unique moment in our country’s history and the opportunities it will bring,” George Zoley, the company’s chief executive, said in a pitch to Trump.

According to an NGO report The sentencing project published last summer, the prison population in private prisons in the US is about 8% of the total. That means nearly 100,000 inmates live in cells in for-profit prisons. The figure is drawn from adding those incarcerated under federal jurisdiction to those in 27 other states, while in the remaining 23 states private prisons are not used to house inmates. Another 16,000 people detained by immigration services should be added to this number.

The return is complete. The growing trend has been for private prison groups to be increasingly repudiated. In 2019, pressure from humanitarian organizations against them took effect, and the eight largest US banks agreed to cut off their financing on ethical grounds, thereby increasing their borrowing costs. Shortly after, poor business performance due to the drop in arrests during the coronavirus lockdown and the huge debt they had accumulated forced them to suspend the large dividend they distributed, one of the largest their attractions to new shareholders, which triggered a stock market crash. To top off the string of negative news, President Joe Biden signed an executive order in 2021 barring the renewal of private prison contracts with the federal government, which cut off one of the mainstays of their business and left them at the mercy of their relationships with states.

GEO Group and CoreCivic did not take well to the Democratic movement. The former warned that the federal veto could lead to hundreds of layoffs and damage to the communities where its facilities are located, while the latter argued that the high rate of incarceration per facility, one of the recurring charges against the companies, did not it was his fault. . Meanwhile, Biden, in his own words, sought to end the economic benefits of corporations that he accused of promoting “less humane and safe” incarceration.

This was not a personal crusade born out of the blue. Criticism of this model has long existed: in addition to constant complaints from NGOs, in 2016 the Department of Justice investigated that private prisons have higher rates of assault, more frequent incidents of excessive use of force and more isolation frequency. The agency also requested that the contracts not be renewed or that the scope of the contracts be reduced before they expire.

The prospects with Trump at the helm they are very different. In a throwback that few anticipated, private prisons have become an object of desire for the markets, with a revaluation approaching 90% in one month for GEO Group and 60% for CoreCivic. The market capitalization of the first is already close to 4 billion dollars, and that of its rival, 2.5 billion dollars. This meteoric advance, accentuated since the election, has caused these corporations to appear — along with bitcointhe dollar, oil companies or Elon Musk’s Tesla — on the list of big winners of a Republican government.

“A great opportunity”

The tone of its executives during the recent results presentation is a clear example of how aligned the sector’s interests appear to be with those of the incoming president. “This is an unprecedented opportunity for us,” said Brian Robert Evans, CEO of GEO Group. “We expect the incoming Trump administration to take a much more aggressive approach to border security as well as domestic law enforcement and seek additional funding from Congress to achieve these goals.”

Lack of physical space doesn’t seem to be a problem. Approving the construction of new prisons involves a cumbersome bureaucracy, but the same is not true of adding new buildings to existing facilities, which, as their owners recently pointed out, are located on huge plots of land.

One of the areas where they are most confident of seeing growth is related to migrants. US Immigration and Customs Enforcement (ICE) is a major customer of both companies, and GEO Group claims it can delivered approximately 31,000 beds for this segment, its current capacity of more than two times can be expanded to hundreds of thousands “and even several million participants”, according to the company, using a euphemism.

People arrested by ICE are not serving sentences for crimes, but are being held while an immigration judge decides whether they should be deported. Detention levels peaked at more than 55,000 under the Trump administration and have fallen to a low of 13,000 in 2021 amid the pandemic to allow for more social distancing between inmates. The institution itself admits that during Covid-19 it has “temporarily adjusted its law enforcement posture to focus strictly on criminal aliens and threats to public safety”.

These agreements represent a fundamental part of the turnover of private prisons. In 2022, GEO Group earned $1.05 billion in revenue from ICE contracts alone, which accounted for 43.9% of its total revenue of $2.4 billion. Outside the US, its presence is more marginal, but it also offers its services occasionally to the governments of the United Kingdom, Australia and South Africa. In these latter two countries it operates two correctional institutions with over 3,000 beds each, while in the United Kingdom it is dedicated to the custody and escort of prisoners in its fleet of over 400 vehicles.

Beyond these international ramifications, domestic business is by far the biggest revenue earner for the sector. And it’s expected to multiply under Trump. The Republican made frequent references to insecurity during his election campaign and sought to convey a tough-on-crime image in contrast to Democrats’ supposed laxity. “You can’t cross the street to get a loaf of bread. You get shot, you get robbed, you get raped,” the former president said said recently at a campaign event north of Detroit. “It’s just not true,” responded Detroit Police Chief James White.

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