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Ann P's avatar

Their idea is that you privatize the government and the people that are losing their government jobs go get the same jobs as employees of the private corporations who replace the government agencies. Then as private employees they either get health insurance as a job benefit or pay for health insurance out of their private job salary, which is assumed to be going to be higher than the government salary was. Most of these government jobs have much lower salaries than their private sector equivalents. One of the nuclear engineers laid off and rehired by DOGE for the agency protecting the nuclear weapons said she could earn double her government salary in the private sector. Since she now had her federal job back, but thought it was now too unstable and she couldn’t count on it anymore, said she was going to job hunt and leave the federal agency as soon as she found a new job. More pay and more job security. That’s the plan, and that’s the message.

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DonnaD's avatar

Their idea though is financially beneficial to them. Knowing what a contractor costs per hour vs a government employee salary, I don't see the cost savings to the US government. I *do* see the boondoggle for the privateers.

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Ann P's avatar

When my H was in the student loan business as the CEO of a finance agency, his agency was a conduit issuer of bonds where the proceeds were used for federal student loans and backed by the full faith and credit of the US Treasury. It cost the government nothing to issue those loans. The bonds raised the money to loan to the students and the loan repayments paid off the bond debt. The loans were guaranteed by the feds, but not funded by the feds. The fees generated from the bond sales paid for the salaries in my H’s agency, which had a very small staff. Each state had a similar agency. When this work was taken back by Obama, allegedly to “save money”, the number of employees needed to do the work inside the DOE almost tripled, and the interest rates for the students went up, all while losing the various state programs that had loan forgiveness for students getting degrees in thing like education and nursing and agreeing to work in underserved communities. Medical schools loans were forgiven for accepting jobs in rural communities and hospitals that had trouble recruiting doctors. The whole thing cost more and was far less efficient than when the semi-private state agencies ran it.

I understand that there will be an incentive for corruption if some things go to a contractor method, but my impression of what they’re going to do is to just offload certain activities from government altogether. You will pay the service provider yourself and not deal with the government at all. Privatizing Social Security, for example, was going to follow a setup much like an IRA. You would invest the money from your paycheck withholding and get back whatever that was worth when you retired. I’m not saying that’s a good idea, but that’s the argument.

The plan to get rid of FEMA, for example, is that the money being spent on FEMA would go directly to the states and the states would run disaster recovery however they want to. DOE funds for special education would go directly to the states and they would run special education programs however they wanted to. There would be no strings attached is my impression, and no DOE telling you what services you have to provide. I’m not sure how it would work with NASA and NOAA, that might be government contractor. Once again, not necessarily agreeing it’s a good idea. But I do know from being close to the industry that state agencies ran the student loan program 1000% better than the feds did.

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DonnaD's avatar

Yes, I remember those days because I had those loans at 2% interest. I believe there is a long and successful history of public-private partnerships (such as NIH grants that go to medical schools for research). Interesting, I hadn't thought about the scenario where the individual would pay the service provider. Re: FEMA, isn't a lot of the service delivered locally anyway, with feds organizing and leading the project? And those local contractors are paid with FEMA dollars? FEMA is not sufficiently staffed to be the only responders. It would be interesting to hear how they might fund each state- by population numbers? Some states see very little disaster while others, due to geography, etc see significantly more. I don't trust the government to develop a non-partisan funding plan that is allocated equitably rather than equally.

I remain skeptical based on my experience as an accountant for the past 30 years, working in organizations that are the recipient of state and federal grants and contracts, many of which flow through the state as pass-through funds. I have no greater confidence in the states managing these activities than the federal government, even less actually. Particularly in states where there is not a lot of depth of expertise in the hirable population such as is the case in NH where I currently live. Not as much of an issue in MA where I came from.

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Ann P's avatar

My H, who ran the bond finance company, is an attorney and a CPA, which is why he was hired to be CEO. His company was heavily involved in the recovery of post-Katrina New Orleans (they did more than just student loans, all kinds of state and municipal bond financing - schools, hospitals, fire trucks, housing, etc). FEMA sends in lots of personnel and provided New Orleans with hundreds of those white “FEMA trailers”. It’s a manpower heavy, multi-leveled, and extraordinarily complicated recovery effort. FEMA personnel were temporarily housed in Baton Rouge for months following Katrina. And a skeleton crew of FEMA personnel stayed in the NOLA area for several years afterward. They didn’t do the actual reconstruction work, but they ran a bunch of stuff. My H had a lease-to-own housing project in the infamous 9th Ward, where everything was destroyed that needed coordination with FEMA to settle. He also did bridge loans for NOLA businesses due to the truly weird way that FEMA pays for recovery rebuilding. It’s a reimbursement program. You pay to rebuild your office, building, or factory, whatever, and FEMA reimburses you. Most people and small business owners don’t have the cash or credit to front those costs, so agencies like the one my H ran loan out or grant the upfront costs so the rebuild can happen and then the business gets their FEMA reimbursement and pays back the loan (or not if it was a grant). The whole thing is ridiculously complicated and frustrating beyond belief.

I’m not at all sure this would work well if left to the states, but what FEMA currently does needs reform. It’s too complicated for me to adequately explain, but my H is retired now, and wants to forget that the federal government even exists. So he’s not going to help me answer your questions. Fwiw, my cousin’s wife, newly retired from the Marines (as was my cousin) returned to New Orleans and she worked the logistics for FEMA for about 5 years post Katrina. She had been the main supply officer for the Southeast quadrant of the US as a Marine supply officer, so she was well suited for the job. Up close and personal, she didn’t have a lot of good things to say about FEMA. They were not as efficient as the Marines in her opinion.

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DonnaD's avatar

Oh yes, the federal systems need an overhaul, no disagreement there. They make everything so difficult for a grantee. But as a taxpayer, I do appreciate oversight of use of my federal dollars. Each federal agency adheres to certain regulations, such as CFR (code of federal regulations), but their own internal systems are distinct and onerous to use. You need to manage a dozen different sites, with a dozen different logons, with a dozen different payment systems, etc. The Feds require the States to do sub-recipient monitoring, which at least in NH, has led to many grantees (not every state agency operates the same way either!) needing to copy every single damn receipt, payment, payroll detail, etc to the state every single month. That is not monitoring and increases administrative burdens on the recipients for which they only want to pay 15% indirect cost.

I have no experience with FEMA, professionally or personally. Knock on wood.

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Ann P's avatar

But where is the oversight now? I sent Bill Cassidy an angry email on Friday because Reuters announced that the CDC was starting a research study to find out if there’s any connection between vaccines and autism! Something Cassidy railed against in both RFK Jr’s hearing, and just this past week during Jay Bhattacharya’s hearing. Supposedly, Cassidy pounded his fist on the table that HHS should NOT waste a dime of taxpayer money on research into the settled science that vaccines do NOT cause autism. And in less than 48 hours the CDC says it’s going to do just that. So I let Cassidy have it on the “don’t you dare waste my tax money on redoing settled science” and “you pounded your fist in this issue in public - WTH???”.

The hypocrisy of this administration is mind blowing. And these appointees lie to these Senators to their faces, but get approved anyway. It’s a nightmare I can’t wake up from.

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Spencer $ Sally Jones's avatar

Theoretically yes but review the history of privatizing Government functions. They almost always end up pulling out money for the Heads and providing less good services. One recent example is Military Housing.

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