07.18.07
TPJ Investigative Report On “Privatization Boondoggles”
In their continuing series called Watch Your Assets, “…investigating abuses and misuses of public assets for private gain”, they don’t let us down. In the latest edition, Peddling Welfare-Privatization Boondoggles, they do an excellent job of spotlighting just what a scam that these privatization schemes have been. Notice as well that these scams are always run on the poor and needy, those who cannot afford to or are unable to defend themselves.
They start out by telling us a story about Grandma who, at one time, thought privatization schemes were the best thing since sliced bread:
A top privatization cheerleader, former Comptroller Carole Keeton Strayhorn, pledged in stump speeches to privatize most any government function that could be performed by businesses listed in the phone book. This “Yellow-Pages test†made for a crowd-pleasing conservative pitch. Yet the real world has stubbornly resisted the notion that the private sector can do just about anything cheaper, better and faster than government. After climbing the Yellow Pages to the comptroller’s office, Strayhorn soon found herself issuing audit reports excoriating state agencies and their phone-book contractors for squandering mountains of taxpayer funds. The frenzied pace of state privatization scandals in recent years have kept the media, public and lawmakers playing catch up
It’s tough to know what she really believed with all the party-switching she did over the years. Generally whatever was best for her political aspirations is how it seemed. But the TPJ does a damn good job of showing what the problems have been with privatization schemes form the beginning. (As you read this keep the TTC in mind).
Thanks in large part to the wonders of the revolving door, the lines between state officials, lobbyists and state contractors often are illusory. Too often architects of Texas’ social service privatization schemes appear to have ensured that privatization would fill their own pockets and those of their past or future employers. Meanwhile they have failed to adopt adequate safeguards to protect the interests of taxpayers and recipients of health care and food assistance. The central failing of Texas’ social service privatization experiments is that they have sought to privatize too many social services too fast with too little oversight of private contractors. The result is that many aid recipients have been hurt and taxpayers have been fleeced.
Another striking characteristic of Texas’ social service privatization disasters is that nobody takes responsibility for them. The buck stops nowhere. As custodians of the public purse, the ultimate responsibility for these boondoggles belongs to the many state officials who approved them and failed to supervise them effectively. The contractor companies that have so little to show for hundreds of millions of tax dollars also richly deserve major responsibility. Finally, an oft-overlooked culprit is the army of lobbyists who sold these privatization schemes.
This study looks at four state programs to privatize human services. In 1996 Texas awarded a contract to develop a fingerprinting system that would prevent Texans from fraudulently helping themselves to duplicate social service benefits. In another scheme two years later Texas launched a pilot project to use private HMO contractors to oversee certain health care services for Medicaid recipients. Texas then launched the mother of all welfare-privatization plans in 2001, paying a contractor to design the Texas Integrated Eligibility Redesign System (TIERS). This massive system was supposed to streamline the state’s handling of enrollment and benefits for a slew of social service programs. HHSC in 2004 also outsourced its own employee administration functions to a private contractor. State officials, contractors and lobbyists sold all four of these privatization projects as ways to deliver welfare services more efficiently and to save mountains of public funds. Taken together, they have done just the opposite. They have burned through hundreds of millions of tax dollars with little to show except for the enrichment of contractors and lobbyists.
Over the past decade, 13 contractors for these four privatization projects have paid 102 Texas lobbyists up to $11.3 million. Yet the top 41 social service privatization lobbyists accounted for 70 percent of these lobby contracts and 87 percent of the resulting revenue. Many of these top lobbyists are discussed below. These hefty lobby expenditures were a relatively modest price to pay to land $2.1 billion in state contracts. Even the House Appropriations chair recently acknowledged that the special-interest lobby writes much—if not most—of Texas’ laws. This report identifies some of the highest paid peddlers of social service privatization schemes run amok. Next time these individuals come peddling ways to save the state money, the state might save much more by exercising a bit of skepticism.
Boondoggles, schemes, scams, call them what you will, it doesn’t matter. What’s clear through all of this is that it’s a racket by corporations and lobbyists to scam taxpayers of their money using the politicians they fund as a conduit. That’s just a few excerpts, go here to read the whole thing.