Former President Barack Obama, former Chief of Staff Jack Lew, and former Treasury Secretary Timothy Geithner in 2013.

New Treasury data busts the myth of government “inefficiency”


Turn on Fox News and you’ll hear about “red tape” and government “inefficiency” more times than you can count. You might hear about it on MSNBC too.

We live in the era of “small government.” (Well, except when it comes to the military, prisons, and controlling women’s bodies.) But recent numbers from the U.S. Treasury beg to differ.

In 2008, the mortgage giants Fannie Mae and Freddie Mac were facing collapse until taxpayers bailed them out. Ten years later, they continue to be extremely profitable for the Treasury under government control, amassing $88.3 billion so far and reducing the amount the government has to borrow each year.

This is a story by In the Public Interest, a nonprofit that studies public goods and services. Sign up here to get stories like this straight to your email inbox.

Whether we should keep control of Fannie Mae and Freddie Mac is up for debate. But the fact remains: they are far from inefficient. Some even believe government control is a big reason why mortgage rates remain low.

Meanwhile, private debt collectors hired by the Internal Revenue Service (IRS) are collecting just a small fraction of the debt they are assigned, all the while leaving taxpayers vulnerable to scams and exploitation. New data from the Treasury’s inspector general show that the four contractors have taken in a mere $1.3 million as of May 2018, just 1 percent of the $4.1 billion they were assigned last year.

Over and over again, privatized tax collection has failed. The IRS has hired contractors three times since 1995, each time resulting in poor management and negative returns. The only thing the contractors have been efficient at is hounding delinquent taxpayers by phone, even ignoring federal law in collecting from people living in disaster zones.

The government isn’t automatically good at doing anything and everything, but neither are corporations. It’s time to bury the myth of government inefficiency. What matters more, anyway, is democracy, whether we have a say in how a public good or service that we all pay for is managed. And corporations certainly aren’t good at that.


Want a story like this about privatization’s impact on the criminal justice system, public education, and more once a week in your email inbox? Sign up here.

Jeremy Mohler is a writer and communications strategist for In the Public Interest, a nonprofit that studies public goods and services. He’d love to hear from you: jmohler@inthepublicinterest.org