Hightower Lowdown

It was a proud day for the governor. In December 2006, he declared, "No decision we've made is more clearly in the public interest."

Gosh, if that was his best decision, I'd hate to see one of his bad ones.

He's Mitch Daniels, governor of Indiana and an ideological absolutist on privatizing government, and he was announcing his plan to outsource that state's administration of food stamps, Medicaid, and other welfare benefits for poor folks. No need for all those government caseworkers, Daniels declared. Their jobs can be done the corporate way--with efficient computers and call centers.

IBM was given a $1.1 billion contract from the state to take charge. Tax-payers, boasted the governor, will reap "a billion dollars in savings," while low-income families will enjoy the stellar service of the private sector.

Now, more than two years into the task, IBM's accomplishments include lost paperwork, frustrating runarounds, poorly trained staff, inadequate equipment, and rejection of qualified applicants. The rate of mishandled food-stamp cases, for example, has more than tripled since IBM took over.

To fix this mess, the state has now issued a list of 200 reforms that IBM must achieve, giving it until September to shape up. The changes include hiring additional staff and managers, which will eliminate much of the highly touted "savings" that privatization was to bring. A state official said: "It's possible we'd have to cancel the contract."

The so-called "efficiencies" of privatization are actually achieved by shortchanging service and eliminating the personal touch.