Public Employee Press

Privatization is about greed, not savings

In spite of the giant cost overruns on many contracted-out city projects, conservative mayors like Michael Bloomberg insist that privatization saves money because public service workers are less efficient. This is baloney.

Thanks to a systematic attack on public-sector services and jobs by right-wing think tanks and politicians, the federal government now hands contractors over $500 billion a year, up from $200 billion in 2000.

A recent study concludes that rather than generating savings, this misguided policy wastes taxpayers' money.

Outside contractors cost the federal government twice as much as doing the work in-house, according to the Project on Government Oversight, an independent think tank that examines government fraud, abuse and waste.

Despite the rhetoric about the mushrooming government bureaucracy, the number of federal employees has remained at about 2 million since 1999, while the payrolls of contract employees soared from 4.4 million to 7.6 million in 2005.

"For decades political pressure to reduce the size of the federal government has increased," says the study. "Government has awarded contracts resulting in an expanding 'shadow government' that costs hundreds of billions of dollars annually."

The study compared contractors' actual bills with the cost of doing the work in-house for 35 different government jobs, including many similar to DC 37 members' jobs, such as auditing and food inspection. For 33 of the 35 jobs, private contractors charged more.

The study found the average billing rate of contractors was almost double the rate paid to federal workers, which was less 94 percent of the time.

But don't studies like this often ignore public employees' so-called bloated benefits and oversized pensions? This study carefully included health and pension costs.

So if privatization doesn't produce savings, what's really going on?

Just follow the money. This cynical game - the product of so-called free-market ideology and simple greed - is really about shifting billions of dollars from public employees to private interests.