Friday, October 26, 2012

Prison Privatization Talks in New Hampshire Stalls

In an article written by Bob Sanders of the New Hampshire Business Review, it was revealed that New Hampshire has stalled all privatization talks of its prison system for the near future. The consultant evaluating the bids from four prospective companies, MGT of America, has asked for an extension to make their decision until after the gubernatorial elections take place in November.

Current Governor John Lynch feels that the matter will not be resolved before the end of the year. The two candidates running for State Governor to replace Lynch, Republican Ovide Lamontagne and Democrat Maggie Hassan, have both spoken out against privatization of their state's prison system. It is clear that the decision will remain in limbo until the gubernatorial race is over. However, it still remains unclear whether or not the next State Governor will allow privatization talks to continue or refuse the private contract altogether.

Tuesday, October 23, 2012

Why Privatization Won't Solve the Student Loan Problem

Mitchell D. Weiss, an adjunct professor of finance at the University of Hartford, recently posted an interesting article concerning America's growing student loan crisis. I encourage you to read the entire article while can be found here. Posted below is an excerpt from the article detailing some of Professor Weiss's concerns.
Also consider the National Consumer Law Center’s May 2012 report, which determined, “…The Department (of Education) has created financial incentives for its contractors that encourage high collections at the expense of borrower rights.” The government paid out more than $1 billion to its nearly two-dozen loan-servicing subcontractors in 2011, some of whom were responsible for originating many of these loans in the first place and, according to the Consumer Financial Protection Bureau’s 2012 Annual Report, culpable for the frustrating “runarounds” and “dead-ends” student loan borrowers are experiencing today.
Furthermore, 2005 changes to the bankruptcy law granted private lenders protections equal to those enjoyed by the federal government. Perhaps this explains why private education loan balances nearly tripled in value between 2005 and 2011, according to another CFPB report.
The conclusions are obvious: the government has done a poor job managing its loan servicing policies and practices, the private sector (including lenders and contractors) has reaped outsized rewards, and a generation of poorly prepared borrowers is stuck with a trillion dollars-worth of debts they may never be able to repay in full.

Tuesday, October 16, 2012

New Study of Romney's Medicare Plan

Ricardo Alonso-Zaldivar of the Associated Press recently published an article analyzing Mitt Romney's proposal to change Medicare to a "premium support" system.

In a new report issued by the nonpartisan Kaiser Family Foundation, it was determined that roughly six out of ten Medicare beneficiaries would pay higher premiums under Romney's privatized system. The study was modeled around Romney's proposal, but Kaiser acknowledged that it should not be taken as a full analysis  because Romney has not revealed all of the details of his plan yet.

There are some notable distinctions. While Romney's plan allows current recipients and those ten years from retirement the option to stay in the current system, the study by Kaiser analyzes a privatization plan that is already in place. The report also did not factor in Romney's promise of providing additional financial help to low-income seniors and those in poor health because Kaiser did not have enough details.

Here are some specific findings from the study:
"Overall, the study found that 59 percent of all Medicare recipients would face higher premiums if they stick with their current coverage, including about half of those in the traditional program.
In five states — California, Connecticut, Florida, New Jersey and Nevada — more than 45 percent of beneficiaries would pay at least $100 a month more in premiums."
This study admittedly does not cover every nuance of Romney's plan, but it does provide a nonpartisan view of the potential results of Romney's Medicare plan.

Thursday, October 11, 2012

Obama's FOIA Transparency Raises Questions

An article published by Geoffrey Ingersoll from the Business Insider investigates President Obama's "new era of transperency" regarding the Freedom of Information Act (FOIA). Recently, roughly 200 private companies were awarded over 250 FOIA contracts from 25 governmental agencies

Danielle Ivory of Bloomberg was unable to get in contact with eleven out of twelve companies. Furthermore, Ivory reports that since President Obama took office in 2009, spending on FOIA-related contracts has risen by 40 percent.

Ingersoll cites another Bloomberg report which graded Obama with an F in transparency, finding 19 of 20 departments in violation of law. One private company reviewing FOIA-related cases has received scrutiny because it is currently involved in a pending case. Kade Ellis, ACLU rights activist, expresses her concerns.
"There could be very serious conflicts of interest involved when private companies are tasked with managing the processes whereby sensitive (and likely embarrassing or damning) government secrets are disclosed to the public. Case in point is CACI International, a military and intelligence contractor that is facing a lawsuit alleging its employees participated in the torture of detainees at Abu Ghraib prison in Iraq. CACI is one of the companies the federal government has outsourced FOIA work to over the past ten years."

Wednesday, October 10, 2012

Privatization Response Essay at Cato Unbound

An interesting discussion is underway over at the Cato Unbound website regarding privatization and outsourcing - check out my contribution here.

Privatized Security at Nuclear Facility Is Deficient

A fascinating article on the Bulletin of Atomic Scientists website describes the gross deficiency of security at nuclear facilities as a result of government outsourcing (privatizing the security). An attack occurred on July 28 by three activists at the Y-12 National Security Complex, where the government stores  300-400 metric tons of bomb-grade uranium.  The activists had little trouble penetrating the perimeter of the facility, and soon were hammering on the walls with tools, hanging up protest banners, splashing around fake blood, and painting graffiti on the building.  Fortunately, this group's intentions were fairly peaceful; it is disturbing to think that more sinister intruders could so easily get into a facility with tons of weapons-grade nuclear material.   

This is highly recommended reading - here is an excerpt focused on the private companies' role:
Still, Energy Secretary Steven Chu has said, "The department has no tolerance for security breaches at any of our sites, and I am committed to ensure that those responsible will be held accountable." Those responsible are the security contractors -- Babcock & Wilcox Technical Services Y-12 and Wackenhut Services, Inc. in Oak Ridge -- who knowingly allowed the security at Y-12 to fall far below acceptable levels. Yet it took over two months for either company to be held accountable in any discernable way. On September 28, Babcock & Wilcox announced its plans to terminate its contract with Wackenhut Services. The NNSA issued a "show cause letter" to Babcock & Wilcox Technical Services Y-12 PDF, but has granted them an additional 30 days to demonstrate why they shouldn't also be fired. These are good first steps, but the contractors are not the only parties responsible. Of course, someone else is equally at fault: Secretary Chu himself. 
Chu has developed a federal hands-off-the-contractor culture at the Energy Department. This mentality was first demonstrated by Deputy Secretary Daniel Poneman in a memo that put forth a safety and security plan for the Energy Department PDF: "Contractors are provided the flexibility to tailor and implement security programs in light of their situation and to develop corresponding risk-and performance-based protection strategies without excessive Federal oversight or overly-prescriptive Departmental requirements." 
The obvious problems that result from so much contractor freedom are made clear by the recent inspector general report, which determined that this lack of federal oversight at least partially contributed to the success of the break-in PDF: "When questioned as to why action was not taken to address growing maintenance backlogs, Federal officials told us that with the advent of NNSA's contractor governance system (Contractor Assurance System), they could no longer intervene." In light of these findings, the inspector general had serious questions about the Energy Department's overall approach and determined that "current initiatives to reduce Federal oversight of the nuclear weapons complex, especially as they relate to security functions, need to be carefully considered."

- Dru Stevenson

Friday, October 5, 2012

Follow Up to GEO Care's Bid for State Hospital

This is a follow up to an article I posted on this blog in early September. GEO Care, a private company, was the sole bidder seeking control of a psychiatric hospital in Kerrville, Texas.

Eva Hershaw recently posted an article on updating the progress of GEO's bid. On Wednesday, the Texas Department of State Health Services (TDSHS) rejected GEO Care's bid, primarily due to concerns over GEO Care's plan to cut operating costs.

The TDSHS determined GEO Care would not be the most beneficial solution for the long term of the state hospital. Additionally, the TDSHS worried GEO's proposal would leave the hospital in violation of federal staffing laws. GEO Care's bid sought to reduce "overall staffing from 542 to 428— a 21 percent reduction—and decreasing psychiatric nursing assistants 29 percent, from 167 to 118." If the bid was accepted, the hospital would have an inadequate patent to staff ratio, in direct violation of a 1997 class-action suit against the Texas Department of Mental Health and Mental Retardation.

Many advocacy groups, such as the ACLU of Texas and the Center for Public Policy Priorities, applauded this decision. Bob Lidal, executive director of the Grassrooots Leadership advocacy group, expressed his satisfaction with decision: "This is a testament to the role that advocacy can play in shaping decisions. The reason the proposal was rejected is telling of the problems with privatization—you make your money by cutting staff and paying them less while the care of your patients suffers.”

Tuesday, October 2, 2012

Pro Business Coalition Ranks Votes of Congress

In an article from the Federal Times, author Sarah Chocko discusses a recent report conducted by a coalition of businesses in favor of privatization. The entire report can be found here. Ms. Chocko described how the report was conducted: "The coalition’s report lists how each member of the U.S. House and Senate voted on legislation, amendments and procedural actions — 10 in each house — that would have allowed private companies to compete with government workers or impeded companies’ competition for federal contracts." As one would expect, most Republican leaders voted in line with the coalition favoring more privatization, while most Democratic leaders voted against expanding privatization.