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It is difficult to get Democrats and Republicans to agree about much of any­thing these days, but politicians of every stripe are likely to concur on this proposi­tion: government at all levels has promised much more than it can deliver, and every year the gap grows worse. One potential solution to this intractable problem is the outsourcing of govern­ment functions to the private sector, but it appears almost certain that any significant steps toward privatization are going to occur at the state level. Why? Because that’s where the most exciting work is going on right now, and because Washington appears allergic to public-private innovation. Congress not only clings to the view that gov­ernment workers must produce all government services, but also even tries to impede progress when it surfaces outside the Beltway—witness the provision tucked inside the 2007 farm bill that would prohibit outsourcing by states and require government employees to process all applications for food stamps. Congress’s resistance to innovation involving the private sector reminds me of my service a few years ago on a working group appointed by the head of the Government Accountability Office (GAO), Comptroller General David Walker, to evaluate the outsourcing of U.S. government activities. The previous decade had seen a dramatic rise in the number of private contractors performing the federal government’s work—with a corresponding drop in the total number of public employees—and Walker’s Commercial Activities Panel seemed to be bringing together the right people at the right time to grapple with the full complexity of out­sourcing issues. Yet almost immediately the panel got bogged down, wrestling instead with the question of what constitutes an “inherently gov­ernmental” function—a technical term for work that is too important, or too public, to be done by contractors.