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Home :  Federal Budget & Tax : 
Federal Budget & Tax:      News     Blog     Background    



Friday, September 28, 2007

Webb-McCaskill Contracting Commission Passes!

Good news- the Webb-McCaskill Wartime Contracting Commission amendment passed the Senate last night, too! Here's the press release. It got unanimous approval.

However, according to the Richmond Times-Dispatch, the amendment was water down to get approval. Most importantly, the commission wouldn't have subpoena power under this draft.

Now it's on to the House. Rep. John Tierney (D-MA) has introduced a bill that set up a commission, too.



Posted by Matt Lewis, 12:02:34 PM



Thursday, September 27, 2007

College Loan Bill Enacted

The President has signed the College Cost Reduction and Access Act of 2007 (summary)!

The act gradually raises the maximum Pell Grant, which helps low-income students pay for college, to $5,400 by 2012, from $4,050 in 2006. And it cuts interest rates in half for subsidized college loans over the next five years. The nearly $20 billion in new funding is all paid for without tax increases, because the bill cracks down on excessive subsidies to the student loan industry.



Posted by Matt Lewis, 05:21:46 PM



Privatization: Is It All About Accountability?

Prof. Ellen Danin has an interesting paper arguing that much of the debate about privatization is really about accountability, in one form or another. Here's the abstract:

The popular view is that the debate on privatization is about cost and efficiency. This was true at one time when most of the discussion involved battling theories concerning markets versus social and economic justice issues. At the extreme, those who advocated privatization argued that markets and competition could always be relied upon to provide the highest quality services at the lowest cost. They preferred letting individuals decide how best to meet their own needs, rather than ceding that role to politicians or bureaucrats. Unions and those concerned with economic and social justice issues often took a "just say no" approach to contracting out.

Today, it is easier to see that arguments for or against privatization are actually about accountability. This is not to say that markets, cost, efficiency, individual liberty, and social and economic justice are issues absent from today's discussions; rather, it means that they are most often ways of talking about accountability. Those who prefer markets argue that markets best provide meaningful accountability. Those concerned about social and economic justice believe that those values are better protected by public rather than private methods of accountability. That this was the case has been somewhat obscured by the fact that the battleground over privatization has most often been on turf defined by the language, thoughts, and values of economics.

If this insight is correct, the central issue for privatization is accountability. That is, issues of accountability may subsume all arguments about the merits and wisdom of privatization. What, then, are the accountability arguments made by proponents and opponents of privatization? What do private and public sector methods for ensuring accountability tell us about the allocation of providing services? Does public accountability have a deeper function than merely ensuring that value for money is received? If public provision and public accountability are part of the fabric of a participatory democracy, what then is the impact of removing those functions from public provision?

In the paper, Danin also challenges the assumption that markets provide sufficient pressure to hold contractors accountable. Privatization promoters often argue that the market is essentially a cost-free way of making service providers perform efficiently, while governmental "red tape" is a costly way of doing the same thing to government workers. There's a trade-off between accountability and efficiency for government workers, but not for private sector workers.

But without proper contract management and administration, Danin shows that contractors have been found to perform inefficiently. So if "red tape" is necessary to hold contractors accountable for cost containment, perhaps the trade-off isn't quite so large, or in some cases, non-existant. The cost-savings to privatization cannot be taken for granted.

And quick tangent: it looks like Josh Marshall of Talking Points Memo is getting into cost issues vis-a-vis military contractors. Awesome!



Posted by Matt Lewis, 04:18:53 PM



Wednesday, September 26, 2007

Contracting Commission Bill On The Floor!

The Senate is now debating the wartime contracing commission bill as an amendment to the defense authorization act. Check out C-SPAN now (it's 1:45) and call your Senators!

Posted by Matt Lewis, 01:49:04 PM



Friday, September 21, 2007

Magic of the Market, Private Prisons Edition

A recent study by University of Utah professors found no clear advantage to privatizing prisons, in terms of either cost or benefits. The Desert Morning News has the story (via the AFSCME privatization blog):

Privatizing Utah's prison system would have no clear cost advantages, according to an independent study that was presented to lawmakers on Wednesday.

The study by the University of Utah's School of Social Work and Criminal Justice Center compared existing studies conducted in other states that have both private and public prisons and found "no clear empirical advantage or disadvantage to privatize."

Study co-author Brad Lundahl told members of the Law Enforcement and Criminal Justice Interim Committee that the majority of private prison facilities are medium- to minimum-security facilities. Arguments for privatization, he said, would be reducing costs while maintaining quality of service. Arguments against the issue would be ethical concerns and risks that security would be compromised.



Posted by Matt Lewis, 10:32:46 AM



Thursday, September 20, 2007

OMB Watch Supports Wartime Contracting Commission

The Senate is now debating and amending the Defense Department authorization act. Sens. Jim Webb (D-VA) and Claire McCaskill (D-MO), along with all the other Democratic freshman Senators, are pushing an amendment that would set up a commission to investigate wartime contracting.

In light of the Blackwater scandal, we need a comprehensive review of military contracting. The public deserves answers for why so many contracts have gone wrong. We need to know whether contractors work efficiently, and if the military holds contractors to appropriate standards. We hope this commission would set in motion reforms of the contracting system, in the military and in general.

See our letter of support for more information. Also see the Project on Government Oversight's letter.



Posted by Matt Lewis, 05:31:46 PM



FedSpending.org Adds New Data, Features

FedSpending.org has launched a new version today, with updated data from parts of FY 2006 and FY 2007, new features and search functionality, greater accessibility for people with disabilities, and a few bug fixes in the site. The site now contains contracting data through the second quarter of FY 2007 and federal assistance data through the first three quarters of FY 2006.

In addition, users now have the ability to narrow contracting searches by using contractor characteristics, such as "minority owned business," or "8A firms," just to name a few. This function is called "Contractor Type" and can be found in all the advanced searches on the contracts side of the database.

Read the OMB Watch press release, or check out the site for more information on the new version.



Posted by Adam Hughes, 01:37:14 PM



Tuesday, September 18, 2007

Take the BudgetBlog Reader Survey

We here at the BudgetBlog would like to know what you think of our blog. Please take a moment to fill this short reader survey and give us your thoughts.



Posted by Craig Jennings, 12:40:45 PM



Monday, September 17, 2007

Student Loans Get The Kinsley Treatment

Michael Kinsley has a great article on the student loan "industry"- another example of privatization that costs more money than when the government does it itself (other examples include Medicare Advantage and the IRS private debt collection program). Behold the power of private enterprise and all its efficiency.

If you know anything at all about the federal student loan program, you will not have been surprised by the scandal of recent months. The only amazing thing is that it has taken so long to arrive. Here's how the program works: Banks and other private companies lend money to students. The federal government pays part or all of the interest -- currently 7% or 8%. The government also guarantees the loans.

What is wrong with this picture? Well, the government itself borrows the odd nickel to finance the national debt. This borrowing, obviously, is also guaranteed by the government. For that reason, it carries an interest rate of only 3% or 4% If the government can borrow money at 3% or 4%, why should it be paying 7% or 8% for the privilege of guaranteeing loans to someone else? Wouldn't it make more sense for the government to loan out the money itself?

Incidentally, your Congress is now hard at work trying to reform this program, as well as Medicare Advantage and the IRS private debt collection program. You can give them a call toll-free (1-866-544-7573) to make sure they finish up this important work.

Update: To be clear, that phone number is intended for calls related to SCHIP expansion and Medicare Advantage reform.



Posted by Matt Lewis, 09:58:36 AM



Thursday, September 06, 2007

College Access Bill To Be Enacted

CongressDaily (subscription required) reports that the President will sign the Higher Education Access Act of 2007- a revenue-neutral bill that will give more help to students to pay for college.

The package, which was agreed upon by a conference committee Wednesday and is expected to clear both houses by end of the week, calls for increasing the maximum Pell Grant award from the current $4,300 to $5,400 over five years and reducing interest rates from the existing 6.8 percent to 3.4 percent. In other loan relief measures, the bill would cap repayments to 15 percent of disposable income and provide loan forgiveness after 10 years to military personnel and a range of other public service occupations such as prosecutors, public defenders, nurses and librarians.

The measure passed 78-18 in the Senate and 273-149 in the House. President Bush had said he opposed it, but did not issue a veto threat.



Posted by Matt Lewis, 04:04:48 PM



Another Strike Against IRS Private Debt Collection

Does anyone really like the IRS' private debt collection program except the folks who are making money off of it? Apparently not. Yesterday, the Taxpayer Advocacy Panel, an independent federal advisory panel made up of taxpayers from every state, released recommendations that the IRS "abandon all plans to outsource any taxpayer debts and restrict collection activities to properly trained and proficient IRS personnel." It's pretty clear where they stand on the program.

The Taxpayer Advocacy Panel also stressed other concerns about the program, particularly that private collection agency staff had different values and attitudes in approaching debt collection, which hurt customer satisfaction and service:

The collection agency staff did not share the same values and partnership attitudes that were practiced by the employees of the selling organization. Over time, the function of managing the contractor's collection activities became more time consuming than handling the function internally.

Add yet another group to those fighting against this program. Let's hope its days are numbered.



Posted by Adam Hughes, 10:41:40 AM




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