Archives: May, 2013

Government… IS… PEOPLE!

The Christian Science Monitor suggests this lesson be drawn from the Obama administration’s recent scandalpalooza:

Congress should use this IRS scandal to beef up civics education for federal workers as well as for public school students. Lesson No. 1: Government cannot restrict or discriminate against political causes that it disagrees with.

I think the scandals teach a different lesson: Government will misbehave because it, like Soylent Green, is made from people. Fallible, foible-ridden people. Therefore, government’s unique powers must be strictly limited to avoid miscarriages of justice.

One of these days, someone should build a nation on that lesson….

Three Questions about Government Spying on the Press

It’s heartening to see widespread outrage—both online and from members of Congress—about the news that Justice Department vacuumed up phone records spanning two months from 20 phone lines belonging to the Associated Press or its employees. This may not be a return to the bad old days of J. Edgar Hoover, who kept files of derogatory information about hostile journalists, but surveillance of the press—even in the course of otherwise legitimate investigations—always threatens to impede the vital check on government the Fourth Estate provides. A subpoena covering so many of a major news organization’s phone lines, including shared switchboard and fax numbers used by scores of reporters, for such an extended period, seems especially troubling in the context of this administration’s unprecedented war on whistleblowers. It’s effectively a warning that nobody who speaks to the press without White House approval—whether they’re leaking classified secrets or just saying things the bosses wouldn’t like—can count on anonymity.  I’ll have plenty more to say about this soon, but a few key questions reporters and legislators ought to be asking:

  • DOJ regulations are supposed to require a careful balancing of investigative needs against First Amendment values before reporter records are sought, with advance notice to the press whenever possible. The AP is fairly certain its records were seized as part of a leak investigation aimed at uncovering the source of  a story about a foiled terrorist plot—a story the AP itself sat on until they were convinced publication posed no national security risk. The administration itself was on the verge of announcing the same facts. Given that anonymous sources discussing classified matters with press are a routine and indispensable part of journalism, what made this investigation so urgent that it was necessary to use methods experts agree were far more broad and intrusive than the norm?
  • Read hyper-literally, those same DOJ regulations refer only to “subpoenas” directed at journalists themselves or seeking “telephone toll records.” And the DOJ’s own operational guidelines make quite clear that they do read the rules hyper-literally: They apparently are not held to apply to the myriad tools other than grand jury subpoenas at the government’s disposal, such as National Security Letters or administrative subpoenas. Does DOJ employ a similarly literal reading of “telephone toll records,” such that they’re not required to observe these rules when they obtain other electronic records, such as e-mail transactional data? The DOJ, recall, says they often don’t need warrants to read e-mail or Facebook chats, let alone review transactional metadata concerning such communications. So it seems odd that they would pull out all the stops when it comes to phone records, yet ignore the channels by which modern reporters probably conduct the bulk of their correspondence. Even if it would have been infeasible to access logs of AP’s e-mail transactional data without tipping them off (my understanding is they maintain their own e-mail servers), nearly every journalist has potentially revealing Facebook friend lists, personal Gmail accounts, Twitter direct message headers, and so on—some of which would be more targeted than records from phone lines shared by dozens of journalists. Was other data that DOJ believes to be outside the scope of their reporting obligations—either because it wasn’t obtained by “subpoena” or because it wasn’t “telephone toll records”—obtained in this case? More broadly, how much press data is obtained without notification because it falls outside these categories?
  • Thanks to a 2010 Inspector General report, we know a bit about the FBI’s use of “community of interest” data requests that sweep up call log data not just on a single target, but all the phones their target is in regular contact with—and maybe even the numbers those phones are calling too. After using this technique for years—sometimes literally by accident—FBI sought an Office of Legal Counsel opinion about whether the press notification rules applied when such requests were likely to indirectly pull in press records. In January 2009, OLC concluded they did—but since they ended up not getting the records in that instance, and the agent making the request apparently hadn’t understood quite what he was requesting, the FBI decided it didn’t need to tell anyone at the time. What, then, is the Justice Department’s current policy when it comes to information about press communications obtained indirectly through “community of interest” requests? Is any attempt made to ascertain when such requests have acquired reporters’ phone records, whether or not that was either intended or foreseen when the request was made? Since records in the FBI database are retained indefinitely for potential future data mining, even records the FBI doesn’t currently know belong to reporters could easily end up revealing patterns of press activity as a result of future analysis. Does DOJ think it must inform reporters when this happens, or is it only at the acquisition stage that the notice obligation applies?  Has any broad effort been made to determine how many reporter records are in FBI databases, especially as a result of requests made before 2009? 

Of course, whatever the answers to these questions, the Electronic Frontier Foundation is right to point out that the broader problem is that communications metadata isn’t entitled to much protection under either current Fourth Amendment jurisprudence or federal statute. This means the government can typically access metadata with little or no judicial oversight—and if you’re not a reporter there are no special rules requiring the government to ever notify you that your records have been swept up in some investigation. As technological change makes such metadata increasingly revealing—because nearly everything you do online leaves some digital trace, from which ever more detailed inferences can be drawn using sophisticated analytic tools—the problem is not just for press freedom: it’s a privacy problem for all of us.

Iran: Political and Religious Persecution Proceeds Apace

The Islamic Republic of Iran will soon hold a presidential election. The result is in doubt—the clerical elite itself is split—but the country’s overall direction unfortunately is not. Iran has a deteriorating human rights record. Although Tehran is not the bloodiest or most tyrannical government in the Middle East, repression is increasing and the space available to regime opponents is diminishing.

Most attention has been focused on the unpleasant potential of an Iranian nuclear weapon. There is good reason to maintain an active campaign to forestall such a prospect. However, war almost certainly is a worse option. Bombastic rhetoric is common in Tehran, but the diverse political and religious figures now bitterly battling over power and wealth seem pragmatic, not suicidal. There is no reason to believe that the United States (as well as Israel) cannot deter Iran even if the latter developed an atomic bomb.

Iran’s worsening religious persecution is far less publicized. As I note in my latest Forbes online column, Tehran has generated a not-so-enviable record in brutalizing religious minorities—Baha’is, Christians, Jews, Zoroastrians, and Sunni Muslims. Such behavior belies a lack of confidence in the dominant theology which underlies the regime.

Sadly, there isn’t a lot the U.S. government can do. But people of goodwill around the world might achieve more. As I argue in Forbes online:

The West’s leverage over Iran is minimal. Some activists have criticized the Obama administration for not doing more, but it is not clear what more could be done, given the sanctions already imposed regarding the nuclear issue.

There may be a better hope of using international popular pressure. Explained [Indiana University Professor Jamsheed] Choksy, “Despite their heavy-handed actions, the Islamic Republic’s hard-liners seek to present their rule as benevolent and humane,” and therefore the regime has been “exhibiting rising concern about negative public perceptions of its rule.”

Individuals, groups, and activists, especially those which have not been at the forefront of the campaign to sanction and even bomb Iran, should press the Iranian government and other entities, from media to business, and protest the manifold violations of human rights. Visiting officials should be embarrassed by protestors. The regime should understand that its fight against sanctions for its nuclear activities continues to be undermined by its brutality at home.

Ahmed Shaheed, the UN Special Rappoteur, confirmed that public pressure works. In March he noted that “At least a dozen lives were saved because of the intervention of international opinion.” More such action is needed.

In 1979 the Iranian people overthrew the Shah, a corrupt thug long supported by Washington. Alas, the Iranian revolution delivered even more tyranny. The Iranian people desperately await a revolution which actually liberates.

Encouraging Continued Reform in Burma

Burmese President Thein Sein will be visiting Washington next week. It’s the first trip by a Burmese head of state in nearly five decades and reflects the reform winds blowing through Naypyitaw.

Burma, or Myanmar, languished under brutal military rule for a half century before the armed forces moved into the background and created a nominal civilian government. Thein Sein is a former general and the retired junta leaders undoubtedly remain influential, though their exact role remains hidden.

Nevertheless, Burma has come far in the last couple of years. Many political prisoners have been released. Many restrictions over the media have been lifted. Nobel Laureate Aung San Suu Kyi has been freed from house arrest and elected to parliament. Fighting has ceased against many separatist ethnic groups. Naypyitaw has distanced itself from its former patron, China.

There’s still more to be done. Conflict with the ethnic Kachin continues to ravage parts of Burma, while Buddhist mobs have been conducting a different form of war against Muslim Burmese. Nor is it certain that the military is prepared to fully yield power in 2015, when the next election is scheduled. Indeed, Tomas Ojea Quintana, the United Nations Special Rapporteur on human rights in Burma, recently issued a report citing the need for additional reforms, which I discussed in a recent article in National Interest online.

Nevertheless, after spending years vying with North Korea for distinction as the world’s worst government, Burma now offers its people hope of liberating change. Ultimately enduring reform will come from inside Burma. But the West can help.

The best reward for Naypyitaw for continuing reform is steadily eliminating remaining economic sanctions. Foreign investment and trade will help moderate poverty, expand the middle class, and provide resources for democratic activism. Expanding the economic pie also would give government and security personnel a stake in a freer society in which their power is more limited.

But Washington and other democratic states should not bury Naypyitaw in foreign aid. Alas, history demonstrates that foreign “assistance” more often deserves to be called foreign hindrance, actually slowing reform and entrenching corrupt elites. Burma desperately needs a broader civil society as the foundation for a freer and more prosperous future.

There is a lot of bad news in the world today. Burma offers some welcome good news. Washington should use Thein Sein’s visit to encourage continuing political and economic reform.

The IRS Scandal: Hiding In Plain Sight

If you had asked me who would actually try to defend the behavior of the IRS employees, I would have guessed, “Oh, maybe someone at the New Yorker…. Jeffrey Toobin?” Bingo

ABC News reports on the bewildering experience of Marion Bower after she sought exempt tax status for her Tea Party group, not expecting the process to drag on for two years:

The Ohio woman also did not expect that providing information about the books her group read would be part of the application process.

“I was trying to be very cordial, but they wanted copies of unbelievable things,” Bower told ABC News today. “They wanted to know what materials we had discussed at any of our book studies.” …

“They wanted a synopsis of all the books we read,” Bower said. “I thought, I don’t have time to write a book report. You can read them for yourselves.”

The thing is, the essentials of the IRS scandal were clear to anyone with eyes to see more than a year ago – before the intervening false denials by IRS officials, the more recent admissions and apologies, and the promises of house-cleaning from the President and leading Democrats. Here’s an AP story from March 2012 citing “instances in which the IRS has asked for voluminous details about [Tea Party] groups’ postings on social networking sites like Twitter and Facebook, information on donors and key members’ relatives and copies of all literature they have distributed to their members, according to documents provided by some organizations.” Here are more reports on IRS demands for transcripts of speeches and radio shows, donor lists, and the like. It is perhaps needless to add that many other groups seeking 501 (c)(4) status were not subjected to overbearing demands of this sort. 

Regarding Jeffrey Toobin, it seems to me that there are two main possibilities. Either he is unaware that the IRS’s scrutiny of politically dissident groups has included these sorts of crushingly burdensome demands, in which case he has not made much of an effort to get up to speed on the story. Or he is aware of it, but sees nothing wrong enough with such demands to give him pause in his defense of the agency’s conduct.

Incidentally, Mrs. Bower of Ohio eventually figured out how to respond to the IRS’s demand for synopses of the reading materials provided to her group’s members. She sent them a copy of the U.S. Constitution.

Conspiracy Not Required

The recent revelation that the IRS targeted conservative political groups is now moving into the second stage of a DC scandal: the first is finding out what happened; the second is finding out how high up it goes. Although it is important to find out how many, if any, high-level officials are culpable, high-level participation is not necessary for libertarians to have a small “I told you so” moment.

But we should not try to oversell it. Some libertarians have an odd tendency to believe that government is more effective at doing bad things than at doing good things. At the extremes, this manifests as the “libertarian conspiracy theorist”—someone who oddly believes that, while government can’t effectively run health care, schools, or welfare programs, it can successfully orchestrate and cover-up massive conspiracies. But we don’t need high-level conspiracies to point out that abuses of power, even by low-level officials, can be expected. Moreover, as government grows larger it becomes both less accountable and more important to our lives, thus giving government officials both more leverage and more freedom to misbehave.  

In his novel Child 44, a fascinating detective story that takes place in Stalin’s Russia, Tom Rob Smith tells of an encounter between a party-member doctor and the novel’s protagonist, a Muscovite police officer who was once a loyal party member but is slowly losing his faith. The officer is out sick and the doctor visits to see if he is really sick or just trying to avoid work. Shirking work is a grave offense, and the doctor’s judgment could destroy the officer and his wife. A bad report and they will go to the Gulag. A good report and they get to stay in their relatively comfortable apartment in Moscow. Knowing his power, the doctor makes unwanted advances towards the officer’s beautiful wife, telling her that “Ten minutes is hardly a high price to pay for the life of your husband.”

It is a chilling episode, and while I am certainly not comparing the U.S. government to Soviet Russia, there are some lessons to be learned. As much as we might like a sensational story implicating top-level officials, the most common form of government misconduct does not usually involve devious scheming by politicians. Instead, it is often both less insidious and more invidious—the cumulative effects of misconduct by less-accountable, low-level officials who enjoy immense power over small areas of our lives.  

My father, an attorney, once told me he first started having vaguely libertarian thoughts after he began dealing with banking regulators. The regulators were relatively low on the chain of command, yet they held an incredible amount of power over their areas of concern, more than enough to make my father’s job very difficult. And they did. Similar stories happen all over the country, and sometimes they make it to the Supreme Court.

But most don’t usually make it to any court, much less the Supremes. The United States government is the most powerful organization the world has ever seen, and lower-level officials wield a small fraction of that power, which is still more than enough to make most people sit down and shut up.

I’m not saying that most government officials illegitimately use their power. I believe that the vast majority of government officials do not. I am saying, however, that many abuses occur and more can be expected if the government continues to grow larger and more powerful. It is simply too large an organization for anyone to control.

IRS Budget Soars

The revelations of IRS officials targeting conservative and libertarian groups suggest that now is a good time for lawmakers to review a broad range of the agency’s activities. Since the agency’s last overhaul in the IRS Restructuring and Reform Act of 1998, its budget has exploded from $33 billion to a proposed $106 billion in 2013. 

Using data from the OMB budget database, I split total IRS outlays into two broad activities: administration and handouts. Administration includes tax return processing, investigations, enforcement, and other bureaucratic functions. Handouts mainly includes spending on “refundable” tax credits such as the EITC. 

The chart shows that the IRS has become a huge social welfare agency in recent decades. Handouts have soared from $4.4 billion in 1990 to an estimated $91.1 billion in 2013 (red line). Handouts are down a bit in recent years because some of the refundable credits from “stimulus” legislation have expired. IRS administration costs have grown from $7.7 billion in 1990 to an estimated $15.3 billion in 2013 (blue line). 

 

How should we reform the IRS budget? First, we should terminate the handout programs. That would save taxpayers more than $90 billion annually and cut the IRS budget by 86 percent. 

The largest IRS handout is the refundable part of the EITC, which is expected to cost $55 billion in 2013. Many policymakers favor the EITC as a “conservative” handout program because it encourages people to work. But the EITC itself creates a discouragement to increased work over the income range that it is phased-out. It also adds to tax-code complexity and has an error and fraud rate of more than 20 percent.

The EITC is an example of how big government begets more big government. We certainly wouldn’t need the EITC incentive to work if we slashed all the taxes and welfare programs that currently encourage people not to work. 

It’s a similar situation with other IRS handout programs, such as the $1 billion “Therapeutic Discovery” grant program. These grants are supposed to “produce new and cost-saving therapies, support jobs and increase U.S. competitiveness.” But it would be better to accomplish those goals by repealing the excise tax on medical devices and slashing the high 40 percent U.S. corporate income tax. 

As for the $15 billion in spending on IRS administration, we could dramatically cut that cost with major tax reforms. In particular, a consumption-based flat tax would hugely simplify the code and greatly reduce paperwork costs of the IRS and taxpayers alike. 

Looking ahead, the IRS budget is expected to balloon in coming years as the agency plays a key role in implementing ObamaCare. Unless the health care legislation is repealed, IRS outlays are expected to soar from $106 billion this year to $263 billion by 2023.