Victors and Spoils
The New York Times
November 19, 2002
By PAUL KRUGMAN
Rule No. 1: Always have a cover story. The ostensible purpose of the
Bush administration's plan to open up 850,000 federal jobs to private
competition is to promote efficiency. Competitive vigor, we're told, will
end bureaucratic sloth; costs will go down, and everyone - except for a
handful of overpaid union members - will be better off.
And who knows? Here and there the reform may actually save a few dollars.
But I doubt that there's a single politician or journalist in Washington
who believes that privatizing much of the federal government - a step
that the administration says it can take without any new legislation - is
really motivated by a desire to reduce costs.
After all, there's a lot of experience with privatization by governments
at all levels - state, federal, and local; that record doesn't support
extravagant claims about improved efficiency. Sometimes there
are significant cost reductions, but all too often the promised savings turn out to be
a mirage. In particular, it's common for private contractors to bid low to get
the business, then push their prices up once the government work force
has been disbanded. Projections of a 20 or 30 percent cost saving across
the board are silly - and one suspects that the officials making those
projections know that.
So what's this about?
First, it's about providing political cover . In the face of budget deficits as far
as the eye can see, the administration - determined to expand, not
reconsider the program of tax cuts it initially justified with
projections of huge surpluses - must make a show of cutting spending. Yet what can it
cut? The great bulk of public spending is either for essential services like defense
and the justice system, or for middle-class entitlements like
Social Security and Medicare that the administration doesn't dare attack openly.
Privatizing federal jobs is a perfect answer to this dilemma. It's not a real
answer - the pay of those threatened employees is only about 2 percent
of the federal budget, so efficiency gains from privatization, even if they
happen, will make almost no dent in overall spending. For a few years,
however, talk of privatization will give the impression that the administration
is doing something about the deficit.
But distracting the public from the reality of deficits is, we can be sure,
just an incidental payoff. So, too, is the fact that privatization is a way to
break one of the last remaining strongholds of union power.
Karl Rove is after much bigger game.
A few months ago Mr. Rove compared his boss to Andrew Jackson.
As some of us noted at the time, one of Jackson's key legacies was the "spoils
system," under which federal jobs were reserved for political supporters.
The federal civil service, with its careful protection of workers from
political pressure, was created specifically to bring the spoils system
to an end; but now the administration has found a way around those
constraints.
We don't have to speculate about what will follow, because
Jeb Bush has already blazed the trail. Florida's governor has been an aggressive
privatizer, and as The Miami Herald put it after a careful study of state
records, "his bold experiment has been a success - at least for him and
the Republican Party, records show. The policy has spawned a network
of contractors who have given him, other Republican politicians and the
Florida G.O.P. millions of dollars in campaign donations."
What's interesting about this network of contractors isn't just the way
that big contributions are linked to big contracts; it's the end of the
traditional practice in which businesses hedge their bets by giving to
both parties. The big winners in Mr. Bush's Florida are companies that give
little or nothing to Democrats. Strange, isn't it? It's as if firms seeking
business with the state of Florida are subject to a loyalty test.
So am I saying that we are going back to the days of Boss
Tweed and Mark Hanna? Gosh, no - those guys were pikers. One-party control of today's
government offers opportunities to reward friends and punish enemies that
the old machine politicians never dreamed of.
How far can the new spoils system be pushed? To what extent will
it be used to lock in a permanent political advantage for the ruling party? Stay
tuned; I'm sure we'll soon find out.
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