The Incoming Privatization Assault

Source: Jeremy Mohler and Donald Cohen, American Prospect, April 24, 2017

Trump’s signature brand of wheeling and dealing fits neatly in the recent tradition of running government “like a business.” For decades, the corporate world has increasingly become the exemplar of good governance, and the market has come to stand for economic efficiency. These claims have fed into a trend of creeping privatization, which has weakened democratic public control over public goods, expanded corporate power, and widened economic and political inequality. Some of this trend has been driven by the desire to save public funds, and some of it by pure ideology. … With the Trump presidency and Republican control of Congress, privatization will drastically accelerate—from privatized infrastructure and private prisons to voucherized schools and Medicaid or Medicare. Despite claims of greater efficiency, the reality is usually higher fees and costs, reduced services, lower wages, and loss of public control. The essence of a public service is cross-subsidy. Free or low-cost provision of water and sewer service, public transit, public education, and public parks tends to help lower-income people, based on the premise that these are basic public goods. …

Can the government save money by privatizing prisons, Medicare and other functions?
Source: Richard Lachmann, The Conversation, March 2, 2017

Should we run the government like a business? Donald Trump seems to think so. … If appointing businesspeople to run government is a path to efficiency, as Trump believes, then privatizing governmental functions entirely should bring even greater budget savings and improvements in services. … We can expect more efforts to privatize government functions and facilities under Trump. … How should we evaluate proposals to privatize government functions? First, we shouldn’t assume that lower costs means more efficiency. It will be easy to develop a replacement for the Affordable Care Act that is cheaper. Just provide fewer benefits or make the insured pay more out of pocket or in premiums. That is not more efficient, but just a less comprehensive program. The government would save money, but patients get less while paying more.  Second, not everything can be reduced to a price. … Finally, we need to recognize that people who have spent their careers working in the private sector, where the single measure of success is the rate of profit, might not be capable of running an organization that measures success in terms of human well-being, public health or the beauty and sustainability of our environment. …

Opinion: How elites profit from the myth of American bankruptcy
Related: Harry Stein, MarketWatch, February 27, 2017

After years of hysterical warnings about a “looming fiscal crisis” from deficits under President Barack Obama, Republican leaders in Congress are suddenly willing to increase deficits for President Donald Trump. This deficit flip-flop is certainly hypocritical, but it also obscures the true nature of the threat posed by Trump. … The primary threat is not that America will go broke; it is that America’s fiscal strength will be wasted and abused. Trump and his allies in Congress are poised to privatize America’s fiscal strength to further enrich a wealthy few and give corporations more power over ordinary Americans. … Corporations would be further empowered by several of Trump’s fiscal policies. Private companies are already jockeying for contracts to build Trump’s border wall — a project that will likely to use eminent domain to seize land from its current owners. According to the conservative Daily Caller, “defense contractors couldn’t be happier” about potential profits from Trump’s military buildup. And privatization is also at the core of the infrastructure plans touted by Trump and some in Congress.

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Cohn Says Privatizing Some Infrastructure Makes Sense (Video)

Source: Bloomberg Politics, April 20, 2017

Gary Cohn, director of the White House’s National Economic Council, comments on U.S. infrastructure during an interview at the 2017 IIF Washington Policy Summit.


Transportation Department plans new top-level spots to oversee Trump priorities
Source: Melanie Zanona, The Hill, April 18, 2017

The Department of Transportation (DOT) plans to create new top-level roles and reshuffle other positions in order to put more muscle behind two of President Trump’s priorities: infrastructure investment and modernizing the Federal Aviation Administration (FAA).   The realignment was announced during a high-level internal meeting on Tuesday, according to sources close to the meeting, with the goal of putting the agency’s top brass in charge of the president’s initiatives.

Trump wants regulations streamlined in infrastructure bill
Source: Josh Boak, Associated Press, April 11, 2017

On infrastructure, President Donald Trump wants to offer a two-for-one deal.  The Trump administration intends to propose a package of tax breaks meant to help spur $1 trillion in new spending on roads, bridges and other construction over the next decade. But as part of that bill, Trump also wants introduce measures to drastically shorten approval times for projects.  The strategy appears aimed at building support for an effort with little momentum in Congress. Democrats are critical of Trump’s focus on public-private partnerships, rather that more traditional funding, while many conservative Republicans have balked at the idea of a massive government investment. …

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I.R.S. Enlists Debt Collectors to Recover Overdue Taxes

Source: Jessica Silver-Greenberg and Stacy Cowley, New York Times, April 20, 2017

The Internal Revenue Service is about to start using four private debt-collection companies to chase down overdue payments from hundreds of thousands of people who owe money to the federal government, a job it has handled in house for years.  Unlike I.R.S. agents, who are not usually allowed to call delinquent taxpayers by telephone, the outside debt-collection agencies will have free rein to do so. Consumer watchdogs are fearful that some of the nation’s most vulnerable taxpayers will be harassed and that criminals will take advantage of the system by phoning people and impersonating I.R.S. collectors. …


IRS Debt Collection Program May Lead to Confusion, Help Scammers
Source: AJ Walker, NBC Connecticut, February 14, 2017

NBC Connecticut Troubleshooters caught up with officials from the IRS to find out more about their new debt collection program and how they’re going to protect taxpayers from getting scammed. This spring, debt collectors hired by the IRS will start making collection calls to go after money on old tax debts. This could lead to confusion as the fake IRS debt collection scam call is one of the number one scams in the country. In the past, the IRS has repeatedly said they will never call you collect money. Instead, they send a letter. This change could open the door to crooks who might see this as opportunity to reach out to more people using the IRS’s name. It’s too early to gauge how the ongoing phone scam will impact real IRS debt collection call efforts. But people targeted by the scheme say it will be confusing. … The collection program came about because a law called the FAST Act passed in 2015 requiring the Internal Revenue Service to use private debt collectors to go after tax money on older accounts. The money would help pay the FAST Act’s $305 billion price tag to fund transportation and infrastructure. … However, this isn’t the first time the agency has tried to use debt collectors. In 2006 the IRS hired Pioneer, CBE Group and a company called Linebarger Goggan Blair & Sampson to try to collect an additional $1.4 billion in past due taxes. It fired the debt collectors in 2009 saying it wasn’t cost effective to use private collectors and the “work is best done by IRS employees.” … However, one IRS debt collector has recently been accused of not acting in peoples best interest. Pioneer was mentioned in lawsuits filed by the Illinois Attorney General and the Consumer Finance Protection Bureau accusing the business and its parent company Navient of taking advantage of borrowers. …

NTEU: Using IRS employees, not outsourcing for debt collection ‘smart and humane’
Source: Meredith Somers, Federal News Radio, September 27, 2016

The National Treasury Employees Union wants the Internal Revenue Service to retrain thousands of employees facing pink slips for outsourced tax-collection work. NTEU President Tony Reardon said his organization will push Congress for resources IRS needs to teach more than 7,000 employees how to track down late accounts. … A provision within a highway bill passed last year requires the IRS to pass on certain delinquent accounts to private collection agencies (PCAs). The employees who face layoffs work at one of three paper tax return processing sites in Covington, Kentucky; Fresno, California; and Austin, Texas. Their jobs would be phased out between 2019 and 2024. … In its fiscal 2017 objectives report to Congress, the Taxpayer Advocate Service warned that the private debt collection program “includes practices that will harm taxpayers and tax administration.” The program was discontinued in 2009 after TAS warned the program threatened taxpayer rights and raised doubts about its revenue projections. One of the concerns with the new law is that it does not take into account economic hardship, nor does it grant PCAs the power to work out a compromise with taxpayers based on their status. … About 1,800 employees work at the Convington site, while 3,000 and 2,400 work at the Fresno and Austin locations, respectively, and the phase-out of the jobs is just one thing that worries Rep. Thomas Massie (R-Ky.). During a House Committee on Oversight and Government Reform hearing on federal vacant properties, Massie called the news of moving 2,000 jobs out of the city “devastating.” …

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Standing Up for Atlantic City: “Water Rights Are Civil Rights”

Source: Food and Water Watch, April 21, 2017

NAACP president and CEO Cornell Brooks came to Atlantic City on April 20 for the public launch of a campaign to prevent the privatization of the city’s public water system.  Brooks spoke in support of the campaign to protect the civil rights of city residents as a result of last year’s takeover law, and tied it to his group’s advocacy for water justice in Flint, Michigan. “Water rights are civil rights, and civil rights are human rights,” he told the audience. … In addition to many Atlantic City community groups and neighborhood associations, the AC Citizens Against the State Takeover campaign has been endorsed by statewide organizations like the New Jersey Working Families Alliance and the New Jersey National Organization for Women, labor unions like AFSCME, AFL-CIO and the Communication Workers of America, as well as national groups like the Center for Constitutional Rights and Color of Change. …


A.C. Council tables water authority dissolution, but study underway
Source: John V. Santore, Press of Atlantic City, April 23, 2015

The Atlantic City Council tabled two ordinances Wednesday that would have replaced the Municipal Utilities Authority with a city utility, as well as a resolution authorizing a financial study of the MUA. However, Business Administrator Arch Liston said Wednesday night that a study of the authority is already being conducted by accounting firms Ernst & Young and Ford Scott & Associates LLC, and that it may be completed within a few weeks….

Atlantic City Council to introduce ordinance dissolving city water authority
Source: John V. Santore, April 20, 2015

The Atlantic City Council is scheduled to introduce ordinances Wednesday dissolving the Atlantic City Municipal Utilities Authority and replacing it with a city-run utility…. If it was dissolved, the city could access about $5.4 million in reserve funds the Authority has on hand for emergencies and capital improvements. But Jeff Tittel, Director of the New Jersey Sierra Club, said Monday that dissolving the MUA is the first step toward selling its assets to a private company. A sale would bring in a one-time infusion of cash, he said, but could result in higher water prices in the future, as the new owner seeks to recoup its investment by raising water rates….

Puerto Rico pushes to privatize operation of public services

Source: Danica Coto, Associated Press, April 20, 2017

Puerto Rico is ready to sign dozens of new deals to privatize the operation of public services as government funds dwindle amid a decade-long recession, the island’s governor told some 800 investors attending a two-day financial summit Thursday.  Gov. Ricardo Rossello said public-private partnerships could create up to 100,000 new jobs and generate some $5 billion in the next three years for a U.S. territory mired in economic crisis and its government facing a $70 billion public debt load that it is struggling to restructure.


AFSCME Pres. Lee Saunders on Puerto Rico Fiscal Plan
Source: AFSCME Press Release, March 13, 2017
AFSCME Pres. Lee Saunders issued the following statement on the oversight board’s approval of a fiscal plan for Puerto Rico:  “The plan approved by the Oversight Board will have devastating consequences for the people of Puerto Rico, especially its most vulnerable citizens. The plan adopts an austerity approach that will slash services, cut pensions and create yet more economic hardship for Puerto Ricans. The winners are wealthy investors who stand to gain from the mass privatization of the services that remain. These actions are the foreseeable result of an anti-democratic law adopted by the last Congress. The people of Puerto Rico have been forgotten; we call on the federal government to act quickly to restore services and pensions.”

Board to Puerto Rico: Cut Pension System, Impose Furloughs
Source: Danica Coto, Associated Press, March 13, 2017

A federal control board on Monday said Puerto Rico’s government needs to cut its public pension system by 10 percent, furlough tens of thousands of its workers and eliminate Christmas bonuses if it cannot generate other types of savings amid a nearly decade-long recession. The seven-member board created by Congress last year to oversee the U.S. territory’s finances voted unanimously to add those measures to a 10-year fiscal plan presented by the island’s governor that the panel approved Monday. The measures will be implemented if the government fails to find other ways to cut spending and increase revenue. Board members said the spending cuts will be necessary so the government will have enough funds to pay for essential services such as education, health and public safety. … The plan drafted by the government and approved by the board also will cap some Medicaid benefits, effectively raise property taxes and scrap some infrastructure projects while possibly turning ferries, ports and parking lots over to private companies. It will freeze salaries until 2020, seeks to privatize the generation of power and increase motor vehicle license fees by 10 percent. …

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Saugus School Committee supports privatizing cafeteria staff

Source: Neil Zolot, Wicked Local, April 19, 2017

The School Committee unanimously voted to send a proposal from food service provider Whitsons Culinary Group to the town Purchasing Department officer that includes provisions for privatizing the cafeteria staff.  Bids for a Request for Proposals were due back by March 13 from companies looking to  manage and operate the food service program from this July 1 to June 30, 2018. … After the vote, AFSCME Council 93 Assistant Director of Legislation, Political Action and Communications Molly Maloney told the School Committee members they showed “a complete lack of respect” to the employees and union members.  At the outset of the April 13 meeting, Maloney asked the School Committee to delay approval of the food service contract in order to be able to fully review and process information she provided.  “I have prepared a packet of information for all of you with stories where privatization of food services has failed,” Maloney said. “This is a large packet of information and because AFSCME has not been granted an opportunity to review the bid submission from Whitsons, I am requesting that you delay approval.” …


Saugus school cafeteria workers concerned about possible privatization of food service program
Source: Mike Gaffney, Saugus Wicked Local, April 6, 2017

As the School Committee prepares to review a request for proposals for the management and operation of the Saugus Public Schools food service program, the American Federation of State, County and Municipal Employees union is raising concerns over a potential move to privatize the school cafeteria workers.  Bids were due back by March 13 from companies looking to manage and operate the food service program from July 1, 2017 through June 30, 2018. Whitsons Culinary Group, which currently manages the Saugus Public Schools food service program and oversees 18 cafeteria workers who are school system employees, was the only company to bid for the contract. … Jim Durkin, the director of legislation, political action and communication for AFSCME Council 93, said the union’s concern is that school officials appear to want a private company to take over the entire food service operation — including the workforce.

… Last summer the New England School Development Council completed a review of the district’s food service program that recommended cutting staff, replacing the food service director and instituting new menus as just a few of the strategies to combat waste and increase student participation. … Markland emphasized that nowhere in the report did NESDEC recommend privatizing the cafeteria workers. She also questioned the logic of awarding a bigger contract and more responsibility to a company, Whitsons, that was criticized by NESDEC. … Cafeteria workers in other school districts that privatized the food service program have seen their salaries slashed by as much as 30 percent, Durkin said. … Durkin questioned why the school lunch program is looked at from a profit/loss standpoint when it was established because research shows that students learn better when they have a healthy meal in their stomachs. …

Senators, reps urge T: Negotiate with your workers instead of privatizing

Source: Nicole Dungca, Boston Globe, April 20, 2017

The state’s congressional delegation is urging the Massachusetts Bay Transportation Authority to negotiate with a machinists union in hopes of preventing dozens of jobs from being outsourced.  In an April 17 letter to Governor Charlie Baker and the state’s transportation secretary, Stephanie Pollack, the legislators called on the MBTA to negotiate with the International Association of Machinists Local 264 less than a week after the agency’s board approved a budget that could privatize dozens of jobs. …


State Inspector General looking into MBTA deals
Source: Matt Stout, Boston Herald, Thursday, April 13, 2017

The state’s independent Inspector General has launched a “proactive” review of at least one of the MBTA’s newly outsourced contracts, bringing the first outside scrutiny to the T’s privatization efforts since the lawmakers granted it a waiver from the Pacheco Law. Inspector General Glenn Cunha’s office said the “interim analysis” — which is not required by law — will be led by a unit specifically created in 2009 to monitor MassDOT, the MBTA and its various programs. Cunha’s office declined to say which contract it’s scrubbing, but it will focus on one of two: a five-year, $18.7 million contract with Brink’s Co., to take over the T’s so-called “money room”; or a five-year, $28 million contract with Mancon to run a parts warehouse.

MBTA officials hope to can save $26 million in bus maintenance costs
Source: Nicole Dungca, Boston Globe, March 6, 2017
Massachusetts Bay Transportation Authority officials said Monday they want to solicit bids to privatize several of their nine bus garages to save about $26 million annually, a prospect that prompted dozens of union supporters to pack the agency’s weekly board meeting.  The MBTA spent about $132 million on bus maintenance during the 2016 fiscal year, and officials estimated that outsourcing the work to private companies could save $26 million annually, officials said.   Brian Shortsleeve, the MBTA’s acting general manager, said the agency must be “ruthless” in becoming more efficient. He has previously pointed to the MBTA’s bus maintenance costs as much higher than those of similar agencies. … The MBTA didn’t release a timetable for the bid process, but it has suggested it would make the change before the next fiscal year. … Officials are focused on privatizing four dilapidated garages in the Boston area, which are staffed by about 120 workers. … Officials also hope outside companies will find ways to cut about $5 million in costs at the Everett bus garage, and about $6 million at the Cabot Garage in South Boston, which will soon be used only for new buses. Workers at Cabot have also been “challenged” to bring their costs down to private-sector levels, Shortsleeve said. … If approved, the outsourcing would mark one of the largest privatization efforts under Governor Charlie Baker’s administration, which had pushed for more flexibility in outsourcing public jobs. The MBTA is already privatizing its cash collection and warehousing departments. MBTA officials have said that the threat of privatization has spurred union officials to reduce worker costs. In December, the MBTA’s largest labor group, the Boston’s Carmen’s Union, agreed to give up a bargained raise and cut wages for future workers to protect thousands of jobs from being outsourced. …

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After a two year fight, contract workers at National and Dulles airports win a pay increase

Source: Luz Lazo and Lori Aratani, Washington Post, April 19, 2017

… The Metropolitan Washington Airports Authority’s board voted Wednesday to require companies that do business at the airports to pay contract workers a base hourly wage of $11.55 starting in January. In all, 4,500 workers — responsible for keeping terminals and plane cabins clean, moving bags, serving meals, and transporting people with disabilities — are expected to benefit from the pay increase. Many of the workers make as little as $7.25 an hour. The plan, approved on a 15 to 1 vote, also will boost pay for Dulles Toll Road workers. The expansion of the authority’s living wage program covers eight additional contracts, and will cost $750,000 to $850,000 annually, according to a report prepared for the board. The base hourly wage will increase to $11.55 on Jan. 1 of next year, $12.15 on Jan. 1, 2019, and $12.75 on Jan. 1, 2020. After that, increases will be tied to inflation.

… MWAA has a living wage policy in place that requires vendors who contract directly with the authority to pay workers $14.27 an hour. However the policy does not cover those who work for business who contract directly with the airlines or those who work for business that operate concessions. … While the policy raises the minimum wage for workers, it doesn’t address their push to require companies to pay for health benefits and submit to a labor peace agreement. …

Why Water Privatization Is a Bad Idea for People and the Planet

Source: Adam Hudson, AlterNet, April 18, 2017

… As climate change increases global temperatures and causes odd weather patterns, multiple cities across the United States are experimenting with some form of water privatization.   In February 2015, Chris Christie, the Republican governor of New Jersey, signed a law green-lighting the privatization of municipal water systems. The bill, called the Water Infrastructure Protection Act (WIPA), allows municipalities to sell their water systems to private companies without a public referendum. … Wisconsin is another front for the battle over water privatization. A bill proposed by a Republican state legislator, at the behest of Pennsylvania-based water utility company Aqua America, would make it easier for private companies to buy Wisconsin’s municipal water systems. …. The record of water privatization efforts is far from rosy. A report by the Pacific Institute, an environment, development and security research organization, points out numerous problems with water privatization. … A June 2016 report by Corporate Accountability International found that water privatization, in the form of public-private partnerships (PPPs), not only fails to solve the problem of fixing public water systems to ensure safe and clean drinking water but actually exacerbates it. …


You Had Me At H2O: A look at who owns your water supply
Source: Beryl Lipton, MuckRock, February 14, 2017

… According to one estimate, municipalities may be spending an estimated $500 billion in capital improvements over the next decade. But between private water companies looking to consolidate their regional reach and activists that insist the federal government should be spending more to help towns keep their water treatment local, there willl need to be a lot of room to talk about how we handle this most precious resource, which the UN has recognized as a basic human right. Action will be most important on the local level, and the people will have to speak up for themselves. We want to help by offering to file your water-related records request this week. …

America can’t trust public water, so it’s turning to private companies
Source: Renuka Rayasam, Quartz, October 25, 2016

While most Americans don’t have to think too hard about whether their water is safe to drink or not, people in Camden, New Jersey are used to not having clean water. When a water main breaks, which has happened at least twice this year, residents are advised to boil their water. When it rains hard in the city, sewage backs up (pdf) and floods the streets. And kids in school there drink from water coolers instead of water fountains, which were shut off in 2002 after officials found lead in the pipes of older schools. … It’s probably no coincidence that nearly 40% of the population lives under the poverty line. But soon it won’t just be poor cities like Flint, Michigan or Camden that have to worry about water. A perfect storm of aging infrastructure, stretched municipal budgets, and changing climate conditions are putting even more of the country’s water systems under pressure. Faced with the steep cost of fixing their broken and ill-prepared infrastructure, lawmakers on both sides of the aisle are turning to private money in their search for an answer to the country’s water woes. While the record of private companies handling water supplies has been mixed, this trend toward water privatization seems to be some kind of tacit acknowledgment that local governments can’t fix the problem on their own. …

… The ground for large-scale privatization is already being prepared. On the federal level, for example, President Obama signed the Water Resources Reform and Development Act in 2014, which has a provision that promotes private investment in water efforts, such as repairing water pipes, boosting water monitoring, and desalinating ocean water to make it safe to drink. In New Jersey, where lead has been found in at least 137 schools, Governor Chris Christie signed the Water Infrastructure Protection Act in February of 2015, which allows municipalities to contract out water services to for-profit companies without a citizen vote. For municipalities, bringing in private players is often the easiest and most politically expedient solution. …

… Those pushing for privatization believe that for-profit companies are more efficient at managing water systems and have the expertise to do so. But opponents believe that for-profit companies charge too much for water services in order to meet corporate bottom lines. Food and Water Watch, a consumer rights group, for example, reports that large, for-profit, privately-owned water systems charged households 59% more for water than large, publicly-owned systems. In reality, private companies are no better or worse at holding down costs than public entities, says Warner. She looked at published studies from 1965 to 2009 and found no difference in costs between privately-controlled and publicly-controlled systems. …

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N.J. Lottery Sales Fall Short Following Privatization

Source: SNJ Today, April 18, 2017

Those hoping to win big in the New Jersey State lottery are spending less on their dreams.  State lottery sales are down for the third year since being privatized.  Lottery operations management firm Northstar New Jersey promised a return of more than $1.4 billion over 15 years when New Jersey Governor Chris Christie moved the games to privatization in 2013.  Since then, Northstar has missed its income projections and spent $20 million in allowance funds to cover financial shortfalls. …


Privatizing lottery isn’t lucrative deal for New Jersey
Source: Michael Catalini, Associated Press, January 9, 2016

New Jersey might get $1 billion less out of its state lottery as part of an amended 15-year deal with the private company that runs part of it, according to an Associated Press analysis. The deal, unveiled by Gov. Chris Christie’s administration on New Year’s Eve, also reduces the amount the company must generate to avoid penalties. The revenue targets that Northstar New Jersey has to meet have been lowered by about $76 million per year over the contract, which was struck in 2013. The total revenue projection was decreased from nearly $16 billion to about $15 billion. … The underperformance — including a $5 million drop in revenue in 2015 — has raised questions from Democrats about the privatization strategy championed by Christie, a 2016 Republican presidential candidate who promoted lottery outsourcing as a way to shrink the government’s payroll and bring in more cash. The lottery brought in $960 million in fiscal year 2015, down from initial expectations of a little more than $1 billion.

New Jersey Having Second Thoughts After Privatizing Lottery
Source: John Reitmeyer, NBC Philadelphia, October 8, 2015
Two years after New Jersey turned over some state lottery functions to a private venture under a controversial long-term deal, lawmakers are questioning why revenues have not met expectations and whether the privatization contract is worth it. The Senate Legislative Oversight Committee announced yesterday that it will hold a hearing on October 19 to review New Jersey’s deal with Northstar New Jersey to address concerns raised in recent weeks about fees Northstar is collecting even as it has failed to meet net-revenue targets. An Assembly committee is also scheduling a hearing on the deal. … Gordon, the Senate committee chairman, said the hearing on October 19 will also review the broader privatization issue, and whether the state is up to the task of monitoring such large contracts. He cited problems the state has had with private companies handling some of the recovery efforts in the wake of Superstorm Sandy in 2012 as another reason to broaden the scope of the hearing.

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