Reform Government Contracts and Restrict Privatization

In this Dispatch, we emphasize that any stimulus spending has to be tied to increased accountability and transparency in spending decisions, especially by government contractors who often operate like a shadow government with little oversight.  One key reality is that those most in need often don't receive help from government spending without transparency and accountability measures built into the rules.  While the recent federal recovery plan made real strides in expanding such accountability, additional measures are still needed if the recovery plan is going to deliver real equity in our economic recovery.

New York's Attorney General, Andrew Cuomo, is in the midst of a two-year investigation into kickbacks paid to state political staff in exchange for the opportunity to profitably manage the investments of New York State's public pension fund.  That investigation has now prompted a national effort with a multi-state task force and the Securities and Exchange Commission working together to uncover rampant pay-to-play abuses.  Nationally there is over $2 trillion in US public pension assets.

As this Dispatch will outline, Buy American policies are a first step in promoting an alternative to the trade and deregulation policies that fueled the current economic crisis.  Ultimately, we need policies that strengthen local tools for economic growth at home, combined with fair trade policies to raise wage standards abroad as well.   Also, as corporate interests increasingly use trade agreements to restrict state authority to protect worker, consumer and environmental interests, states are increasingly reviewing those trade agreements in order to restore states' ability to effectively respond to economic crises and protect the long-term interests of working families.

Given the central role of private contractors in delivering public services, this Dispatch continues our series of Privatization Updates (see November's edition). Today we focus on current privatization debates in the education, prison and mental health sectors -- and what states are doing to increase accountability for contractors.

The new American Recovery and Reinvestment Act contains significant funding for the states, but it also has tight new transparency rules requiring states to track how all federal funds are being spent and the number of jobs created.  These provisions aren't just ethically desirable, they are extremely practical fiscal measures for combating the recession and growing the economy.  Strict transparency can save states millions in unnecessary expenditures and increase the quality of work they receive from private contractors, while simultaneously ensuring that contractors create quality, decent-paying jobs to help turn the economy around.

The unfortunate reality is that most states are not collecting the necessary information to meet the standards required by the Recovery Act. This Dispatch is designed to summarize what states need to do.

With the federal government about to transfer hundreds of billions of dollars to the states, with many of those funds going to private contractors, a broad-based, bi-partisan coalition of organizations has come together in a Coalition for an Accountable Recovery.    The Coalition, which Progressive States Network participated in creating, is promoting reforms at both the federal and state level to assure transparency in how funds are used by federal and state contractors, the number of jobs created, and the quality of jobs created-- with the results posted online in easily searchable websites for the public.

In past Dispatches, we've highlighted the potential and actual taxpayer ripoffs hidden in the industry siren song of selling off public assets like highways.  States gets what looks like an attractive upfront payment, but lose in the long-term from lost toll revenue and lost democratic control of transit decisions.

The credit crisis has undermined the financial players who had been leading the charge on privatization, so they are looking for a bailout under the federal recovery plan.  As reported by Reuters, Morgan Stanley, Merrill Lynch and a number of other firms pushing "public-private partnerships" -- the industry's preferred euphemism for privatization -- wants part of the stimulus package to flow to them.  Their wish list includes federal rules to push privatization of airports and highways, along with a national infrastructure bank to subsidize loans for private sector deals.

As states face mounting deficits, corporate lobbyists have been promoting the idea that privatization of public services and assets is a free lunch -- services can be delivered more cheaply than by public employees and public assets like highways can be sold or leased for a hefty return to the taxpayer.  As PSN has detailed in our December 2007 report Privatizing in the Dark: The Pitfalls of Privatization & Why Budget Disclosure is Needed, the promises of privatization too often yield to a reality of lost money and degraded services, weak oversight and lost expertise, assets sold off for short-term gains but long-term loss, lost democratic accountability, and the corruption of the political process.

Instead of allowing the right-wing to scapegoat undocumented immigrant workers, Progressive States Network will be working with progressive leaders across the country to introduce wage enforcement laws that emphasize that native and immigrant workers both suffer under illegal working conditions. See State Immigration Project: Policy Options for 2009 for the full range of immigration policies Progressive States Network is supporting in upcoming legislative sessions.

Today, the Progressive States Network is releasing a new report: The Anti-Immigrant Movement that Failed: Positive Integration Policies by States Still Far Outweigh Punitive Policies Aimed at New Immigrants.   The Executive Summary is available online, as well as the full report in PDF and HTML format.