June 2013

June 28, 2013 4:48PM

What Happens to Leakers in Ecuador?

With the political asylum request by Edward Snowden to Ecuador—which hasn’t been approved yet—and Julian Assange’s one-year ordeal in the Ecuadorean embassy in London, there is a lot of self-righteousness coming from the administration of Rafael Correa and its sympathizers about that country being a safe heaven for leakers and transparency types.

In truth, Ecuador is one of the least friendly countries in Latin America in terms of freedom of the press. Just recently the country’s National Assembly approved a law (the so-called “gag law”) that tightens controls on the media, severely limits private ownership of frequencies, and bans the repeated public criticism of authorities individuals. The Inter-American Press Association has called the law “the most serious setback for freedom of the press and of expression in the recent history of Latin America.”

But another, less reported story is Correa’s war against leakers in his own government. Since he came to power in 2007 there have been four well-documented cases where the Ecuadorean government either prosecuted or arrested people who leaked information to the media, revealing alleged instances of corruption in Correa’s government:

Quinto Pazmiño: A former aide to then-finance minister Ricardo Patiño (now the foreign relations minister), Pazmiño leaked videos of a meeting held in Quito in 2007 with representatives of the New York-based firm Abadi & Co. in which Patiño allegedly planned to create uncertainty in the bond market so both sides could speculate and reap financial benefits. Pazmiño claimed to have more incriminating videos of other high-ranking officials in the government. Correa immediately reacted by changing the bylaws of the Radio and Television Law to establish sanctions—including canceling the broadcasting license—for disseminating “clandestine videos or audio recordings.” No videos were broadcast afterwards. Then, the attorney general ordered the arrest of Pazmiño, alleging that his detention was required for the safety of the president. He spent almost a month in jail. Then the president himself sued Pazmiño for libel. A few years later Pazmiño died of a heart-attack in his home. His widow was then killed by hit men in 2011 under mysterious circumstances, supposedly related to past debts.

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June 28, 2013 4:47PM

Don’t be Fooled: Uncle Sam Is Still Bankrupt

The big spenders in Washington are all excited: the deficit is down. That must mean the budget crisis is over and Uncle Sam can go back to wasting money, big time.

Not that he ever stopped doing so. But now interest groups and leftish pundits are calling for more stimulus outlays, increased Medicaid, and expanded Social Security. They are defending huge increases in food stamp outlays. And 're theybewailing the terrible impact of “austerity,” defined as $5 trillion in deficits over the last four years.

The latest excitement has been caused by the recent Congressional Budget Office study detailing new budget projections. The federal budget deficit this year will be “only” $642 billion. 

That’s one-sixth of total federal outlays and 50 percent higher than that pre-Obama record deficit in 2008. But no matter; it’s not as big as before.

As I wrote in my new piece on American Spectator online:

In fact, the CBO’s latest report, “Updated Budget Projections:  Fiscal Years 2013 to 2023,” actually demonstrates that we face a continuing, enduring, and potentially catastrophic budget crisis. The near term is slightly less disastrous than originally thought. But without a genuine change of direction, the federal Leviathan remains headed over an economic cliff.

...However, this reduction does not reflect spending restraint. Rather, tax collections are up and the housing revival has at least temporarily stopped the fiscal bleeding of Washington’s boondoggle housing agencies. Explained the agency: the deficit estimate dropped significantly from February “mostly as a result of higher-than-expected revenues and an increase in payments to the Treasury by Fannie Mae and Freddie Mac.” 

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June 28, 2013 3:26PM

Epstein on NSA (Again) Part I: PRISM & the FISA Amendments Act

I’m disappointed to see that renowned libertarian legal scholar Richard Epstein is persisting in his defense of the National Security Agency’s surveillance programs. This time, he co‐​authors with the American Enterprise Institute’s Mario Loyola in a Weekly Standard essay blasting the “Libertarians of LaMancha”—among whose ranks I have the dubious distinction of being named specifically. As with Epstein’s previous op‐​ed on this topic, which I responded to here, there are both factual mistakes and some broader conceptual problems. So many, alas, that to prevent this from becoming unwieldy, it’s better to divide my reply into two posts, each dealing with one of the NSA programs the authors discuss.

Epstein and Loyola begin with a defense of the FISA Amendments Act of 2008 (FAA), and in particular the use of FAA authority to collect Internet content via the PRISM program. That law scrapped the traditional requirement that a Foreign Intelligence Surveillance Act (FISA) warrant be obtained to intercept wire communications to which a U.S. person was a party, provided that the “target” of surveillance was a foreigner. Epstein and Loyola nevertheless characterize the new standard as having “unduly restricted” surveillance on the grounds that some limitations on that interception remain. Yet the authors get several of those limits wrong.

They claim, for instance, that FAA minimization procedures “require, among other things, the destruction of much potentially valuable information on U.S. persons, and anyone inside the United States, even before intelligence officials can determine its value.” Since those minimization procedures have now been published by The Guardian, it is fairly easy to see that this is not accurate. Instead, destruction of U.S. person information is required only after intelligence officials have determined that it is not of value, which is to say that once a reviewer has identified a communication as “clearly not relevant to the authorized purpose of the acquisition (e.g., the communication does not contain foreign intelligence information) or as not containing evidence of a crime which may be disseminated under these procedures.” When the communication “may be related” to an authorized purpose, it can be forwarded to an analyst for further scrutiny. As the secret FISA court has explained in a rare public ruling, FISA minimization procedures are “weighted heavily in favor of the government,” with destruction required only when a communication is unambiguously irrelevant. Even wholly domestic communications—which are not supposed to be acquired under FAA authority at all—can be retained under a variety of exceptions. Among these: any communication that is encrypted or otherwise suspected to contain a “secret meaning” can be retained pending cryptanalysis.

<--break->They also claim that “[l]ike a wiretap, the target [of FAA surveillance] is always a specific suspect,” and that this “system allows the U.S. government to target specific persons wherever they go (outside the United States).” This is not merely incorrect; it is precisely backwards. As Attorney General Eric Holder made explicit in a letter to Congress urging reauthorization of the FAA, the attorney general and director of national intelligence annually approve “intelligence collection targeting categories of non-U.S. persons abroad, without the need for a court order for each individual target.” In other words, the whole point of the FAA is that the “target” of surveillance at the authorization level is essentially never a specific suspect. The language of the law, which describes the “target” as a “person,” may have misled Epstein and Loyola on this point. But as the former head of the Justice Department’s National Security Division explains in the definitive manual National Security Investigations and Prosecutions, the “person” who may be a “target” of FAA surveillance:

includes not only “any individual” human being, but also “any group, entity, association, corporation or foreign power,” some of which are (in fact or by definition) located abroad, even if they have individual members or affiliates inside the United States… [The FAA] authorizes acquisition “targeting” a “person” reasonably believed to be abroad, and explicitly adopts traditional FISA’s broad definition of the term “person.”

Again, the minimization procedures which have now been published explicitly discuss situations in which a “person” for FAA purposes is either a “corporation” or an “unincorporated association.” As the targeting procedures for FAA surveillance make clear, that leaves NSA analysts with the discretion to determine not merely which specific numbers and accounts are being used by a named individual target, but which individual “targets” fall within the ambit of sweeping surveillance authorizations covering broad categories of targets.

Finally, Epstein and Loyola rather uncritically repeat the claim that the PRISM program surveillance pursuant to FAA authorities “is responsible for foiling about 40 of the 50 terrorist plots which the administration recently disclosed to Congress in classified briefings.” If we scrutinize the government’s claims a bit more closely, we see that in fact NSA Director Keith Alexander claimed that PRISM intercepts had “contributed” to the disruption of 40 of 50 terrorist “events,” mostly overseas, and judged this contribution to have been “critical” in 50 percent of these cases.

When we examine some of the specific “events” government officials have discussed, however, it becomes clear that not all of these are “plots” at all—many seem to have involved funding or other forms of “material support” for radical groups, though in at least one such case the government appears to have claimed a “plot” to bomb the New York Stock Exchange where none really existed. (FBI Deputy Sean Joyce further told Congress that the “plot” must have been serious given that a jury convicted the plotters. But federal prosecutors themselves emphasized that the men “had not been involved in an active plot” and there was no jury trial: they were charged with “material support” and pled guilty.)

Presumably at least some of these “events” did involve actual planned attacks, but knowing that PRISM surveillance was “critical” to disrupting half of them doesn’t in itself tell us much. The question is whether the same surveillance could have been conducted in these cases using authorities that existed before the FISA Amendments Act, or under narrower amendments to FISA. Since the bulk of these “events” appear to have been overseas, the traditional authority to intercept purely foreign communications without a warrant would seem to have sufficed, or at most required a legal tweak to accommodate stored data on U.S. servers used by foreigners to communicate with other foreigners. There is no evidence to suggest that the actually controversial part of the FAA—the revocation of the warrant requirement for interception of U.S.-to-foreign wire communications—made a necessary contribution in these cases. Indeed, as national security expert Peter Bergen has documented, the public record in the overwhelming majority of terror plots we know about shows that they were “uncovered by traditional law enforcement methods, such as the use of informants, reliance on community tips about suspicious activity and other standard policing practices.”

There is certainly such a thing as too much skepticism about government. But when officials make vague allusions to vital, secret successes in an effort to justify their own broad powers, there is also such a thing as too much credulity.

So much for PRISM and the FISA Amendments Act. I’ll discuss what Epstein and Loyola say about the NSA’s metadata dragnet in a separate post.


June 28, 2013 1:41PM

New NAEP Scores Extend Dismal Trend in U.S. Education Productivity

Yesterday, the U.S. Department of Education released the latest results from the Long Term Trends portion of the National Assessment of Educational Progress. The NAEP LTT was specifically designed to track changes in student performance over time, even when there aren't any. The chart below depicts the average performance of U.S. 17-year-olds across subjects, relative to the scores of the students who took these tests 40 years ago.

Media Name: cato_coulson_trends_in_us_education_june_2013.jpg

There have been some slight improvements in the scores of younger children, but they don't last. By the time students are preparing to enter higher education or the workforce, they are no better prepared academically than they were two generations ago--despite the fact that we have spent three times as much on their K-12 education as we did educating the class of 1970.

What explains this stagnation?

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June 28, 2013 1:35PM

WSJ Sets a Litmus Test for Corporate Welfare

The Wall Street Journal has a largely terrific editorial today on the wasteful, inefficient, distortionary and unconstitutional Ex‐​Im Bank. I say “largely” because the editorial is rather meek in its recommendations, calling for “more oversight” and “limits” on the bank’s operations, rather than outright disbandment. But it’s a start, and might lend some momentum to legislative efforts to terminate the bank entirely.

The Ex‐​Im Bank itself is authorized until September 2014, but in the meantime a serious spanner could be thrown in the works if, as the editorial suggests, the Ex‐​Im board is denied a quorum. While these sorts of micro‐​level shenanigans are, in my opinion, an inferior substitute for principled, thoughtful policymaking, it might at least go some way toward preventing the growth of the bank, especially while Congress is so timid.

Watch this space.

June 28, 2013 1:31PM

The Real Consequences of Raising Tariffs for Bangladesh

As I noted yesterday, the Obama administration has suspended Bangladesh from the list of poor countries that receive preferential tariff treatment in the United States, citing concerns over workplace safety and inadequate labor laws. The vast majority of imports from Bangladesh will not be affected because apparel goods were already exempt from the program. But some tariffs will go up and the human cost of these new taxes is very real. 

The Wall Street Journal’s coverage of yesterday’s announcement includes this anecdote:

Higher porcelain duties will put a strain on the business of Ian Zucker, chief executive of 10 Strawberry Street in Denver, who imports dinnerware from Bangladesh for Bloomingdale’s, Wal‐​Mart and others.

“After the tariff goes in, I have to raise my prices 20 percent,” he said in an interview. “You think Wal-Mart’s going to say that’s OK?”

Mr. Zucker said he is likely to turn to China or Sri Lanka for dinnerware products, the making of which is labor‐​intensive, making countries with low wages especially attractive.

I wonder if the administration thinks it will get a thank‐​you card from unemployed Bangladeshi dinnerware makers now that they’re no longer being “exploited” by Western investors looking for low‐​wage labor.

June 28, 2013 9:30AM

A Legal Blow to Cities That Want to Take Your Property

As Roger Pilon has previously noted, on Tuesday, June 25, the Supreme Court issued a decision that helps protect people's property rights from greedy municipalities. On Thursday, the New York Times published an op-ed critical of that decision by Vermont Law School Professor John Echeverria, who considers it a blow to "sustainable development," whatever that means. 

In the case, a Florida property owner named Coy Koontz Sr. wanted to fill and develop 3.7 acres of wetlands. To mitigate the wetland fill, Koontz offered to put 11 acres of his property (75 percent of the total) under a conservation easement. But the St. Johns River Water Management District denied the permit, saying it wanted either 13.9 acres of Koontz's land (leaving him less than an acre, or just 5 percent of the total, for development) or for Koontz to spend a bunch of his money helping the district restore wetlands elsewhere.

Koontz sued, citing the Supreme Court's Nollan and Dolan decisions. (Cato and the Institute for Justice filed an amicus brief supporting Koontz.) In the Nollan/Dolan cases, permits were granted on the condition that the property owners give some of their land to the public. The Supreme Court had held that such conditions were an unconstitutional taking of private property.

The Florida Supreme Court rejected Koontz's argument, saying that there was a big difference between his situation and the Nollan/Dolan cases. In the latter cases, the permits were granted conditional upon the property owners giving up land. In Koontz's case, the permit was denied unless he gave up land or money.

Echeverria considers these differences to be so clear and obvious that he is amazed that five Supreme Court justices were bamboozled into overturning the Florida court's decision. After all, granting a permit conditional on giving up your land is completely different form denying a permit unless you are willing to give up your land. Moreover, giving you a choice between giving up your money or property is completely different from simply demanding that you give up your land.

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