Possible fallout over welfare

INDIANAPOLIS — Democrats to Republican Gov. Mitch Daniels: We told you so.

The gloating was to be expected after Daniels announced Thursday that he was canceling a contract with IBM Corp. to automate applications for food stamps, Medicaid and other welfare benefits.

The project introduced in the spring of 2007 had been fraught with complaints of lost documents, delays in approving benefits, lengthy call hold times and severed eligibility for Medicaid and food stamps. Federal officials had closely scrutinized the state’s performance, and the state had put IBM on notice that it needed to improve.

Daniels had long backed the ambitious 10-year, $1.34 billion deal despite the complaints. He finally sacked Armonk, N.Y.-based IBM, though, saying it hadn’t done enough to fix problems.

Other private vendors, including Affiliated Computer Services of Dallas, a firm partnered with IBM, will continue working on the programs.

But IBM’s firing means the welfare modernization is no longer a program Daniels can point to as a success. And some believe it could mar both his legacy as governor and his reputation as a proponent of privatization as a way to improve government services at less cost.

“He has to be looked at as someone who has got egg on his face,” said Brian Vargus, a political science professor at Indiana University-Purdue University at Indianapolis. “The egg doesn’t wash off easily.”

Democrats and Republicans alike congratulated Daniels for cutting ties with a program that was not working. But the move clearly bolstered Democrats, even though Daniels cannot seek a third term and has said he will never again seek public office.
“I had to come into the Statehouse because of a rare moment where I can congratulate the governor for making the right move,” said House Speaker Patrick Bauer, D-South Bend.

“In this case, it was the right move and I want to thank the public, the media and those members of the General Assembly that fought the good fight and never gave up,” Bauer said. “That actually is a bipartisan concern, but I know the members of my caucus are unanimous in saying this change had to be made.”
State Democrat
ic Party Chairman Dan Parker said the decision was a “major victory for hundreds of thousands of Hoosiers” but should have come sooner.

“From the start, there were questions about putting such vital services in the hands of a for-profit company, and the problems have been mounting for years,” Parker said.
Daniels conceded many critics of the program were right. But he defended his decision to try the IBM move, saying the old system was riddled with waste, fraud and high error rates.

Ultimately, it was Daniels’ decision to make the deal, and to stick with it for so long.

He suggested that the problems with Indiana’s effort were not related to privatization.

“It has nothing to do with private or public. It had to do with a concept,” he said. “If you would use the same concept IBM brought, and every worker was a state worker, you would have had the same results, or worse.”

Vargus said Daniels’ privatization efforts, including leasing the Indiana Toll Road to a foreign consortium, have fueled speculation about him as a potential candidate for president in 2012 even though he has said repeatedly that he is not interested.

But if he were to change his mind, the IBM deal “causes him a bit of a problem,” Vargus said.
Vargus said the move also could help bolster Democrats’ efforts to retain control of the narrowly divided Indiana House. Bauer, he said, is sure to bring up the failed IBM deal every chance he gets on the campaign trail.
Some social service advocates don’t care about political fallout. John Cardwell, chairman of the Indiana Home Care Task Force, is one of them.

“If at the end of his eight years, on this particular issue, he has done the course correction that leads to a good system that is truly a human system ... I’ll say, ‘Governor, you did a good job,’” he said.
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Mike Smith of The Associated Press has covered Indiana’s Statehouse and political scene since 1993.