The Daniels administration’s ongoing efforts to privatize Indiana’s Medicaid eligibility screening process has hit another snag. One of the two prime candidates for the billion dollar contract, Affiliated Computer Services (ACS) — FSSA Secretary Mitch Roob’s prior company — has had its CEO and CFOs resign after they were caught performing financial shenanigans designed to boost the value of stock options. Falsifying dates on option dates will apparently result in $51 million in extra taxes for ACS.

Certainly proponents of privatization could argue that this, like the tortures at Abu Ghraib, was the result of a few bad apples. But, whether it’s endemic or just a couple of rogues, it highlights one of the problems with privatization — lack of transparency and lack of accountability. It’s much more difficult for administration officials to find out exactly what’s being done with the money once a contract is signed, and probably even more difficult to change the way the money is used if one is not satisfied. Sure, if you’re not getting the results to which you think you’re entitled, you can cancel the contract. But, with a billion dollars on the line, you can bet the other party to the contract isn’t going to just agree that it has breached the contract and, ultimately, it’s probably going to drag through the courts for a few years at great expense to everybody. As the saying so colorfully goes, it’s pretty tough to unshit the bed.

The Fort Wayne Journal Gazette has Journal Gazette | 11/25/2006 | an editorial supporting the plan of Speaker Bauer and House Democrats to review Governor Daniels’ privatization initiatives.

Bauer gets off a zinger:

“Our caucus basically does not support privatization,” Bauer said on Tuesday’s Organization Day. “We don’t support making profit out of poor people or mentally ill people.”

The Journal Gazette notes that since January of 2005, the Indiana Department of Corrections outsourced its food services, the state has tried to privatize state park inns, the state allowed a coal company to do exploratory mining in a state wildlife area and has begun privatization of the state developmental centers.

They note the Governor being supportive of the concept of privatization:

This month, the governor defended his privatization efforts in an address to business owners in Indianapolis. He said he had heard terms like “private,” “profit” and “corporate” tossed around “as though they were dirty words.”

“Anybody who still thinks like that really needs to get over it quick because if we’re going to be a great state … if we’re going to have real economic progress … we’re going to have to have America’s strongest, most vibrant private sector making profits,” Daniels was quoted in the Times of Northwest Indiana. “Somebody better make a profit or nobody will have a job.”

First, Daniels is engaging in a non-sequitur. There are plenty of non-governmental activities in which profit potential abounds. Government generally engages in activities a) where it would be a disaster for profit-motivated private actors to act (see, e.g. activities related to government’s monopoly on violence — police powers, justice system, etc.); or b) where there is an obligation to act even in the absence of a good profit potential (see, e.g., care for the poor.)

Daniel Warrick of the AFSCME says that Governor Daniels refused to provide a cost-benefit analysis when the state “privatized the Division of Family Resources.” If no such analysis was done, that’s troubling because it cannot at all be taken as an article of faith that the private sector will perform a function more cheaply than the public sector. The General Assembly need not look further than the printing of its own bills for proof of this. It cost substantially more money to have a private entity print the bills than it cost the General Assembly to have the Legislative Services Agency do it.

Now, it’s always possible that pro-privatization advocates are not so much concerned about how much money is being spent, but who receives it. A politician does not benefit all that much when a bunch of public employees are being paid fairly well to do a job versus the benefits a politician may receive when similar expenditures are concentrated in the hands of friends and well-wishers with low-paid employees. But, that’s just speculation. I, like the Governor, do not have analyses to support my articles of faith. Unlike the Governor, this blog costs the citizens of Indiana nothing.

The Associated Press is reporting that Senator Dick Lugar’s challenger in the recent Senate race, Libertarian Steve Osborn, has filed a petition for a recount despite having lost by more than 1 million votes. Specifically, Osborne has requested a recount in 10 precincts in Howard, LaPorte, Porter, and St. Joseph counties. Osborne has no comments at the moment but says he would comment after the counts are done. Apparently the recount commission will proceed with the request unless someone from the Lugar campaign objects.

I’ll certainly be interested in finding out Osborne’s reasoning. My best guess is that he suspects some sort of impropriety or defect to which he wishes to call attention even though it won’t alter the overall result. But, like I said, that’s a guess.

There are three recounts coming for the Indiana House of Representatives. Incumbent Democrat Ed Mahern is contesting the election results showing Republican challenger Jonathan Elrod ahead by 7 votes. Democratic challenger Myron Sutton is contesting the election results showing Republican incumbent Don Lehe ahead by 27 votes. And Democratic challenger Larry Hile of Hartford City is contesting the election results showing Republican Timothy Harris ahead by 19 votes.

As the results stand, Democrats hold a 51-49 lead in the House. Their first act was electing Rep. Pat Bauer to be Speaker of the House. The Indiana Barrister notes the election of Sen. David Long to be President pro tem of the Senate and suggests that there could be a battle between conservative senators on one hand, and very conservative senators on the other hand.