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The price of privatization

by John Young

Back when Ronald Reagan could get taxpayers frothy over tales of "welfare Cadillacs," the real scandal they didn't hear about until too late was corporate welfare.

In the go-go '80s, exorbitant tax breaks made some developers very wealthy and caused a glut in commercial real estate. That led to the stunning collapse of savings and loans, costing Americans hundreds of billions of dollars.

Today, a similar mind-set prevails about stealing. Private contractors and off-shore corporations make a killing without penalty, but the pauper who takes an apple will forfeit a hand.

In Texas, lawmakers went to great lengths this session to make sure working-poor families don't con Texas by exceeding income limits for the doctors' visits and flu shots made possible by the Children's Health Insurance Program. Fire up your ire, boys.

Where was the umbrage four years ago when, with thousands of children being dropped from CHIP, auditors found that the state had overpaid a vendor $20 million for administering the program?

But, you see, that's just the cost of privatizing government.

Four years ago, with a newly enthroned Republican majority in Austin, Texas was engaged in a veritable lollapalooza of privatizing social services. A privatalooza. And guess who the "loozas" turned out to be: certainly not the contractors. They raked in millions. The losers were the people who needed the social services.

The biggest boondoggle was Bermuda-based Accenture's $899 million contract to remake how the state determines eligibility for state services. It promised $646 million in savings by replacing experienced workers with a big computer system and a skeleton crew. Who could say no?

After horrific foul-ups and delays in serving the needy, the state told hundreds of pink-slipped state workers not to leave. It dropped Accenture instead. Net savings to taxpayers: none.

A similar "return" on Texans' investment has come from an ambitious system to identify food-stamp recipients using their fingerprints.

At $2.5 million a year (about half footed by the federal government), the Texas fingerprinting program must really prevent a lot of welfare fraud.

But the Center for Public Policy Priorities in Austin estimates that Texas' finger-imaging project resulted in less than $150,000 in fraud caught in a six-year analysis period. The same amount could have been saved, said analyst Celia Hagert, by checking Social Security numbers.

But you see, treating welfare moms as potential felons is so alluring. And lobbyists for contractors are always so convincing, and sometimes generous with campaign contributions.

Texans for Public Justice just released a report on all the hay made by corporations in bidding for and winning contracts to do things the government used to do.

In the case of finger imaging, to win a state contract, French firm Sagem Morpho spent from $520,000 to $1.1 million on 24 lobbying contracts. Last year, another firm won the contract. You might say Texans haven't gotten their money's worth. But the contractors certainly have.

When told that private enterprise can do something more efficiently and effectively than government, check the warning label.

— John Young
Waco Tribune-Herald
2007-07-29


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