I should have seen it.
The Washington Post recently reported on what should have been obvious to those of us who have studied the Right’s constant efforts to privatize governmental functions: Elon Musk’s mass government cuts will make private companies millions. While Trump and Musk are framing the immense and indiscriminate cuts to federal governance as removal of “waste,” they are really likely to provide what the article calls “a boon to private companies – including Musk’s own businesses – that the government increasingly relies on for many of its key initiatives.”
Much of my academic life was devoted research on contracting-out, a/k/a privatization–the decision to provide government services through private contractors rather than government employees.
My skepticism began with obvious misuse of the term. Actual privatization would mean selling off government operations and allowing them to sink or swim in the marketplace (a la Margaret Thatcher). Americans, however, use the term to mean something else entirely: government “contracting out” with private companies to supply goods and services being financed with tax dollars.
There are certainly times where contracting makes sense, but government hasn’t been a very good judge of when those are. Contracts with units of government are qualitatively different from contracts between private actors, and those differences make it far more likely that the contracts ultimately negotiated will be unfavorable to the taxpayers who are funding them–and that’s even without the predictable “crony capitalism” that rewards campaign donors and favored billionaire sycophants with lucrative contracts at taxpayer expense.
As Musk has proceeded to lay waste to the federal bureaucracy, many objectors have noted that despite population growth, the federal workforce has been flat for decades. There’s a reason: a few years ago, I came across data showing that the federal government was actually paying the salaries of some 17 million full-time contract workers who weren’t technically government employees.
Criticisms of government operations ignore the reality that programs are often stymied by a lack of skilled in-house personnel. That includes–among other things– the government’s inept handling of refugees and the (mis)management of Medicare and Medicaid ($103.6 billion in improper payments in 2019 alone).
Too few critics recognize that passing a law to do X or Y is only a start; the unit of government charged with administering the law or program needs sufficient resources to do so. Those resources include adequate numbers of well-trained employees and skilled supervision– virtually impossible when contractors are providing the bulk of the services.
Back in 2021, I posted about an example from 2004, when George W. Bush turned the job of collecting the hundreds of billions of dollars that tax scofflaws owed Uncle Sam over to private collectors–parroting the GOP insistence that private business would do a better job than federal workers. Most of what the private firms brought in was from easy-to-collect cases that began running out after just a few months. When the IRS brought the work back in-house, agents collected some two-thirds more money in that same few months, and it came from the harder cases the private companies had avoided. Relying on private tax collectors actually ended up costing the federal government money.
I should note that Republicans’ subsequent actions suggested that “efficiency” hadn’t really been the goal. They slashed 20 percent of the IRS’s budget and 22 percent of its staff. For people making more than $1 million, the number of tax audits dropped by 72 percent—and the money the IRS collected from audits fell by 40 percent.
The Guardian report noted that private firms are salivating as Musk decimates the federal bureaucracy.
Musk’s plans have already excited Silicon Valley mainstays such as Palantir, whose executives praised Doge on an earnings call last week and talked about how the disruption by the billionaire’s strike squad was good for the company. Palantir already has won hundreds of millions of dollars in US military contracts in recent years for AI-related projects.
Musk himself has extensive contracts worth billions of dollars through companies like SpaceX that are set to expand under the new administration.
There are certainly situations in which contracting out makes sense–but we are already relying on private contractors beyond the point of reason. We have contractors who do more or less the same work as civil servants, sitting in the same offices, for years on end, and typically at far higher cost. We have contractors who oversee contractors, contractors who write policy for government officials, and Trump is firing federal contract managers who are already too few in number and too outgunned in skills to manage it all.
The GOP’s persistent attacks on civil servants costs taxpayers and enriches privateers. The Trump/Musk goal is more of the grift.
Indiana’s “privatization” is something of which most people are ignorant. Many don’t know that the State can take a child away fr parents. In IN, first the juvenile court has to find a Child in Need of Services (“ChINS”). Second, after a child has been out of parent’s custody for a specific time, Department of Child Services (“DCS”) must seek to terminate parental rights. (“TPR”). A case is overseen by a Family Case Manager (“FCM”). In case you missed it, DCS is extraordinarily understaffed. In the ChINS, the court (usually) will order the parent to complete services that are meant to address the reasons for the child’s removal. The reasons for removal of the child are listed in the DCS petition and statute. The reasons tend to involve parental behaviors such as substance abuse and physical abuse. In nearly every case the parents are poor. When privatization caught on, a DCS therapist realized the financial benefits of entering the private sector. The more services ordered, the merrier. Overworked FCMs saw the benefits of employment with private agencies at significantly higher pay to handle significantly fewer case files, for a lot fatter paycheck. There are really good judges out there who take these cases seriously. There are DCS lawyers who are very good. There are very good lawyers who are appointed to represent the parent. Unfortunately, there also are people who handle these cases who are not very good, or who view these cases as a pain in the ass. (I tried to explain to the head of a county PD agency, who referred to that agency’s budget in first-person singular possessive & who saw TPR cases as an imposition on the agency’s criminal focus, that these parents have a right to counsel. That’s a hill to overtake at a later time.) In outlying counties, a parent might be referred to several service providers in different places. Did I mention these people are poor? It is not uncommon for a parent to lack a vehicle and a job. Options for transport include the FCM, viewed by a lot of parents as a part of the move to take the child, driving them where ever. The private agencies proliferate & former DCS co-workers populate the private agencies. The system was not perfect, but privatization has made it worse.
I just posted on Facebook’s “What’s on your mind?” line that Donald Trump and Elon Musk have no right and no need for our personal and private information to fire federal employees in Social Security and IRS. They cannot fire private citizens. The federal courts should not be working so slowly to stop this presidentially sanctioned HACKING.
What exactly does Trump’s Supreme Court immunity cover? Will he actually shoot someone on 5th Avenue to prove he can get away with it; committing murder is one of the very few crimes he hasn’t committed…that we know of. Of course he could privatize or contract-out the act. Too bad he cannot be charged for those mass shootings which were traced back to the shooters support of Trump, MAGA and White Nationalism.
Why would Musk and his mini army of tech teens need all that IRS information on private citizens? To monetize it perhaps? Create an online company to sell it? Just as the mining of personal information has become big business for Google, Facebook, and Tic Tock, information that is sold to corporations, political parties and foreign governments, so will all that personal information about your financial status become a commodity. Perhaps it will be sold to the public online just like tennis shoes and bibles. “You too can get the goods on your boss, your ex, or your neighbor. For the low price of $59.95 you can own them, just like the Trump Administration owned the libs.”
If you think this is far-fetched keep asking yourself “Why would a bunch of crooks do this?”
Oligarchy is like a cancer in that it spreads from a single cell, one of the 30 trillion cells that make up each human adult. Our cancer of the collective started when we were still a British colony because most European countries from which we migrated here believed in oligarchs. They were left over from the Aristocracy, which came from Kings conquering lands and inventing the accounting abstraction that individuals could own land.
If we define potential oligarchs as individuals controlling the equivalent of $10M, so-called high net worth humans, they represent about 1% of us, but they control half of the abstraction of “wealth” humans believe in.
That’s right, the cancer killing the collective is a religion that almost all of us have Faith in—a malignancy of the imagination that could be fatal to the collective—soul cancer.
Psychiatrists of the collective soul are called Philosophers, and they are the best humans have in a specialty knowledge of suggesting what might change our collective soul away from self-loathing towards a healthy relationship with life, our home, earth, and our family of each other.
First, though, we must reboot the species to a new version of ourselves and, as computer engineers recommend, reboot ourselves into the next version of our software.
Is Artificial Intelligence controlling “wealth” and influencing an improvement over networked accountants, lawyers, and politicians?
The financial gutting and ultimate destruction of our public education system was created and orchestrated by wealthy elites with their end goal being to privatize, control and monetize every level of education within our country.
Several decades ago they realized the easiest way to get buy-in for education privatization from the public was to use religion as the most deadly weapon to degrade and destroy public education. Having already taken ownership of mass media sources, they’ve used that power to spread their propaganda against public education and speed up its demise. Their insatiable greed for power and money never ends.
The mindless chopping of government employees, vested and not, combined with the equally mindless tax cut “negotiations” among Republicans shows that they really don’t have a clue about governing, nor really care to have one. Forest service employees that work to prevent and quell forest fires? Gone. FAA employees necessary for flight safety? Out. FEMA employees? Take a hike.
When the disasters pile up and we have no knowledgable people on the job to deal with them, will the MAGAts finally realize that their “leadership” is full of crap? Probably not. Can anyone imagine a dolt like Marjory Taylor Greene admitting they were wrong? Not Ms. Gulf of America in Congress.
What will DOGE do with all our personal financial and social security data? Sell it back to us to use as gotcha stuff on people we know? And who will go after the mega-tax cheats when the IRS is de-fanged? Well, hell, we didn’t need that extra legal revenue anyway, right?
I liked what Pete started with above. We were an oligarchy from our inception. We swapped rule from an aristocracy to an oligarchy that feared the concept of a democracy – people power. This was the basis of our constitutional republic. The founders also excluded a central bank mainly because of Jefferson. I’ve not read about the Bank of England, but I am sure its influence was substantial then. A subject for another day.
From my experience with our local government, the computer systems are archaic, like those from the 1970s and 80s. The established two-party system absolutely resists updating its programs. The auditor system doesn’t communicate with the treasury department, so they download the information on a spreadsheet and then manually type it in at the treasury office. When I asked one of the top dogs at the Democratic Party to let me go in and update the computer systems for the county, I was looked at as if I had just recommended that he murder someone. Why would the political parties insist on using old, antiquated data processing systems?
It’s called rigging the system, corruption. In exchange for contributions, they would classify a big campaign contributor’s property as a nonprofit (one code change). The size of the corruption is hard to tell, but it’s magnified at the state and federal levels.
Also, why do you think Indiana quietly privatized the lottery system? It’s now run by the Italian mob, which can donate to the local politicians. When the state ran it, this wasn’t allowed. Magnify this by 100x to imagine the scale of the problem, especially at the federal level. This is why they don’t want to upgrade their data systems. Look at how they gamed the USAID organization. It was a CIA slush fund, among other things. I doubt either corrupt party ever thought one of the Tech Bros would one day gain access.
The SSA administration is a mess, and I am sure both parties have rigged it many times over. Now, Musk wants to audit Fort Knox’s gold, which hasn’t been audited since 1974. Their only audits have been security-related—not counting the gold bricks. This should be fun!
Personally, I would have started at the Pentagon and CIA since I consider those low-hanging fruit for an audit. I can understand Musk’s reasons (being a defense contractor) for not starting there, but he better not avoid it, or he’ll get blown out of the water on his social media platform.
Speaking of, there was a critical ad of Musk on Facebook, and Zuckerberg had it yanked. And if you’ve watched how the entertainment media has bent the knee for Trump, you better start following independent journalists on Substack and those who publish directly on the web because you’re getting filtered propaganda.
p.s. I know the Republicans have to be extremely nervous about Musk’s intrusion on the rigged systems, but what can they do? If you make a pact with the mob, it’s hard to get out of it.
My brother worked for Rolls Royce in Indy until 9/11. He was then laid off within 30 days and had about 2 weeks off before his old boss called him and said they needed his expertise again. So my brother had to go to the Contractor that was now in charge of filling all of those jobs that were laid off. My brother got a significant raise but no benefits like sick days, holidays or vacation days. This has been the modus operandi of corporations for decades. This is how the private companies make their money. They hire contractors all of the time so they don’t have to provide benefits to the employees anymore. Thanks Reagan.
Thanks for your inspiration as always. Love your blog, it brings so many excellent subjects out of the dark.
https://democracyteaparty.us/blog/the-false-promise-of-privatization
The only reasons I can think of for a techie to physically go to a building is to access the equipment itself or to access the source code. Note that the really good hackers can get to the source code on line.
I suspect that Musk has never been inclined to hire the best and the brightest, since he needs to be the shining star in every scenario. Just look at the President he bought. He has already gotten a ton of money from that investment. He’s made at least a billion in one month and he only had to invest $290 million.
One thing about contractors that few people know is that they’re not supposed to do anything that is considered an inherently governmental duty. The problem with that is that nobody has defined “inherently governmental”.
I’ve been opposed to privatization since the 80s. The taxpayers pay for the salaries and benefits of any government worker, whether it’s an employee or a contract employee. The contractor takes the total, hires staff, and pays the same or a bit more in salaries, but nothing near the benefits. He also pays himself very well and over and above that he has to make a profit. It seems as if no self respecting COO, CFO, or CEO would accept less than a million dollars in salary these days. If that isn’t waste, fraud, and abuse, what is?
We really have set the fox loose in the henhouse by giving Elon Musk the freedom to ransack the government.
AgingLGirl; my daughter-in-law returned to Rolls Royce a few years ago after losing her job of many years for 5 years. At one point, mid-5 years, she was offered her old job at minimum wage but refused. Rolls Royce’s treatment of employees protection from Covid-19 during the Pandemic was bare-bones protection of flimsy paper masks and very limited days of sick time if they became infected.
Years ago, when Western Electric (they produced phones for Indiana Bell) shut down, my sister-in-law was offered jobs in, I think Oklahoma or Florida with paid moving expenses. Their third offer was paid move to Hong Kong which would be at minimum wage with government housing and a free bicycle. Privatizing or contracting-out; that Hong Kong offer still makes me laugh.
Todd; the Republicans are nervous about nothing but keeping their own jobs and possibly a financial reward of salary increase with all of the money Musk is saving by firing federal employees by the thousands; unless Trump has other plans. That quarter trillion he is saving by ending EPA protections is a nice bonus for he and Musk; how many employees does that effect?
“The GOP’s persistent attacks on civil servants costs taxpayers and enriches privateers. The Trump/Musk goal is more of the grift.
« They’re Still Coming For The Schools”
And the Republican Legislature in Indiana is still “messing” with the state’s retirement funds. The RIPEA, comprised of young Republicans, after four years did get a return of our annual bonus checks for 20204; the bill to continue it with a possible return of COLA finally passed House and Senate but after passing it was discovered no implementation date was entered so it has to be rewritten and run through the Legislature again. In bright red Indiana, the majority of this state’s public retirees are old and disabled Republicans who are being screwed by the new-age Trump Republicans. And the beat goes on!
It’s just renamed union busting. And as AG pointed out, employees are brought back by the contractor with 0 bennies or protection. When business is slow, let’em go! When it’s hot bring back the lot. No muss no fuss. It keeps the workers on unstable ground, unable to plan past the next day! Anxiety prevents any sort of punitive action by anyone working or trying to make a living. If you’re worried about a mortgage, or a car note, or school, or anything that day-to-day life brings, your anxiety is going to prevent you from concentrating on anything else but how to get through the next day. Now you have a worker commodity. Because that’s all anyone is, a commodity to be used, abused, and tossed in the trash heap. Next in line? Papers please!
My husband took a contractor job at Fort Ben- the accounting system for the Pentagon. He was hired because he still knows the programmer languages from when he was in the Air Force- decades ago, and they are still using the derelict code (and computers!) from back then. He came from the private sector and eventually quit in disgust because the contractor was using dozens of people to do what just one person did at his previous employer- unfixable thieving ineptitude. This is why the Pentagon can’t pass an audit….
John Sorg: That is Exactly what happened to my brother. The recession caused him to lose that contractor position and he was let go. He did find another company within the contractor firm and was hired there until he retired in 2023. He worked from home the last 4 years of his working career.
John and JoAnn,
Workers across America must be shocked to take action, but I haven’t seen much from the US unions. The civil servants’ union has made some noises, but the major unions have said nothing about collaborating with mass strikes and work stoppages. The socialists are the only ones making noises, and they’ve been throttled by Google and social media companies, so you can barely hear them.
Musk did the same thing with Tesla and Twitter, which is the mentality of a private equity company and the way of corporate executives. And since only 10% of workers are unionized, who will oppose and resist? If the workers can’t help themselves up, then help them down to see if that wakes them up.
P.S. The socialists accuse the major unions of colluding with the oligarchy to render themselves impotent intentionally. If you watched how Pelosi and Biden stopped the rail strikers, I believe the socialists are correct.
The Orange one is thin skinned. I just wrote the White house seeking to drive a wedge between him and Musk. I suggest others try regularly as well. “Why are you letting an unelected businessman, with clearly only his personal gain in mind, take a poorly aimed wrecking ball to your budget and the US economy? He’s rapidly crashing it, but you will get the blame. I pulled all my money out of the market today because it’s obvious what’s coming. I expect there will be the equivalent of a “run on the banks” (on the market) nationwide (Warren Buffet just pulled all his money out of the market). Musk likes to flex muscles and show off by doing things fast because he is so sure he is brilliant, but that’s not smart. Big changes have to be phased in carefully, over time. You are letting a brash ignoramus take charge, and you will be known as the president who sank us into depression. Correct course please, before it is too late.” https://www.whitehouse.gov/contact/
Has anyone started a Deport Musk movement? He scores in all categories: naturalized, treasonous, potential criminal.
Core functions of a government should not be contracted out. It removes employee loyalty and responsibility, and it adds in the cost of the contractor’s profit margin. One-offs or ancillary services are something else. For example, it’s important for a city to have its own traffic system team. They know the city, the traffic patterns, etc., and should have someone available 24/7 in the event of an emergency or even just an outage. A town with only one traffic light can’t afford that and doesn’t need it, so it makes perfect sense to contract that out to a vendor who serves a number of similarly situated communities.
In 2017 we heard economics Professor Mark Skidmore and Michigan State graduate students found $21T in DOD and HUD 1998-2015 unauthorized spending. DOD responded by closing off access to its numbers.
I welcome the accounting. I expect many more disclosures to come.
Theresa, as Heather Cox Richardson says frequently, follow the money!
Dear Dalab
While I have seen deport Musk on a few websites nothing appears to be organized. I am seeing more and more Boycott Tesla and “X” now that would have a real effect on Musk if everyone stopped buying his cars and moved from X. It would hit hm where it hurts — money.
THANKS, getting Honest info out is the only way we have of changing minds.
deleb: I was at the president’s day protest yesterday in Oakland and there were many many signs regarding Musk. How he smells. How he wasn’t elected. A foreigner inside our government is a coup etc etc. The resistance is building.
The ripple effects of all these government firings seem to be ignored. People who lose their jobs will have less money to spend. There are so many of them that new jobs will be hard to find. Those in the DC area will have to find jobs elsewhere. That means they will have to sell their homes but who will be buying them? The value will go down. People will likely lose money on their homes. Will government contractors keep their jobs? Who will supervise them? Ripple, ripple, ripple.
Head count games are old. When I went to work at NIMH in the late ’70s, I was hired at 35+4 hours per week. I wasn’t counted in the “head count”. When they banned overtime and ordered that part-timers only get partial benefits, I became full-time. Fortunately, I had a boss that appreciated me.
Unfortunately, I have a more malign take on Musk. Yes, all investigators and IGs will be gone, allowing him to steal the government blind, but I fear the United States of Musk, where all government information is stored on “X” computers and Musk can flip a switch to harm competitors and personal enemies. Also, given the quality of his workers, we can assume that all hackers, foreign and domestic, will have easy access to the files.
Funny how it was intolerable for anyone to see Trump’s tax returns. That was a horrible invasion of privacy. Meanwhile, it is OK for Musk to comb through every taxpayer’s returns.
Imagine even the most right wing DA saying he wanted to search everyone in the city in case someone was a criminal. Even the current Supremes would balk at that.