Archives: 09/2011

COINTELPRO II: Hunting Terrorists by Making Them

A new study from the RAND Corporation looks at the threat of homegrown terrorism and concludes that our so-called “lone wolves” look a lot  more like “stray dogs”—and stray dogs with more bark than bite, at that:

The 82 cases [i.e., investigations culminating in prosecution for some form of support for jihadist terrorism] since 9/11 involved 32 plots. Few of these 32 got much beyond the discussion stage. Only 10 developed anything resembling an operational plan that identified a specific target, developed the means of attack, and offered a sequence of steps to carry out the planned action. Of these, six were Federal Bureau of Investigation (FBI) stings. Only two individuals actually attempted to build devices on their own. One was arrested while doing so, and the other’s device failed. The rest of the would-be terrorists only talked about bombs. In only two cases did jihadist terrorists actually succeed in killing someone, and both of these cases, which occurred in 2009, involved lone gunmen. [Emphasis added.]

That assessment dovetails with the portrait painted by an important package of feature stories in the latest issue of Mother Jones examining the FBI’s pursuit of the War on Terror, and in particular the way the Bureau has established a vast network of informants. In many recent high profile cases, the FBI or its “assets” appear to have gone beyond trying to detect terror plots to playing a substantial role in manufacturing them. In line with the findings of the the RAND report, Mother Jones’ survey of domestic War on Terror success stories shows that many of the highest-profile ones, including all but one of the supposed subway bomb plots “foiled” by the FBI, had first been orchestrated by FBI assets. While the targets of those operations were clearly boiling over with anger at the United States, it’s not clear how many of them would have translated their rage into violent action absent the government’s prodding.

The author of the Mother Jones article compares the contemporary hunt for “lone wolves” and domestic terror cells to another notorious FBI initiative: COINTELPRO, a series of covert projects, stretching over three decades during the Cold War, that targeted domestic “subversive” groups for infiltration. But the aggressive use of informants and infiltrators is not the only interesting parallel here. COINTELPRO projects like Operation Chaos targeted activist groups, especially anti-war groups, suspected of being controlled by foreign governments, consistently failing to turn up proof of foreign control. But Lyndon Johnson was convinced that the link had to be there—and the failure to uncover it only underscored how insidious and dangerous the adversary must be. Thus, over time, the bar for what counted as foreign “ties” was lowered, the program’s scope expanded to include civil rights and women’s liberation groups, and its methods grew more aggressive. Because the foreign communist control had to be there, failure to detect it was regarded as failure, period.

The attempt to detect “lone wolf” terrorists presents a similar—and perhaps in some ways a still more daunting—problem. The last decade has seen a drastic expansion of government surveillance powers in the name of  “connecting the dots” to identify the affiliates of foreign terror groups. This has inevitably involved the monitoring of many innocent people, but that project is, in one way, finite: Investigators begin with a set of known starting points—people, phone numbers, Internet addresses, bank accounts, etc., that are believed to be tied to a group like Al Qaeda, and then begin tracing the links in search of unknown allies. As investigators learn more about the target group through capture, infiltration, or surveillance, they can begin to develop estimates of how many operatives might reasonably remain at large—and in particular, how many of those might have made it into the United States.

But a true lone wolf won’t be located that way since, by definition, he’ll lack the necessary links to known terror groups. And there’s no reliable way to know in advance how many solitary angry individuals might be plotting violence. The effort to preempt lone wolves, then, leads to much broader attempts to detect “suspicious behavior,” leading to the compilation of dossiers on many innocent people. But it’s hard to justify the hundreds of billions, if not trillions, of additional spending on a vast national security state since 9/11 without a few scalps. Pressure naturally mounts on informants to come up with the lone wolves the government just knows must be out there—even if some of them need a little push, a little help getting a plan together or a working bomb produced. Call it supply and demand: When billions are available to fight a terrorist enemy, you can be confident we’ll come up with enough scary terrorist enemies to keep the money flowing. Even if we have to make them.

This Week in Government Failure

Over at Downsizing the Federal Government, we focused on the following issues this past week:

  • The child tax credit started out as a Republican effort to distort the tax code in a socially conservative manner, and it has now morphed into a large welfare program. As for the earned income tax credit, any program that hands out one-quarter of its spending erroneously and fraudulently is grossly unfair to the taxpayers who are footing the bills.
  • The electorate — and reporters covering the president’s “jobs plan” — should understand that subsidies to state and local government have gone through the roof since 2000.
  • The wonderful thing about this newly discovered feature of ObamaCare is that states don’t have to wait for Congress to act. They can reduce federal spending simply by not creating a health insurance exchange.
  • President Obama’s job speech was full of bad ideas.
  • We should place fewer demands on our troops and recognize that our spending and our foreign policy discourage other countries from doing more. Declaring military spending off limits before the Supercommittee even begins its work reveals a shocking unwillingness to reconsider the roles and missions that drive military spending.

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Total State Spending Has Not Been Cut

Expressing his Keynesian view of the economy, Federal Reserve Board Chairman Ben Bernanke said this yesterday:

While the weakness of the housing sector and continued financial volatility are two key reasons for the frustratingly slow pace of the recovery, other factors also may restrain growth in coming quarters. For example, state and local governments continue to tighten their belts by cutting spending and reducing payrolls in the face of ongoing budgetary pressures…

Mr. Bernanke made a boo-boo. Overall state and local government spending has not been “cut” any year in the last decade. In recent years, spending has been flat at about $2.2 trillion, but it has not been cut.

I think the Keynesian formulation that government spending equals economic growth is bizarre. But even if true, Bernanke’s concern that state and local governments aren’t profligate enough is strange because spending is up about 60 percent over the last decade, as shown in the chart below. The chart shows “total expenditures” for state and local governments from BEA Table 3.3. The figure for 2011 is the 2nd quarter value, which is up 3.1 percent over 2nd quarter 2010. So, despite Benanke’s claim, spending is (unfortunately) growing again.

Note to Charles Krauthammer: Economic Growth Averaged 2.9% (not 5%) under Ike’s Military-Industrial Complex

In an effort to defend spending $1.3 trillion on wars in Iraq and Afghanistan, the Washington Post’s hawkish columnist Charles Krauthammer writes, “During the golden Eisenhower 1950s of robust economic growth averaging 5 percent annually, defense spending was 11 percent of GDP and 60 percent of the federal budget.”   

In reality, economic growth averaged only 2.9 percent a year while Eisenhower was president from 1953 to 1961.   Krauthammer is erroneously crediting Ike with the ephemeral Korean War boom of 1950-51 when defense spending was much smaller (7.6 percent of GDP), but consumers emptied the shelves due to fears that rationing would return.

Real GDP growth averaged 5.2 percent from 1962 to 1968, as President Kennedy’s plan to cut marginal tax rates by 23 percent was implemented.   We then switched to a mix of high tax rates and easy money, starting with surtaxes in mid-1968, and annual growth slowed to 2.6 percent from 1969 to 1982.  From 1983 to 1989, after President Reagan gradually cut marginal tax rates another 23 percent by mid-1983, economic growth averaged 4.3 percent a year. 

A strong economy can afford a strong military, but foreign military adventures are nevertheless an economic burden.

Postal Service Running on Fumes

The Senate Homeland Security and Government Affairs Committee held a hearing this week on the U.S. Postal Service’s dire financial situation. The USPS is facing a $10 billion loss this year, is about to max out its $15 billion line of credit with the U.S. Treasury, and doesn’t have the money to make a required $5.5 billion payment for retiree health care benefits due at the end of the month. The USPS is projecting insolvency in 2012 if Congress doesn’t step in to provide relief.

Congress hasn’t been able to bring itself to allow the USPS to close 3,000 of its 30,000+ retail locations, so it’s hard to imagine that it will allow operations to come to a halt. Therefore, the important question is what sort of relief will Congress ultimately provide?

Let’s start with what it won’t do: consider privatization. “Consider privatization” means authorizing studies or a commission to examine what it would take to prepare the USPS for sale to the private sector. In its current form, it’s unlikely that anyone would touch the USPS with a 10-foot pole. The reluctance to even consider privatization is unfortunate, especially since European nations have been liberalizing their postal markets for two decades. Getting the privatization ball rolling would probably require leadership from the White House, and that won’t happen with this administration. (See this Cato essay on privatizing the USPS for more information.)

Interestingly, U.S. Postmaster General Patrick Donahoe is asking Congress to let the USPS operate more like a private business by allowing it to reopen collective bargaining agreements, eliminate Saturday mail delivery, manage its own employee benefit programs, and have more freedom to close down excess postal facilities. Donahoe understands what Congress either doesn’t or is unwilling to recognize: if the USPS is to operate solely on the revenues that it generates, then it needs the flexibility that comes with private ownership.

Based on several pieces of postal legislation that have already been introduced in Congress, the most likely scenarios are a band-aid and/or bailout.

The band-aid solution would be to allow the USPS to decrease or defer its statutory requirement to fund retiree health care benefits. Currently, only 47 percent of the future liabilities for retiree health care benefits are funded. Therefore, while decreasing or deferring the payments will free up money now, it will increase the unfunded liability going forward. That’s a problem because mail volume — the USPS’s lifeblood — is projected to continue plummeting as people turn to electronic forms of communication. Thus, the band-aid solution would increase the chances of a taxpayer bailout in the future.

The bailout solution would be to transfer to USPS approximately $50-$75 billion in employee pension “overpayments” to the Civil Service Retirement System that the USPS is alleged to have made over the years. The postal employee unions are pushing this solution. The question of whether or not the USPS is “owed” money is a very complicated matter and beyond the scope of this blog post. The USPS’s inspector general has concluded that the USPS is owed the money. The Office of Personnel Management, which administers the pensions of federal government employees, and its inspector general have concluded otherwise. Regardless of whether the USPS paid more than its fair share, the transfer of funds from the federal government to the USPS would be a hit on taxpayers. (I recommend that interested readers take a look at a paper on the controversy produced by the Institute for Research on the Economics of Taxation’s Michael Schuyler.)

I’ll conclude by noting that the Senate hearing offered another example of why putting Congress in ultimate control of a commercial operation is bound to fail. Here’s a solution that Sen. Claire McCaskill (D-MO) offered up to Postmaster Donahoe as reported by the Washington Post:

In addition to structural reforms, Sen. Claire McCaskill (D-Mo.) suggested that USPS should mount a national advertising campaign promoting the value of printed mail. “You cannot get money by text message,” McCaskill said. “I really think that there is a longing out there right now, especially in these uncertain times, for some of the things that have provided stability over the years.”

I’ll forgo any wisecracks and just let Comedy Central’s Jon Stewart take it away:

Post-9/11 Visa Delays Hurting U.S. Exports and Jobs

The terrorist attacks of a decade ago left their mark on U.S. trade, travel, and immigration policy, as I contemplated in my modest contribution to the flood of 9/11 retrospectives this week (see “9/11 tested America’s openness to trade and immigration,” posted over at The Daily Caller).

In the wake of the attacks, it was necessary to tighten U.S. visa policy in a way that made it far more difficult for a terrorist to ever enter our country again in the disguise of a tourist or student (as in shutting down the “Visa Express” program for young men from Saudi Arabia).

One unintended consequence of the tightening, however, is that we have also kept away millions of potential visitors who pose no threat whatsoever to the security of our homeland. As the Wall Street Journal reports today, long waits for visas have discouraged potential tourists to the United States from emerging markets such as China, Brazil, and India. As the Journal reports:

The backlog especially has deterred tourists from emerging-market countries with fast-growing pools of people looking to travel overseas, travel executives say. Waiting periods for a Brazilian to get an in-person interview for a visa to enter the U.S., for instance, can exceed four months.

Those delays have imposed a real cost on the American economy. Between 2000 and 2010, according to the story, the number of overseas arrivals to the United States barely budged, from 26 million to 26.4 million. During that same period, global long-haul arrivals grew from 152 million to 213 million—an increase of more than 60 million fueled largely by the growth of the middle class in those emerging economies. But that also means all those new travelers went elsewhere, reducing the U.S. share of long-haul visitors from 17 percent to 12 percent.

That loss of market share means the loss of tens of billions of dollars in tourism service exports, and fewer jobs for Americans in the domestic tourism industry. If President Obama and Congress are serious about promoting economic growth and employment,  they should find a way to make America more hospitable for peaceable foreign tourists who only want to come here to enjoy the best our wonderful country has to offer.

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