Horror Stories of Failed Outsourcing Public Interests to Private Corporations, Attacking Pensions, and the Graying of America

Here is a fascinating, long document, reporting research on multiple failed outsourcing exercises of public services over past couple decades to private industry. Out of Control: The Coast-to-Coast Failures of Outsourcing Public Services to For-Profit Corporations. The study is published on the web site of In the Public Interest. A Comprehensive Resource Center on Privatization and Responsible Contracting.

It is not pleasant reading. Many are true horror stories, all illustrating how greed and corruption have triumphed again and again, and the costs of outsourcing services has ended up pretty much robbing the citizens and taxpayers blind, while lining the pockets of the private corporations and CEOs running them with plenty of ill-gotten gains.

Our very own Indiana toll road gets an honorable mention, along with the mess that outsourcing to IBM cost the state.

It is often very difficult for taxpayers to get out of contracts , even if the company fails to deliver. In 2006, Indiana signed a 10 year, $1.6 billion contract with IBM to manage its food stamp and Medicaid eligibility screening. Thousands of low-income Hoosiers were erroneously dumped from the system, including an Evansville resident, who died of heart ailments in October 2009 more than a year after he was denied Medicaid
benefits. His wife testified to the Indiana Legislature that he was denied assistance after repeatedly mailing in information requested by IBM.
According to the Los Angeles Times , an 80 year old woman from Terre Haute was dropped from her Medicaid payment “without warning” when a hospitalization for congestive heart failure prevented her from calling an eligibility hotline. And a nun suffering from cancer was denied benefits, including food stamps, because a hospitalization forced her to miss a recertification interview. She tried in vain to reschedule the interview six times.

In 2009, Indiana tried to end its relationship with IBM after numerous reports of lost paperwork, long delays and wrongly denied benefits. But the matter remains in court today, costing taxpayers millions in legal fees, increased personnel costs associated with fixing contractor mistakes, and unrecovered
payments from IBM.

According to Marion County Superior Court Judge David Drier, “This story represents a ‘perfect storm’ of misguided government policy and overzealous corporate ambition. Overall, both parties are to blame, and Indiana’s taxpayers are left as apparent losers

In 2006, Indiana leased its toll road to a conglomeration of companies, including transportation infrastructure giant Macquarie and Spain-based Cintra. In 2008, Gov. Mitch Daniels declared an emergency during a massive flood and waived tolls for motorists escaping the affected areas. Because the contract contained a compensation clause, state taxpayers were required to pay the privatized toll road operator $447,000 for the cost of those waived tolls.

The company prioritized profit over safety again when it did not allow Indiana state troopers to close the toll road during a snowstorm, claiming it was a private road.

The Chicago story alone is enough to make one puke.

In 2009, Chicago signed a 75-year contract with a consortium of companies backed by Wall Street giant Morgan Stanley for the operation of the city’s 36,000 parking meters. It has since become Exhibit A for reckless outsourcing schemes in America. Though Chicago got $1.2 billion in the deal, Chicago
drivers will pay the private companies at least $11.6 billion to park at meters over the life of the contract. However, the broader economic and social impacts of the contract will haunt the city for generations. Upon signing the contract, the company dramatically increased parking rates, to $7 for two hours of parking in some parts of the city, and extended paid parking to seven days a week. Downtown businesses blamed the price increases for a decrease in economic activity. Residents complained that parking downtown was cost prohibitive.

The contract was written so broadly that taxpayers will be penalized whenever “any action…is reasonably expected…[to have] a material adverse effect on the fair market value of the Concessionaire Interest (whether as a result of decreased revenues, increased expenses or both).” As a result taxpayers must reimburse the company whenever the city needs to temporarily close its streets, even for community parades and street fairs. Even more outrageous, the city is restricted from making improvements to streets that contain parking meters, such as adding bicycle lanes, sidewalk expansion, streetscaping, loading zones, or rush hour parking for the length of the contract because these projects might “compete” with the parking meters, and decrease revenues for the company. These restrictions severely limit the future city’s ability to accommodate residents, including icyclists, pedestrians, and transit users.

I often meditate on how lucky I was to have a job I was able to do well in and hang on to till retirement. I read an article over the weekend about the latest trend in American enterprise. Fire everyone over 50, and refuse to give them another decent job at equitable pay levels for their skills and experience. It’s all the latest rage. 50 Is the New 65: Older Americans Are Getting Booted from Their Jobs — and Denied New Opportunities

In every corner of America, millions of people are terrified of losing their jobs and falling into financial ruin. Men and women with impressive professional achievements and credentials are being let go, nudged out and pushed aside. They are pounding the pavement and scouring the job sites, but find themselves turned away even for the most basic retail jobs. Not because they aren’t competent. Not because they lack skills. But simply because they have a gray hair or two.

This is not just a story of people in their 60s or 70s. Workers as young as 50 are shocked to find themselves suddenly tossed onto the employment rubbish heap, just when they felt on top of their game. They’re feeling stressed, angry and betrayed by a society which has benefited greatly from their contributions.

As the global population grows older, age discrimination is on the rise. It could be headed for you, much sooner than you think.

New research shows that age discrimination may be even more common than we thought and more prevalent than other forms of bias, like ethnic discrimination. According to a study published in the Journal of Age and Ageing, one third of British people in their 50s and above reported age discrimination, a figure that surprised researchers. From poorer service in restaurants to ill treatment in hospitals to outright harassment, people found themselves increasingly disrespected as they aged.

Lead researcher Isla Rippon of University College London told Reuters that such day-to-day experiences impact physical and mental health: “Frequent perceived discrimination may be a chronic source of stress and build up over time, leading to social withdrawal and reluctance to go to the doctor.”

When it comes to financial stress, older Americans say that job insecurity is their number-one concern, according to a recent survey. Many people over 50 find themselves hanging on to their jobs for dear life, aware that they are perceived as obsolete and not as valuable as younger workers, despite their vast experience and institutional knowledge. According to a 2013 AARP survey report, “more than one-third of older workers are not confident that they would find another job right away without having to take a pay cut or move (37%). Of those, about one in five (19%) say the reason they are not confident is due to age discrimination and 21 percent identify age limitations, such as feeling they are ‘too old’ or limited in some way because of their age.”

Of course one of the most blatant efforts of the attacks on public entities right now is the attack by conservatives in Congress on the United States Post Office. The Constitution, of course, declares point blank in black and white the the government is supposed to create and provide for the post office. Of course the Constitution for the right wing and many on the left means what they want it to mean, when they want it to mean it.

The bottom line is Congress passed an absurd law requiring the Post Office to FULLY FUND its pension plan till nearly the end of this century. Which of course is not only ridiculous, and not how any rational pension plan has ever been funded. The whole point of the law was to make it impossible for the Post Office to balance its books, so the GOP could point at it as a failure, and OUTSOURCE the Post Office to some private corporation.

Given the horror stories in the document I referenced at the beginning of this post, I suggest the authors hold that thought, because there are obviously more horror stories to come.

Combine the attacks that are destroying pension plans with the graying of not just America and the world, and all the efforts to gut and steal from pension plans workers have paid into for past half century, and the picture is looking bleak for most people entering old age.

I opened a can of soufflé style cat food for the boys, Bucky and Spenser, this morning, and observed it actually looked good enough to eat.

I think I will go now and ask The Google if it is safe for humans to eat cat food. Just in case. I am sure it will be there somewhere next to stories about Simpson and Bowles.


Author: Ron