Gangster State US/UK

Paul Craig Roberts

Recently I wrote about how the US reversed roles with the USSR and became the tyrant that terrifies the world. We have now had further confirmation of that fact. It comes from two extraordinary actions by Washington’s British puppet state.

David Miranda, the Brazilian partner of Glenn Greenwald, who is reporting on the illegal and unconstitutional spying by the National Stasi Agency, was seized, no doubt on Washington’s orders, by the puppet British government from the international transit zone of a London airport. Miranda had not entered the UK, but he was seized by UK authorities.  Washington’s UK puppets simply kidnapped him, threatened him for nine hours, and stole his computer, phones, and all his electronic equipment. As a smug US official told the media, “the purpose was to send a message.”

You might remember that Edward Snowden was stuck for some weeks in the international transit zone of the Moscow airport. Obama;s Administration repeatedly browbeat Russia’s President Putin to violate the law and kidnap Snowden for Obama. Unlike the once proud and law-abiding British, Putin refused to place Washington’s desires above law and human rights.

The second extraordinary violation occurred almost simultaneously with UK authorities appearing at the Guardian newspaper and illegally destroying the hard drives on the newspaper’s computers with the vain intention of preventing the newspaper from reporting further Snowden revelations of US/UK high criminality.

It is fashionable in the US and UK governments and among their sycophants to speak of “gangster state Russia.” But we all know who the gangsters are. The worst criminals of our time are the US and UK governments. Both are devoid of all integrity, all honor, all mercy, all humanity. Many members of both governments would have made perfect functionaries in Stalinist Russia or Nazi Germany.

This is extraordinary. It was the English who originated liberty. True, in 1215 it was the freedom of the barons’ rights from the king’s infringement, not the freedom of the commoner. But once the principle was established it spread into the entire society. By 1680 the legal revolution was complete. The king and the government were subject to law. The king and his government were no longer the law and above the law.

In the 13 colonies the Englishmen who populated them inherited this English achievement. When King George’s government refused the colonies the Rights of Englishmen, the colonists revolted, and the United States was born.

The descendants of these colonists now live in an America where their Constitutional protections have been overthrown by a tyrannical government that claims it is above the law. This raw fact has not stopped the US government or its puppets from continuing to cloak the war crime of military aggression in the faux language of “bringing freedom and democracy.” If the Obama and Cameron governments were in the dock at Nuremberg, the entirety of both governments would be convicted.

The question is: are there sufficient brainwashed people in both countries to sustain the US/UK myth that “freedom and democracy” are attained via war crimes?

There is no shortage of brainwashed Americans who love to be told that they are “indispensable” and “exceptional,” and therefore entitled to work their will on the world. It is difficult to discern in these clueless Americans much hope for the revival of liberty. But there is some indication that the British, who did not inherit liberty but had to fight for it for five centuries, might be more determined.

The British Home Affairs Committee, chaired by Keith Vaz, is demanding an explanation from Obama’s lap dog, the British prime minister. Also, Britain’s watchman over anti-terrorism enforcement, David Anderson, is demanding that the UK Home Office and police explain the illegal use of anti-terrorism laws against Miranda, who is not a terrorist or connected to terrorism in any way.

Brazil’s foreign minister has joined the fray, demanding that London explain why the UK violated its own law and abused a Brazilian citizen.

Of course, everyone knows that Washington forced its UK puppet to violate law in order to serve Washington. One wonders if the British will ever decide that they would be better off as a sovereign country.

The White House denied involvement in Miranda’s kidnapping, but refused to condemn the illegal action of its puppet.

As for the UK’s destruction of press freedom, the White House supports that, too. It is already happening here.

Meanwhile, get accustomed to the police state.

One in Three Americans is Poor — And Getting Little Relief

Dollars and Sense
By Jeanette Wicks-Lim

In 1995, a blue-ribbon panel of poverty experts selected by the National Academy of the Sciences (NAS) told us that the “current U.S. measure of poverty is demonstrably flawed judged by today’s knowledge; it needs to be replaced.” Critics have long pointed out shortcomings including the failure to adequately account for the effects of “safety net” programs and insensitivity to differences in the cost of living between different places.

The Census Bureau, the federal agency charged with publishing the official poverty numbers, has yet to replace the poverty line. However, in the last couple years it has published an alternative, the Supplemental Poverty Measure (SPM). The SPM is the product of over two decades of work to fix problems in the federal poverty line (FPL).
This new measure takes us one step forward, two steps back. On the one hand, it has some genuine improvements: The new measure makes clearer how the social safety net protects people from economic destitution. It adds basic living costs missing from the old measure. On the other hand, it does little to address the most important criticism of the poverty line: it is just too damned low. The fact that the poverty line has only now been subject to revision—50 years after the release of the first official poverty statistic—likely means that the SPM has effectively entrenched this major weakness of the official measure for another 50 years.

The 2011 official poverty rate is 15.1%. The new poverty measure presented—and missed by a wide margin—the opportunity to bring into public view how widespread the problem of poverty is for American families. If what we mean by poverty is the inability to meet one’s basic needs a more reasonable poverty line would tell us that 34% of Americans—more than one in three—are poor.

What’s in a Number?

The unemployment rate illustrates the power of official statistics. In the depths of the Great Recession, a new official statistic—the rate of underemployment, counting people working part time who want full-time work and discouraged workers as those who have just given up on looking for work—became part of every conversation about the economy. One in six workers (17%) counted as underemployed in December 2009, a much higher number than the 9.6% unemployment rate. The public had not been confronted with an employment shortage that large in recent memory; it made political leaders stand up and pay attention.

The supplemental poverty measure had the potential to do the same: a more reasonable poverty line—the bottom line level of income a household needs to avoid poverty—would uncover how endemic the problem of economic deprivation is here in the United States. That could shake up policymakers and get them to prioritize anti-poverty policies in their political agendas. Just as important, a more accurate count of the poor would acknowledge the experience of those struggling mightily to put food on the table or to keep the lights on. No one wants to be treated like “just a number,” but not being counted at all is surely worse.

With a couple of years of data now available, the SPM has begun to enter into anti-poverty policy debates. Now is a good time to take a closer look at what this measure is all about. The supplemental measure makes three major improvements to the official poverty line. It accounts for differences in the cost of living between different regions. It changes the way it calculates the standard of living necessary to avoid poverty. And it accounts more fully for benefits from safety net programs.

Different Poverty Lines for Cost-of-Living Differences

Everyone knows that $10,000 in a small city like Utica, New York, can stretch a lot farther than in New York City. In Utica, the typical monthly cost of rent for a two-bedroom apartment, including utilities, was about $650 during 2008-2011. The figure for New York City? Nearly double that at $1,100. Despite this, the official poverty line has been the same regardless of geographic location.The supplemental poverty measure adjusts the poverty income threshold by differences in housing costs in metropolitan and rural areas in each state—a step entirely missing in the old measure.

We can see how these adjustments make a real difference by simply comparing the official poverty and SPM rates by region. In 2011, according to the official poverty line, the Northeast had the lowest poverty rate (13.2%), the South had the highest (16.1%), and the Midwest and the West fell in between (14.1% and 15.9%, respectively). With cost-of-living differences factored in, the regions shuffled ranks. The SPM poverty rates of the Northeast and South look a lot more alike (15.0% and 16.0%, respectively). The Midwest’s cheaper living expenses pushed its SPM rate to the lowest among the four regions (12.8%). The West, on the other hand, had an SPM rate of 20.0%, making it the highest-poverty region.

Updating Today’s Living Costs

Obviously, household expenses have changed a lot over the last half-century. The original formula used to construct the official poverty line used a straightforward rule-of-thumb calculation: minimal food expenses time three. It’s been well-documented since then that food makes up a much smaller proportion of households’ budgets, something closer to one-fifth, as new living expenses have been added (e.g., childcare, as women entered the paid workforce in droves) and the costs of other expenses ballooned (e.g., transportation and medical care).

The new poverty measure takes these other critical expenses into account by doing the following. First, the SPM income threshold tallies up necessary spending on food, clothing, shelter and utilities. The other necessary expenses like work-related child care and medical bills are deducted from a household’s resources to meet the SPM income threshold. A household is then called poor if its resources fall below the threshold.

These non-discretionary expenses clearly take a real bite out of family budgets. For example, the “costs of working” cause the SPM poverty rate to rise to nearly doubles that of the official poverty rate among full-time year-round workers from less than 3% to over 5%. Bringing the Social Safety Net into Focus

Today’s largest national anti-poverty programs operate in the blind spot of the official poverty line. These include programs like Supplemental Nutrition Assistance Program (SNAP) and the Earned Income Tax credit (EITC). The supplemental measure does us a major service by showing in no uncertain terms how our current social safety net protects people from economic destitution. The reason for this is that the official poverty measure only counts cash income and pre-tax cash benefits (e.g., Social Security, Unemployment Insurance, and Temporary Assistance to Needy Families (TANF)) towards a household’s resources to get over the poverty line. The supplemental poverty measure, on the other hand, adds to a household’s resources near-cash government subsidies—programs that help families cover their expenditures on food (e.g. SNAP and the National School Lunch program), shelter (housing assistance from HUD) and utilities (Low Income Home Energy Assistance Program (LIHEAP))—as well as after-tax income subsidies (e.g., EITC). This update is long overdue since the 1996 Personal Responsibility and Work Opportunity Reconciliation Act (a.k.a., the Welfare Reform Act) largely replaced the traditional cash assistance program AFDC with after-tax and in-kind assistance.

Here are some figures for 2011 that illustrate the impact of each of twelve different economic assistance programs. Social Security, refundable tax credits (largely EITC but also the Child Tax Credit (CTC)), and SNAP benefits do the most to reduce poverty. In the absence of Social Security, the supplemental poverty rate would be 8.3 percentage points higher, shooting up from 16.1% to over 23.8%. Without refundable tax credits, the supplemental poverty rate would rise 2.8 percentage points, up to nearly 19%, with much of the difference being in child poverty. Finally, SNAP benefits prevent poverty across households from rising 1.5 percentage points. The SPM gives us the statistical ruler by which to measure the impact of the major anti-poverty programs of the day. This is crucial information for current political feuds about falling over fiscal cliffs and hitting debt ceilings.

A Meager Supplement

Unfortunately, the new poverty measure adds all these important details to a fundamentally flawed picture of poverty.

In November 2012, the Census Bureau published, for only the second time, a national poverty rate based on the Supplemental Poverty Measure: it stood at 16.1% (for 2011), just one percentage point higher than the official poverty rate of 15.1%. Why such a small difference? The fundamental problem is that the supplementary poverty measure, in defining the poverty line, builds from basically the same level of extreme economic deprivation as the old measure.

In an apples-to-apples comparison, the new supplemental measure effectively represents a poverty line roughly 30% higher than the official poverty income threshold for a family of four. For 2011, the official four-person poverty line was $22,800, an adjusted SPM income threshold—one that can be directly compared to the FPL—is about $30,500. Unfortunately, the NAS panel of poverty experts appears to have taken an arbitrarily conservative approach to setting poverty income threshold. Reasonably enough, NAS panel uses as their starting point how much households spend on the four essential items: food, clothing, shelter, and utilities. A self-proclaimed “judgment call,” they choose what they call a “reasonable range” of expenditures to mark poverty. What’s odd is that their judgment leans back toward the official poverty line – the measure they referred to as “demonstrably flawed.”

To justify this amount they show how their spending levels fall within the range of two other “expert budgets” (i.e., poverty income thresholds) in the poverty research. What they do not explain is why, among the ten alternative income thresholds they review in detail, they focus on two of the lower ones. In fact, one of these two income thresholds they describe as an “outlier at the low end.” The range of the ten thresholds actually spans between 9% and 53% more than the official poverty line; their recommended range for the threshold falls between 14% and 33% above the official poverty line.

Regardless of the NAS panel’s intention, the Inter-agency Technical Working group (ITWG) tasked with the job of producing the new poverty measure adopted the middle point of this “reasonable range” to establish the initial threshold for the revised poverty line. This conflicts with what we know about the level of economic deprivation that households experience in the range of the federal poverty line. In a 1999 book Hardship in America, researchers Heather Boushey, Chauna Brocht, Bethney Gunderson, and Jared Bernstein examined the rates and levels of economic hardship among officially poor households (with incomes less than the poverty line), near-poor households (with incomes between the poverty line and twice the poverty line), and not poor households (with incomes more than twice the poverty line).

As expected, they found high rates of economic distress among households classified as “officially poor.” For example, in 1996, 29% of poor households experienced one or more “critical” hardships such as missing meals, not getting necessary medical care, and having their utilities disconnected. Near-poor households experienced these types of economic crises only a little less frequently (25%). Only when households achieved incomes above twice the poverty line did the incidence of these economic problems fall substantially—down to 11%. (Unfortunately, the survey data on which the study was based have been discontinued, so more up-to-date figures are unavailable.) This pattern repeats for “serious” hardships that include being worried about having enough food, using the ER for health care due to lack of alternatives, and falling behind on housing payments. So if what we mean by poverty is the inability to meet one’s basic needs, then twice the poverty line—rather than the SPM’s 1.3 times—appears to be an excellent marker.

Let’s consider what the implied new poverty income threshold of $30,500 feels like for a family of four. (This, by the way, is about what a household would take in with two full-time minimum-wage jobs.)

This annual figure comes out to $585 per week. Consider a family living in a relatively low-cost area like rural Sandusky, Michigan. Based on the basic-family-budget details provided by the Economic Policy Institute, such a family typically needs to spend about $175 on food (this assumes they have a nearby grocery store, a stove at home, and the time to cook all their meals) and another $165 on rent for a two-bedroom apartment each week. This eats up 60% of their budget, leaving only about $245 to cover all other expenses. If they need childcare to work ($180), then this plus the taxes they have to pay on their earnings ($60) pretty much wipes out the rest. In other words, they have nothing left for such basic needs as telephone service, clothes, personal care products like soap and toilet paper, school supplies, out of pocket medical expenses, and transportation they may need to get to work. Would getting above this income threshold seem like escaping poverty to you?

For many federal subsidy programs this doesn’t seem like escaping poverty either. That’s why major anti-poverty programs like that National School Lunch program, Low Income Home Energy Assistance Program (LIHEAP), State Children’s Health Insurance Program (SCHIP) step in to help families with incomes up to twice the poverty line.

If the supplementary poverty measure tackled the fundamental problem of a much-too-low poverty line then it would likely draw an income threshold closer to 200% of the official poverty line (or for an apples-to-apples comparison, about 150% of the SPM income threshold). This would shift the landscape of poverty statistics and produce a poverty rate of an astounding one in three Americans.

Now What?

The Census Bureau’s supplemental measure doesn’t do what the underemployment rate did for the unemployment rate—that is, fill in the gap between the headline number and how many of us are actually falling through the cracks.

The poverty line does a poor job of telling us how many Americans are struggling to meet their basic needs. For those of us who fall into the “not poor” category but get struck with panic from time to time that we may not be able to make ends meet—with one bad medical emergency, one unexpected car repair, one unforeseen cutback in work hours—it makes us wonder, if we’re not poor or even near poor, why are we struggling so much? The official statistics betray this experience. The fact is that so many Americans are struggling because many more of us are poor or near-poor than the official statistics lead us to believe.

The official poverty line has only been changed—supplemented, that is—once since its establishment in 1963. What can we do to turn this potentially once-in-a-century reform into something more meaningful? One possibility: we should simply rename the supplemental poverty rates as the severe poverty rate. Households with economic resources below 150% of the new poverty line then can be counted as “poor.” By doing so, politicians and government officials would start to recognize what Americans have been struggling with: one-third of us are poor.

Sources: Kathleen Short, “The Research Supplemental Poverty Measure: 2011,” Current Population Report, U.S. Bureau of the Census, November 2012 (census.gov); Constance F. Citro and Robert T. Michael (eds.), Measuring Poverty: A New Approach, Washington D.C.: National Academy Press, 1995; Trudi Renwick, “Geographic Adjustments of Supplemental Poverty Measure Thresholds: Using the American Community Survey Five-Year Data on Housing Costs,” U.S. Bureau of the Census, January 2011 (census.gov).

Texas Republican Party

IP Cloaking Violates Computer Fraud and Abuse Act, Judge Rules

By David Kravets WIRED
08.20.13

A federal judge has ruled that circumventing an IP address blockade to connect to a website is a breach of the Computer Fraud and Abuse Act, the same law that was used to prosecute Aaron Swartz before he committed suicide earlier this year.

The decision (.pdf) by U.S. District Judge Charles Breyer marks the first time a court has offered this interpretation of a highly controversial law that affords both criminal and civil penalties. Congress passed the law in 1984 to combat hackers.

The legal issue concerns 3Taps, a site that was scraping classified ads from Craigslist and republishing them without consent. Craigslist sent the San Francisco aggregator a cease-and-desist letter and blocked 3Taps’ IP addresses from accessing the site. After circumventing the IP blockade, 3Taps continued scraping and was sued under the CFAA, which has since Swartz’s death been the target of calls for reform by lawmakers and the public.

“3Taps asks this Court to hold that an owner of a publicly accessible website has no power to revoke the authorization of a specific user to access that website. However compelling 3Taps’ policy arguments, this Court cannot graft an exception on to the statute with no basis in the law’s language or this circuit’s interpretive precedent,” Breyer ruled.

Friday’s decision means 3Taps likely faces a civil-damages trial for the “unauthorized access” unless Craigslist settles out of court.

Hanni Fakhoury, an attorney with the Electronic Frontier Foundation, which filed a friend-of-the-court brief with the judge, said the decision has its pluses and minuses.

Moreover, by focusing on the IP blocking, the court essentially agreed with the basic principle we’ve suggested as a means to limit the reach of the CFAA: that there must be circumvention of a technological barrier before a person can be found to have ‘accessed’ information or data ‘without authorization.’ In fact one proposal to reform the CFAA currently before Congress, ‘Aaron’s Law,’ defines ‘access without authorization’ to mean precisely that: ‘knowingly circumventing one or more technological or physical measures that are designed to exclude or prevent unauthorized individuals from obtaining that information.’ The court adopted this idea in principle when it found that Craigslist’s CFAA claim was based on something more than violating the terms of service of a publicly accessible website, and indeed something more than the cease and desist letter alone.

But the minus, Fakhoury added: “We believe that the CFAA requires hacking—doing something that breaches a technological barrier, like cracking a password or taking advantage of a SQL injection. Changing your IP address is simply not hacking. That’s because masking your IP address is an easy, common thing to do.”

Breyer disagreed:

The banned user has to follow only one, clear rule: do not access the website. The notice issue becomes limited to how clearly the website owner communicates the banning. Here, Craigslist affirmatively communicated its decision to revoke 3Taps’ access through its cease-and-desist letter and IP blocking efforts. 3Taps never suggests that those measures did not put 3Taps on notice that Craigslist had banned 3Taps; indeed, 3Taps had to circumvent Craigslist’s IP blocking measures to continue scraping, so it indisputably knew that Craigslist did not want it accessing the website at all.

The judge added that he believes the decision isn’t going to penalize normal internet-surfing behavior:

Nor does prohibiting people from accessing websites they have been banned from threaten to criminalize large swaths of ordinary behavior. It is uncommon to navigate contemporary life without purportedly agreeing to some cryptic private use policy governing an employer’s computers or governing access to a computer connected to the internet. In contrast, the average person does not use “anonymous proxies” to bypass an IP block set up to enforce a banning communicated via personally-addressed cease-and-desist letter.

Orin Kerr, one of the country’s leading CFAA scholars, had this to say about the decision:

I think this analysis is somewhat misdirected. In my view, the fact that 3taps was on notice that Craiglist did not want them to access the Craigslist website is only relevant to show intent. From that perspective, Judge Breyer should have been clearer that the cease-and-desist letter couldn’t make visiting the website an “unauthorized access.” The letter is just a written statement of the owner’s wishes as to who can visit the site, just like Terms of Service. In my view, whether the facts of the 3Taps case amount to an unauthorized access hinges on the circumvention of IP blocking. If so, then the cease-and-desist letter shows that the act of unauthorized access was intentional; if not, then the letter does not have any relevance to the CFAA.

3Taps said (.pdf) it would obey Judge Breyer’s ruling. Ironically, however, the site announced it would continue accessing Craigslist’s classified adds.

Although craigslist may use the CFAA as currently interpreted to prevent 3taps from accessing its servers, 3taps can continue to function because directly accessing these servers is only one of three ways in which the information in question can be obtained. The other two, crowdsourcing and public search results, require no such access to Craigslist’s servers and thus obviate the need to engage in conduct that may implicate the CFAA. Going forward, 3taps will operate based on its understanding that if it does not access Craigslist’s servers, it has a right to collect public information originally posted on Craigslist’s website.

The Computer Fraud and Abuse Act was passed in 1984 to enhance the government’s ability to prosecute hackers who accessed computers to steal information or to disrupt or destroy computer functionality. The government, however, has interpreted the anti-hacking provisions to include activities such as violating a website’s terms of service or a company’s computer usage policy.

One of the latest criminal prosecutions under the act concerned Andrew “Weev” Auerheimer, who was sentenced to 3.5 years in prison for obtaining the personal data of more than 100,000 iPad owners from AT&T’s publicly accessible website.

This Modern World

The NSA: ‘The Abyss From Which There Is No Return’

August 19, 2013 By John W. Whitehead

“The National Security Agency’s capability at any time could be turned around on the American people, and no American would have any privacy left, such is the capability to monitor everything: telephone conversations, telegrams, it doesn’t matter. There would be no place to hide. If a dictator ever took over, the N.S.A. could enable it to impose total tyranny, and there would be no way to fight back.”—Senator Frank Church (1975)

We now find ourselves operating in a strange paradigm where the government not only views the citizenry as suspects but treats them as suspects, as well. Thus, the news that the National Security Agency (NSA) is routinely operating outside of the law and overstepping its legal authority by carrying out surveillance on American citizens is not really much of a surprise. This is what happens when you give the government broad powers and allow government agencies to routinely sidestep the Constitution.

Indeed, as I document in my book, A Government of Wolves: The Emerging American Police State, these newly revealed privacy violations by the NSA are just the tip of the iceberg. Consider that the government’s Utah Data Center (UDC), the central hub of the NSA’s vast spying infrastructure, will be a clearinghouse and a depository for every imaginable kind of information—whether innocent or not, private or public—including communications, transactions and the like. In fact, anything and everything you’ve ever said or done, from the trivial to the damning—phone calls, Facebook posts, Twitter tweets, Google searches, emails, bookstore and grocery purchases, bank statements, commuter toll records, etc.—will be tracked, collected, catalogued and analyzed by the UDC’s supercomputers and teams of government agents.

By sifting through the detritus of your once-private life, the government will come to its own conclusions about who you are, where you fit in, and how best to deal with you should the need arise. Indeed, we are all becoming data collected in government files. Whether or not the surveillance is undertaken for “innocent” reasons, surveillance of all citizens, even the innocent sort, gradually poisons the soul of a nation. Surveillance limits personal options—denies freedom of choice—and increases the powers of those who are in a position to enjoy the fruits of this activity.

If this is the new “normal” in the United States, it is not friendly to freedom. Frankly, we are long past the point where we should be merely alarmed. These are no longer experiments on our freedoms. These are acts of aggression.

Senator Frank Church (D-Ida.), who served as the chairman of the Select Committee on Intelligence that investigated the National Security Agency in the 1970s, understood only too well the dangers inherent in allowing the government to overstep its authority in the name of national security. Church recognized that such surveillance powers “at any time could be turned around on the American people, and no American would have any privacy left, such is the capability to monitor everything: telephone conversations, telegrams, it doesn’t matter. There would be no place to hide.”

Noting that the NSA could enable a dictator “to impose total tyranny” upon an utterly defenseless American public, Church declared that he did not “want to see this country ever go across the bridge” of constitutional protection, congressional oversight and popular demand for privacy. He avowed that “we,” implicating both Congress and its constituency in this duty, “must see to it that this agency and all agencies that possess this technology operate within the law and under proper supervision, so that we never cross over that abyss. That is the abyss from which there is no return.”

Unfortunately, we have long since crossed over into that abyss, first under George W. Bush, who, among other things, authorized the NSA to listen in on the domestic phone calls of American citizens in the wake of the 9/11 attacks, and now under President Obama, whose administration has done more to undermine the Fourth Amendment’s guarantee of privacy and bodily integrity than any prior administration. Incredibly, many of those who were the most vocal in criticizing Bush for attempting to sidestep the Constitution have gone curiously silent in the face of Obama’s repeated violations.

Whether he intended it or not, it well may be that Obama, moving into the home stretch and looking to establish a lasting “legacy” to characterize his time in office, is remembered as the president who put the final chains in place to imprison us in an electronic concentration camp from which there is no escape. Yet none of this could have been possible without the NSA, which is able to operate outside the constitutional system of checks and balances because Congress has never passed a law defining its responsibilities and obligations.

The constitutional accountability clause found in Article 1, section 9, clause 7 of the Constitution demands that government agencies function within the bounds of the Constitution. It does so by empowering the people’s representatives in Congress to know what governmental agencies are actually doing by way of an accounting of their spending and also requiring full disclosure of their activities. However, because agencies such as the NSA operate with “black ops” (or secret) budgets, they are not accountable to Congress.

In his book Body of Secrets, the second installment of the most extensively researched inquiry into the NSA, author James Bamford describes the NSA as “a strange and invisible city unlike any on earth” that lies beyond a specially constructed and perpetually guarded exit ramp off the Baltimore-Washington Parkway. “It contains what is probably the largest body of secrets ever created.”

Bamford’s use of the word “probably” is significant since the size of the NSA’s staff, budget and buildings is kept secret from the public. Intelligence experts estimate that the agency employs around 38,000 people, with a starting salary of $50,000 for its entry-level mathematicians, computer scientists and engineers. Its role in the intelligence enterprise and its massive budget dwarf those of its better-known counterpart, the Central Intelligence Agency (CIA). The NSA’s website provides its own benchmarks:

Neither the number of employees nor the size of the Agency’s budget can be publicly disclosed. However, if the NSA/CSS were considered a corporation in terms of dollars spent, floor space occupied, and personnel employed, it would rank in the top 10 percent of the Fortune 500 companies.

If the NSA’s size seems daunting, its scope is disconcerting, especially as it pertains to surveillance activities domestically. The first inkling of this came in December 2005 when the New York Times reported that President Bush had secretly authorized the NSA to monitor international phone calls and email messages initiated by individuals (including American citizens) in the United States. Bush signed the executive order in 2002, under the pretext of needing to act quickly and secretly to detect communication among terrorists and their contacts and to quell future attacks in the aftermath of September 11, 2001.

The New York Times story forced President Bush to admit that he had secretly instructed the NSA to wiretap Americans’ domestic communications with international parties without seeking a FISA warrant or congressional approval. The New York Times had already sat on its story for a full year due to White House pressure not to publish its findings. It would be another six months before USA Today delivered the second and most significant piece of the puzzle, namely that the NSA had been secretly collecting the phone records of tens of millions of Americans who used the national “private” networks AT&T, Verizon and BellSouth.

It would be another seven years before Americans were given undeniable proof—thanks to NSA whistleblower Edward Snowden—that the NSA had not only broken privacy rules or overstepped its legal authority thousands of times every year but was actively working to flout attempts at oversight and accountability, aided and abetted in this subterfuge by the Obama administration.

Then again, all Snowden really did was confirm what we already suspected was happening. We already knew the NSA was technologically capable of spying on us. We also knew that the agency had, since the 1960s, routinely spied on various political groups and dissidents.

So if we already knew that the government was spying on us, what’s the big deal? And more to the point, as I often hear many Americans ask, if you’re not doing anything wrong, why should you care?

The big deal is simply this: once you allow the government to start breaking the law, no matter how seemingly justifiable the reason, you relinquish the contract between you and the government which establishes that the government works for and obeys you, the citizen—the employer—the master. And once the government starts operating outside the law, answerable to no one but itself, there’s no way to rein it back in, short of revolution.

As for those who are not worried about the government filming you when you drive, listening to your phone calls, using satellites to track your movements and drones to further spy on you, you’d better start worrying. At a time when the average American breaks at least three laws a day without knowing it thanks to the glut of laws being added to the books every year, there’s a pretty good chance that if the government chose to target you for breaking the law, they’d be able to come up with something without much effort.

Then again, for those who insist they’re not doing anything wrong, per se, perhaps they should be. Because if you’re not doing anything wrong, it just might mean that you’re not doing anything at all, which is how we got into this mess in the first place.

The “Bankization” of America

Friday, August 16, 2013 by Campaign for America's Future Blog
by Richard Eskow



The share of our national income which goes to corporate profit is the highest it’s been since they started tracking it in 1929, while the share going to people – as salary and wages – is the lowest. And the percentage of that corporate profit which goes to Wall Street is also the highest on record.

We’re becoming a financialized economy. Never before has the manipulation of money counted for so much and the real-world economy of people and consumer goods counted for so little.

And none of it is an accident.

When Wall Street catches a cold …

The Wall Street Journal reported this Thursday that “Stock and bond prices tumbled after stronger-than-expected economic data …”

Why would good news about the economy cause the stock market to fall? The sentences continues: “… raised investor anxiety about a pullback next month in central-bank support for financial markets …”

Investors had been relying on the Federal Reserve to keep pumping up the stock market’s record run, but some mildly favorable economic reports raised fears were raised that the Fed’s market-friendly interventions might come to an end.

“We’re getting another knee-jerk reaction to fears of tapering,” a market analyst told the Journal, referring to the Fed’s monthly purchase of $85 billion in bonds. As Reuters reported last month, “Many on Wall Street believe the Federal Reserve’s monetary policy is behind record corporate earnings and the stock market’s surge to all-time highs this year.”

When Wall Street catches a cold – when it even might catch a cold — the economy catches pneumonia.

Reality Bites

Meanwhile, the “real” economy – the one where people live, and work, and buy things – has suffered even as Wall Street and the stock market have boomed. That trend continued this week, too, Wal-Mart announced disappointing sales and lowered its projections. Its Chief Financial Officer observed that “The retail environment remains challenging in the U.S. and our international markets, as customers are cautious in their spending.”

Cisco also lowered its sales expectations. As the Journal article notes, these announcements added to the fear that the Fed’s interventions might wind down.

This stock market story illustrates the gulf between a stock-market economy increasingly driven by the banking industry – an economy which has been booming, today’s news notwithstanding – and a human economy wracked by consumer fears, falling wages, joblessness, and low-level jobs for a growing number of people who are working.

The gulf between these two economies drove this morning’s stock market story. It’s also driving the long-term depression-like misery which holds millions of Americans in its grip.

This is not the playing out of some divinely-decreed order. The financialization of the US economy is the result of very deliberate governmental choices. Unless different choices are made going forward, we will continue to become a “Bankistan” whose wealth and economic fate is increasingly hijacked by Wall Street.

Financialized

The Federal Reserve’s data on corporate profits were helpfully compiled by a contributor to the investment site The Motley Fool, who notes that financial profits were 11 percent of total corporate profits in the US back in 1947, the first year these numbers were compiled.

These profits soared in the first decade of the 21st Century. After taking a hit in the crisis of 2008 – a crisis which the banking industry caused – they rose again and are now at record highs. Their share of total corporate profits has risen from 11 percent to 42 percent, as of the latest report, and the Fed expects them to keep rising.

Here’s how that looks:

The money nowadays isn’t in manufacturing, or retail, or any of the other traditionally jobs-producing industries. The money now is in money.

How did this happen?

A series of policy decisions enabled this explosive growth, including the deregulation of Wall Street; the repeal of Glass-Steagall, which separated bank customers’ money from money which the bank could invest for its own profit; runaway banker salaries and bonuses, which prompted the “best and the brightest” to flock to Wall Street and apply their ingenuity to flouting the rules; and government’s increasing unwillingness to indict bankers for criminal behavior.

And then, when banker criminality and incompetence created the crisis of 2008, they were rescued by the government without being held financially or legally accountable for their wrongdoing.

The Federal Reserve continues to pursue stimulus policies that moderately help the economy as a whole, but which emphasize the economic health of banks and publicly-traded corporations over that of companies that hire workers – and therefore increase the consumption of consumer goods.

Profit by the slice …

Banks have a bigger share of the corporate-profit pie – and that pie’s bigger than ever. As Floyd Norris notes in the New York Times, the government’s revised estimate of wage and salary income is 42.6 percent of GDP, which matches the 2010 figure as the lowest percentage since this data was first captured in 1929.

Using the latest revisions to the national income and product account (NIPA) data produced by the Bureau of Economic Analysis, Norris also notes that corporate profits are now 9.6 percent of GDP. That’s the highest since these figures were first captured.

As Norris also notes, corporate taxes rose slightly in 2012 as a percentage of GDP but are still well below their historical averages. That’s not an accident either.

Meanwhile, as this chart shows, unemployment remains horrendous:

 

 (via Bill McBride, Calculated Risk)

Wages actually fell for most people after the 2008 crisis, as high-income individuals (the top 1 percent) captured all of the economic gains created by the government-sponsored recovery – and even enlarged their share, capturing 121 percent of the recovery as the rest of the country fell behind.

Indebted

You might think that financial institutions feel indebted to the public for rescuing them. But the opposite is true: We’re indebted to them. According to the latest report from the New York Federal Reserve, auto loan balances increased by $20 billion over the previous quarter while credit card balances and student loan debt increased by $8 billion each.

The falling rates of mortgage debt, driven by range of factors which included falling housing values and foreclosures, resulted in an overall decline in total indebtedness. But these figures show that our household debt in many key areas continues to rise.

As wages and salaries decline, people are struggling to keep up with the way of life they once know. So they fall deeper in debt – a debt which allows them, and the banks, to delay the day of reckoning once again.

Fixing a Hole

These figures paint the picture of an economy that has become seriously unbalanced in favor of the banks – “financialized,” as observers increasingly describe it. How can the economy be rebalanced?

Many solutions are well-known to bank reformers and well-informed voters: Reinstate Glass-Steagall, or something very much like it. Insist on strong regulatory oversight of the banking sector, and give regulators the authority to do their jobs. End “too big to fail” banks, instead of encouraging their consolidation (as the government has done in recent years). Prosecute criminal bankers.

Other solutions are equally important. The interbank database and shell company called MERS must be ended, so that financial institutions can’t collude against consumers and the states. The Federal Reserve must demand that banks perform their central economic function – responsible lending to consumers and job-creating businesses – rather than reward them for speculation and other forms of non-productive profiteering.

(That’s why the choice of Federal Reserve head is so important.)

Genuine shareholder reform is also needed, so bankers don’t overpay themselves at shareholder expense or use the bank’s coffers as a “get out of jail” card for massive settlements caused by their own misdeeds.

Lastly, no comprehensive solution can be found until banks and other corporations are once again taxed at reasonable levels and the revenues are used to create well-paying jobs for the American middle class.

A healthy economy needs banks that lend, and consumers with the money to buy. Until that happens we’ll be living in a highly-financialized “Bankistan” that excludes most of its citizens from sharing in the American dream.