12/07/2004

Bad Privatization

The Washington Post reports on the Bush administration's plan to let private companies collect back taxes from delinquent taxpayers:

When Reps. Shelley Moore Capito (R-W.Va.) and Chris Van Hollen (D-Md.) teamed up in September to get the House to pass an amendment blocking the use of private companies to collect back taxes from delinquent taxpayers, it seemed the Bush administration plan might be doomed for at least a year.

But in the final hours of drafting a 3,300-page spending bill last month, House and Senate negotiators eliminated Capito's and Van Hollen's handiwork, clearing the way for the Internal Revenue Service to hire commercial debt collectors. These private agents could keep as much as 25 percent of the amounts they recovered.

While the Bush administration has strongly supported the initiative as a way to increase revenue collections amid growing deficits, critics contend it could lead to harassment of taxpayers and breaches of privacy. Labor groups representing federal workers also oppose the change. But it has the backing of the debt-collection industry, which has contributed heavily to GOP organizations and causes since Bush became president.
Is there anyone who hasn't heard of (or experienced) horrific abuse at the hands of private collection firms?
Just ask Angela M., a mother of two, in Denton, Texas. She fell behind on four credit card bills in late 2001. "When it went to the collection agencies, it turned really personal," Angela says. "They called me a deadbeat. They called me a criminal. I had perfect, spotless credit before this happened."

Angela's roughly $40,000 in overdue debt stems from a small business. She opened a children's boutique in 1998.

One debt collector accused her of running up her credit card balances with no intention of paying.

One collector told her to sell her house. Another threatened her home. One debt collector scolded her for taking her children to Chuck E. Cheese for pizza. Another collector told Angela, who is expecting another child, that she had no business being pregnant.
My libertarian streak predisposes me to favor privatization in many functions of government. Privatizing garbage collection, for example, is easy to support - choosing an unscrupulous garbage haulers means garbage goes uncollected. Choosing an unscrupulous collection agent, however, means that citizens get intimidated and harassed. The collections industry has shown no willingness or capability to police its own; that intransigence should not be rewarded with huge government contracts.