05/18/2006 Rush to Privatize Draws Condemnation

Thursday, May 18, 2006


IN: Rushed Social Services Privatization Condemned

In Indiana, critics are condemning a rushed $1 billion privatization of the states' social services work -- despite the fact that the companies bidding on the contract have mismanaged similar contracts in other states and, more tellingly, no one even bothered to determine whether the companies could do the job cheaper than current state employees:

Lisa Travis, advocacy and education coordinator for the Indiana Institute for Working Families [argues], "we are not aware of any other state doing so much, so fast, and there is no cost-benefits analysis that shows there will be a savings to taxpayers or improvements in services."

Making the deal stink even more? One of the main bidders on the contract, Affilated Computer Services (ACS), is the former employer of Indiana's Family and Social Services Administration Secretary E. Mitchell Roob Jr.

So you have a rushed privatization that may hand a $1 billion contract to the former boss of the agency handling the deal-- with no proof of any savings to the taxpayer.

These kinds of social services privatizations have been plagued with problems in other states. ACS lost part of a Georgia contract two years ago because of mismanagement of processing claims. In Texas, the other bidder for the Indiana deal, Accenture, received a similar $1 billion private contract with similar accusations of insider influence, only to see repeated delays. Kentucky has run into similar charges of corruption in its bidding system for private companies to manage its Medicaid system.

As participants at last week's Corruption in the Statehouses conference discussed last week, one solution to these kinds of corrupt and costly privatization deals are laws like that in Massachusetts which require that privatizations move forward only if studies demonstrate that private corporations can do the job more cheaply than existing government workers -- a commonsense check on corruption of the contracting process which multiple studies show has saves Massachusetts from the typical bilking other states have suffered from privatization. Other states put a range of other restrictions on contracting to hold corporate contractors accountable. See the fact sheet on contracting reform for more.

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NY: Protecting Domestic Workers From Abuse

The New York Times has an excellent story that encapsulates the American dream and a legislator helping fight to make it more achievable.

David Mejias' parents are immigrants. His parents' hard work paid off. He grew up to become an attorney and now serves on the Nassau County legislature.

That's the inspiring part -- the reminder that great beginnings are possible in this country.

But the article is also a story of the Mother's Day present that David recently gave his mother. When Elsa Mejias moved to the United States, she started her new life as a domestic worker -- a nanny for a Long Island family. Her new employers failed to pay her. Her second employers failed to pay her.

Her story is not unique. Indeed, it is a story that has been played out far too many times. David Mejias put a stop to it. He coordinated a unanimous effort to require that domestic workers be notified by their employers of their rights and protections as workers -- "the minimum wage, overtime regulations and Social Security."

Other counties are looking at similar legislation. It's ultimately a healthy reminder, though -- change starts at home.

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Feds Fail on Immigration...Again

The Bush Administration's latest move on immigration reform is yet another attempt likely to fail, at least in part because it ignored input from the people most impacted. Stateline reports that a number of Governors from both parties are upset both by the continued federal dependence on the Guard and by the lack of consultation from the White House before Bush proposed using National Guard forces as a stop-gap measure:

Gov. Bill Richardson (D) of New Mexico said he was concerned that the White House did not consult with governors in the weeks leading up to his Monday announcement. "A phone call three hours before delivering a speech is not the same as cooperation and consultation," Richardson said Monday in a statement.

Other Governors, including Arnold Schwarzenegger (R-CA), Kathleen Sebelius (D-KS), Jon Huntsman (R-UT), and Jon Corzine (D-NJ), voiced concern that with Guard troops already being relied upon heavily in Iraq that additional missions are the last thing they need to be thinking about -- especially when their own states might face natural disasters.

Bush's plan relies on voluntary assistance from states to send their Guard soldiers into the command of a different Governor. And it also relies on Governors in border states buying into the program.

Perhaps most ironically, Bush is pushing the measure to supplement the border patrol with Guardsmen only until more border patrol can be hired, trained, and deployed. The reason there are not more border patrol already trained and working is that Bush underfunded his own law and scrapped over 9,000 border patrol positions in the process.

As far as shutting down the border goes, Bush's plan is ill-conceived, hastily thrown together, and only partially addressing a shortfall he created.

Even worse, his plan fails to include proven, effective, and fair measures to reduce problems stemming from illegal immigration while protecting American workers. The best way to deal with the immigration issue is to undermine incentives that employers have to hire undocmented workers. In the current system, most states and the federal government will not enforce wage rules or safety regulations for undocumented workers, and workers risk deportation for raising concerns. Protecting all workers would increase worker pay, shut down sweatshops, and remove a major reason employers hire undocumented workers--so that they can exploit their illegal status.

The Los Angeles Times has already noted the worthiness of this approach as a way to deal with immigration. Isn't it time we gave it some fair consideration?

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Corporate Tax Dodges, Medical Malpractice Mythology, the Success of Clean Elections, and Local EITCs

Economic Development: In a boon to legislators and community leaders interested in local economic development, the book The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation, Good Jobs First's widely acclaimed 2005 book is now available in its entirety free on the web at If you want to know what kinds of corporate deals rip off the taxpayers and how to design policies that create good jobs, this is a great place to start.

Health Care: One of the mantras of rightwing "health reformers" is that frivolous medical malpractice claims are one of the main drivers of health care costs. But a new study in the New England Journal of Medicine that analyzed 1,452 actual malpractice claims found that two-thirds were clearly caused by medical error and most of the rest were dismissed or resolved with no payment to the patient. The study's lead researcher, David Studdert of the Harvard School of Public Health, said the findings contradicts claims that the system is riddled with frivolous claims that lead to huge jackpots for meritless claims.

Clean Elections: According to a new study by the Institute on Money in State Politics, the percentage of candidates taking part in Arizona's publicly funded election system continued to increase in the 2004 elections and clean elections has been closing the gap between fund raising by challengers and incumbents.

Tax Policy to Promote Work: The Brookings Institution has a new report on how San Francisco's Working Families Credit, a local supplement to the federal Earned Income Tax Credit, helps families and describes best practices for other jurisdictions considering similar programs.

IN: Rushed Social Services Privatization Condemned

AFSCME, Legislative Approaches to Responsible Contracting
Good Jobs First, Accountable Development
National Alliance for Fair Contracting
Progressive States Network, Ending "Pay to Play" on Government Contracts

NY: Protecting Domestic Workers From Abuse

CAAAV Organizing Asian Communities, Domestic Workers United
NY State Assembly, A02804 - Proposed Statewide Domestic Workers Bill of Rights

Feds Fail on Immigration...Again

Drum Major Institute, "Principles for an Immigration Policy to Strengthen and Expand the American Middle Class"
Immigration Policy Center, "Achieving Security and Prosperity: Migration and North American Economic Integration"
National Employment Law Project, Workplace Rights for Immigrant Workers
Los Angeles Times, "How L.A. Kept Out a Million Immigrants"



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Feds Fail on Immigration...Again



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Eye on the Right

In Wyoming, an unusual group of allies is working together to create a charter school -- liberal parents working with conservative foundations. While there are questions about such an alliance -- Progressive States Policy Director Nathan Newman cuts to the heart of the matter in an interview with the Jackson Hole Star-Tribune: If school choice creates such greater efficiency, why do charter schools always seem to need so much outside funding to be successful?

Beltway v. Reality

Do you make $40,000 a year or less? According to Speaker of the House Dennis Hastert, you don't pay taxes. A common conservative canard when discussing tax policy is to discuss "federal income taxes" and exclude payroll, gas, property, sales, state income, and all of the other taxes to create skewed stats. But now they've moved on to straight-up lies. And this one is a doozy. Not only would a $40,000-wage earner pay a number of federal and state taxes, in some states, income taxes apply to families under the poverty line. Of course, for Dennis Hastert, who gets to support his own pay increases and who hasn't earned anything close to $40,000 in years, it's pretty easy to lose touch. Watch the video of Speaker Hastert.


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Matt Singer
Editor, Stateside Dispatch