Yesterday the House narrowly defeated (217-205) an amendment to the defense spending bill (proposed by Michigan Republican Justin Amash) that would have prohibited NSA from collecting metadata on phone calls unless there is evidence that a specific person involved in the call is involved in criminal activity. From Bloomberg:
Implementation of the amendment could have created a new burden on telephone and Internet companies to retain bulk data, in addition to ending the NSA’s blanket collection of phone records. Those possibilities led the White House, Republicans leaders and many congressional Democrats to oppose the proposals, pitting them against lawmakers from both parties who champion civil liberties and privacy….
The provision would have had the potential to cause headaches for information technology companies.
“It could be a significant burden depending on how the government wants us to keep this data and store it,” Trey Hodgkins, a senior vice president for TechAmerica, a Washington-based trade group that represents Verizon Communications Inc. (VZ), AT&T Inc. (T) andCenturyLink Inc. (CTL), said in a phone interview. “You’re talking about potentially extremely huge data sets.”
It’s important to note that the bill as passed also includes a provision that prevents the closing of Guantanamo and prohibits the President from transferring any of the detainees who are being held there. So a vote for the Amash amendment would also mean voting to keep Gitmo open indefinitely.
Another amendment to limit NSA data collection did pass:
The House also adopted an amendment written by Republican Richard Nugent of Florida that sought to prohibit the NSA from using funds in the almost $600 billion Pentagon spending measure to “acquire, monitor or store the content” of electronic communications by “a United States person.”
The Nugent amendment was viewed by some lawmakers as providing political cover for those who didn’t want to vote for Amash’s amendment. While lawmakers voting for the Nugent amendment might appear to be curbing the NSA’s powers, in actuality the amendment wouldn’t change anything, simply restates current law and is “a fig leaf”, said Representative Zoe Lofgren, a California Democrat.
The bill now goes to the Senate; who knows what will happen next. I hope there will be an open debate on regulating possible abuses that could arise from NSA data collection. If a serious debate takes place, perhaps something positive will eventually come from the Snowden debacle. I’m skeptical, but still hopeful.
USA Today presents arguments from Keith Alexander against completely “blowing up” the NSA’s data collection program.
Gen. Keith Alexander, head of the NSA, has said the collection of data has helped disrupt dozens of terrorist plots. Investigators are not allowed to comb through the data, but can use it when they have identified a foreign suspect through other intelligence collection.
The data allows investigators to then detect networks the suspect may have been tied into, which could lead to other suspects and the uncovering of secret cells.
“The court restricts what we can do with that data,” Alexander said in a recent speech. “We have to show some reasonable, articulable suspicion that the phone number that we’re going to look at is associated with al-Qaeda or another terrorist group.”
Personally, I’d rather see more carefully defined limits on when and how NSA can use the metadata to target specific American citizens and regulations to prevent lower level employees like Edward Snowden from getting access to personal information rather than an overall prohibition on having the data available when needed for an investigation. Whenever there is a “terrorist” event–as in the Boston Marathon bombings, people demand to know why the government didn’t prevent it. The fact is there are already regulations in place that limit NSA from targeting Americans. IMHO, we should improve those rules if necessary, based on a serious and thorough debate.
Here are Glenn Greenwald’s reactions to the vote in case you want to read another of his inaccurate, rabid screeds. Basically, Greenwald says it’s all the Democrats’ fault–especially that horrible, dreadful war criminal Barack Obama, who is roughly equivalent to Peter King and Michele Bachmann.
Further down in the article, poor Glenn has to admit that a majority of House Democrats supported the Amash amendment in the face of nasty mean old Obama saying he would like to have a nuanced discussion of the issues rather than simply shutting down the counterterrorism program entirely. Greenwald also continues to claim, falsely, that NSA collects and analyzes the phone calls of every American, in the face of calmer, more knowledgeable people who have tried to explain to him that the data isn’t examined without a warrant and clear suspicion of criminal activity (famous example of how these allowed a criminal to slip through the cracks: Tamerlan Tsarnaev). But we’re not Russia, so we do have some limits on surveillance of American citizens and legal residents like Dzhokhar and Tamerlan Tsarnaev.
You know what I’d like to see targeted for more regulation? The FBI’s use of informants and FBI agents’ apparent ability to get away with murder. From Adrian Walker at The Boston Globe: Ibragim Todashev’s shooting needs explanation.
Ibragim Todashev was mysterious in life, but he has fallen into a void in death.
Todashev was fatally shot during an interrogation by Boston-based FBI agents in Orlando on May 22. The Russia native was being asked about his friendship with Tamerlan Tsarnaev, the presumed mastermind of the Boston Marathon bombing. Unusual as it is for someone to be shot to death during questioning, silence has reigned in its aftermath. The FBI’s few statements have been more confusing than illuminating.
The American Civil Liberties Union of Massachusetts made an attempt Tuesday to spur somebody, anybody, into providing clarity. It called on state authorities in Florida and Massachusetts to conduct their own investigations. The questioning was being done by the FBI and Massachusetts State Police, though some reports have indicated a lone FBI officer was in the room when Todashev was shot.
In response, Attorney General Martha Coakley made it clear her office has no intention of getting involved, pleading lack of jurisdiction. Florida officials have maintained all along that they have no standing to investigate. There doesn’t seem to be any reason to think they are about to change their minds.
Walker notes that we have a stunning example of the FBI’s misbehavior with informants in the James “Whitey” Bulger trial, which is going on in Boston right now.
…we should know better than to rush to absolve the FBI, no questions asked. After all, another of Boston’s great villains, James “Whitey” Bulger, is being tried for decades of terrorizing the city while an FBI informant.
And while the verdict on Whitey is still weeks away, the evidence is clear that the FBI aided and abetted his activities for ages. Not just a rogue agent or two, either; much of the agency’s Boston office was involved.
It’s not comforting, either, to examine the FBI’s record on examining its own shootings. According to a New York Times investigation, the FBI has cleared itself in nearly every agency-involved shooting of the past 20 years.
There was a terrible train crash in Spain yesterday, with at least 78 killed and 130-140 injured. A Spanish official described the scene as “Dante-esque.”
Bodies covered in blankets lay next to the overturned carriages as smoke billowed from the wreckage. Firefighters clambered over the twisted metal trying to get survivors out of the windows, while ambulances and fire engines surrounded the scene.
The government said it was working on the hypothesis the derailment was an accident – although the scene will stir memories of 2004’s Madrid train bombing, carried out by Islamist extremists, that killed 191 people. Sabotage or attack was unlikely to be involved, an official source said….
“It was going so quickly. … It seems that on a curve the train started to twist, and the wagons piled up one on top of the other,” passenger Ricardo Montesco told Cadena Ser radio station.
“A lot of people were squashed on the bottom. We tried to squeeze out of the bottom of the wagons to get out and we realised the train was burning. … I was in the second wagon and there was fire,” he added.
This brief video shows the moment the train derailed and crashed.
According to Railway Gazette, the accident may have been caused by excessive speed.
SPAIN: At 20.41 on July 24 a Madrid – Ferrol Alvia service derailed on a curve on the approach to Santiago de Compostela. Formed of a Class 730 gauge-convertible electro-diesel Talgo trainset, the 15.00 from Madrid was carrying 218 passengers, according to a joint statement from Spanish train operator RENFE and infrastructure manager ADIF.
The train had 12 vehicles, with an electric and a diesel power car at the ends. The rear power cars appear to have caught fire after the impact, and one of the intermediate coaches was thrown up on to an adjacent road; other cars rolled over or struck a retaining wall. Reports on July 25 indicated that 79 people had died in the accident with many more injured.
The train had left the high speed alignment and should have been slowing in preparation for the stop at Santiago station, about 3 to 4 km from the site of the accident. The speed limit on the curve is understood to be 80 km/h, but Spanish media reported that the train driver had said over the train radio that the train had been travelling at 190 km/h. A video taken from a lineside security camera appeared to show coaches behind the front power cars derailing first, pulling the heavier leading vehicles over as the train rounded the curve.
Here’s the crazy Republican story of the day–so far. I suppose the crazy could still get worse as the day goes on. As you know I was born in Fargo, ND, and I still have a soft spot for my home state; but I’m horrified by what’s happening there right now. Check this out: Pro-life group promotes cannibalism, hands out ‘fleshy’ fetus toys in candy bags to kids at State Fair, according to Freak-Out Nation. Yes, you read that right. They put “realistic” fetus dolls into candy bags for children!
Want a squishy toy fetus with your corn dog? If you’re visiting the North Dakota State Fair, you’re in luck! Last weekend, local anti-choice advocates slipped soft fetal models into kids’ candy bags without parental permission during the fair’s gigantic parade. “I don’t know exactly where I stand on abortion,” one mother told Jezebel, “but I believe in my rights as a parent.”
The North Dakota State Fair boasts a bevy of attractions, including performances by Tim McGraw and Creedence Clearwater Revisited. But Minot Right to Life spent the weekend giving away creepy little fetuses to kids without asking parents’ permission first. “It was really disturbing watching children run around with them,” one recalled. A federal judge recently blocked enforcement of the state’s highly unconstitutional six-week abortion ban; perhaps appealing to elementary schoolers’ interests is the group’s Plan B?
“The Precious One” fetal models are manufactured by Heritage House, a “pro-life supply store,” for $1.50 a pop — cheaper if you buy in bulk. “Its beautiful detail, softness and weight can really move hearts and change minds!” the website promises. A customer service representative told Jezebel that the models are most often given to pregnant women at “pregnancy centers” and kids at school presentations. The customer reviews on the site (it’s like Yelp for fetus-lovers instead of foodies) further imply that the doll-like figures are great for kids. “Children especially like to hold them,” one satisfied customer wrote. “No other item that we hand out has the amazing effect that these fetal models have — instant attachment to the unborn!” said another. “So many times, we hear, ‘Awwwww! That’s adorable!’ Or we just see a girl’s tears begin to form and fall.”
Something is very very wrong with these people.
Here’s one for Dakinikat: Paul Krugman explains (following Obama’s speech on the economy yesterday) why there are no “new ideas” about how to fix the financial crisis–because we knew how to do it from day one: Gimme That Old-Time Macroeconomics.
It was clear early on that this was a crisis very much in the mold of previous financial crises. Once you realized that financial instruments issued by shadow banks — especially repo, overnight loans secured by other assets — were playing essentially the same role as deposits in previous banking crises, it was clear that we already had all the tools we needed to make sense of what was going on. And we also had all the tools we needed to formulate an intelligent policy response — all the tools we needed, that is, except a helpful economics profession and policymakers with a good sense of whose advice to take.
As Mark Thoma memorably remarked, new economic thinking appeared to consist largely of rereading old books. Brad DeLong says that it was all in Walter Bagehot; I think that this is true of the financial crisis of 2008, but that to understand the persistence of the slump we need Irving Fisher from 1933 and John Maynard Keynes from 1936. But anyway, this is not new terrain.
The trouble is Republicans keep right on insisting we should do what Herbert Hoover did in response to The Great Depression. Because that worked so well…
Okay Sky Dancers! What stories are you focusing on today? Please post your links on any topic in the comment thread.
I always have to cover this topic in any introductory macroeconomics class I teach because usually one nutjob or another running for office always brings this up and people fall for it. The arguments are usually based on complete fallacies and misunderstanding of the math of economics, but hey, for some reason balanced budgets sound ‘reasonable’ when they are anything but.
I used to talk theoretically about how balanced budget amendments will kill state economies when the next real recession hits. Well, it hit a few years ago and we’re there. States continue to make their own economies worse day in and day out but there’s still those people that insist that if a family has to balance its budget, then so should the country. That’s even stupid considering most families have mortgages and car payments and probably student loans. Take Michele Bachmann as an example. She’s got all of the above plus farm subsidies and government grants. Even the President is guilty of that false equivalency. No person or family exists in perpetuity. No person or family can print money. No person or family has the power of taxation. Because of these three things, you cannot compare government to a family. Nor can you compare government to a business. Businesses exist to make a profit. Government exists to provide services and goods that the private sector will not provide or provides at an outrageous cost. It exists to administer justice and ensure level playing fields and fair play exists. Everything about a government is unique and is no way comparable to either businesses or households.
Macroeconomists know from years of study that the federal government can influence the economy at large. It does so through its spending and taxing priorities and policies. This is called fiscal policy. We have found several economic laws that guide the relationship between taxes and government spending and the behavior of Gross Domestic Product (GDP) which roughly measures all the legal and reported spending by households, governments, foreigners, and businesses. In our economy, household spending comprises about 68% of all GDP.
Investment or purchases by businesses is the smallest and most erratic component of GDP. Keynes said that it is easily spooked and subject to animistic spirits. Because it’s an unreliable source of growth, Keynes argued that in down turns, government should use its power to spend. Business investment usually only does fine in good economies. Please note, Keynes said deficit spend in recessions. Keynes’ prescription also said that Federal governments should run balanced budgets during times when the economy is fully employed and surpluses during bubble or boom times to relieve inflationary pressure. As usual, conservative politicians completely lie about the nature of Keynes and his highly proven and credible theories on fiscal policy. A lot of what we know about Monetary Policy comes from Milton Friedman, however, that is not the subject today. What I want to emphasize is that both men spent a lot of time analyzing panics and the Great Depression and are very much at the heart of accepted theory. We are seeing a classical lack of aggregate demand today. It is what’s driving the budget deficit. It is what’s driving the joblessness. It is what’s driving the slow recovery. Government must and will by automatic stabilizers be in a deficit position during downturns. It is simple math. More revenues come in during good times than bad. More safety net spending increases during bad times than good. We naturally run towards deficit in bad economies and towards surplus in good.
However, show me an economy that’s booming with high revenues and lower safety net spending and I will show you a group of politicians spending wildly. This tends to create inflation and can lead to bubbles. However, you never hear them complain at that point in time. That’s because it should be relatively easy to balance a budget then, but they do not do so or if they do its by expanding programs that cannot be sustained without borrowing during bad economies.
With that short explanation, let me cite you some folks that tell you why balanced budget amendments are bad policy. This first quote is from Simon Johnson who is the former chief economist for the IMF. He asks us to keep in mind that GDP is a measurement that is fraught with problems. He also mentions the fact that a balanced budget amendment makes the government make recessions worse.
Second and more seriously, imagine that this constitutional amendment were in place and that federal spending were roughly at its limit relative to the size of the economy. Then, what happens should the financial sector blow up again — either through no fault of its own (which, believe it or not, is the current prevailing myth on Wall Street about 2007-9) or because of some toxic combination of malfeasance and malpractice (the current predominant view of 2007-9 among many other people)?
The blame game is irrelevant when G.D.P. drops 10 percent; the issue is how to prevent a Great Depression. But note that with such a decline in G.D.P., a level of nominal spending that was 18 percent of G.D.P. is suddenly 20 percent, and now a constitutional crisis awaits – even before we get to the question of whether tax cuts or other forms of stimulus might be appropriate.
It makes no sense to take aim, as a matter of constitutional process, at two numbers that are both outcomes of deeper economic processes.
And to be frank, sometimes it makes a great deal of sense to apply an economic stimulus to an economy in free fall. One such moment was 1930 (and 1931 and 1932), when no stimulus was applied. Other moments were 2008 and 2009; both President Bush and President Obama initiated stimulus packages. When credit for and confidence in the private sector evaporates, do you really want the government sector to be forced to make quick cuts — or to raise taxes?
James Ledbetter at Reuters argues that even conservatives should oppose a balanced budget amendment (BBA). His reasons are more pragmatic. He argues that it won’t work.
Historically, conservatives have opposed extending government authority in places where it is not effective. You can find all the evidence you need to conclude that balanced budget requirements are useless by simply investigating the oft-repeated claim that 49 states have laws requiring a balanced budget. Leave aside the falsity of the claim and just consider the logic: if so many states are required to balance their budgets, why are so many states in the red?
The answer is that requiring state governments to annually balance their books simply encourages them to find clever ways to disguise debt and deficits. For example: California has both a Constitutional and a statutory requirement that its budgets be balanced. Would any sane person maintain that the state’s books have been anything resembling healthy for at least a decade? This year, after some brutal spending cuts, the governor’s office found that the state still had a short-term deficit of more than $9 billion and $35 billion in long-term debt. The governor’s budget report noted that California’s “massive budget deficits for most of the past decade…have been largely the result of a reliance on one-time solutions, borrowing, accounting maneuvers, and cuts or revenues that were illusory and therefore did not materialize.”
If that sounds familiar, it may be because, as Richard Quest pointed out on CNN Sunday evening, we’ve witnessed numerous Congressional attempts in recent decades to rein in federal deficits—including Gramm-Rudman in 1985 and the Budget Enforcement Act of 1990—all of which fell victim to legislative legerdemain. Why would a federal balanced budget amendment be any different?
Here’s something from The Economist on “Fiscal Rules”. Some fiscal rule–rather than a balanced budget amendment–would better stop congress from spending during booms and full employment cycles rather than balancing its budget via a BBA. This would be a rule that attaches the spending mandates to what’s going on in the economy. But again, I doubt they’d follow it since they’ve ignored a good portion of the Keynesian prescription for years any way.
It is difficult for Congress to tie its own hands. Any law that can pass Congress can later be undone or changed. In the rare cases that Congress puts together a near-perfect piece of legislation, that’s a bad thing. In the vastly more common occurrence that Congress passes highly imperfect legislation in need of significant future tweaks, that’s a very good thing. Support for an amendment to the constitution is a spectacular vote of confidence in the ability of a legislature to design near-perfect legislation, because the only thing rarer than an amendment to the constitution is a subsequent amendment undoing or clarifying a previous amendment.
I see the argument for a well-designed, over-the-business-cycle balanced-budget amendment. But the idea of enshrining this Congress’ pathologies into the constitution is terrifying. Let’s see Congress design some quality fiscal rules using the normal legislative process first, and then we can talk about adding those to the constitution.
Bruce Bartlett has some excellent analysis up for the current go round of balanced budget amendments. Mark Thoma explains how a BBA is a very bad idea. His analysis includes looking at the destabilizing effects that states’ BBAs have had on their economies. There’s a nifty graph that I did not include here if you’d like to go view it.
I’ve argued on many occasions that one of the big lessons we need to learn from this recession is that state-level balanced budget requirements are highly destabilizing. When a recession hits, spending goes up for social services and taxes fall as income, sales, property values, and other sources of revenue for state and local governments decline.
The result is a big hole in state and local government budgets, and that forces either increases in taxes or cuts in spending both of which make things even worse. And though some state and local governments were an exception to this, far and away the choice is to cut spending. We can see this in the state and local government employment statistics:
That’s not what we want to have happening when we are trying to recover from a recession. It would be much better if states had rainy day funds to rely upon, and if the rainy day funds fall short, the federal government could backfill the budget holes to prevent the destabilizing downsizing.
So have we learned the lesson? Nope, at least not if you are a Republican. They’d like to impose the same destabilizing rules on the federal government:
You really would have to search high and low for an economist that actually supports a BBA. The more conservative ones go for the fiscal rule that attaches spending to business cycles but even they believe that it would be unenforceable and easy to avoid. Can you imagine some District Judge trying to look over a complex macroeconomic model and figure out if the government forecast was correct or not?
A group of leading economists, including five Nobel Laureates in economics, today publicly released a letter to President Obama and Congress opposing a constitutional balanced budget amendment. The letter outlines the reasons why writing a balanced budget requirement into the Constitution would be “very unsound policy” that would adversely affect the economy. Adding arbitrary caps on federal expenditures would make the balanced budget amendment even more problematic, the letter says. The Economic Policy Institute and the Center on Budget and Policy Priorities organized the letter.
“A balanced budget amendment would mandate perverse actions in the face of recessions,” the letter notes. By requiring large budget cuts when the economy is weakest, the amendment “would aggravate recessions.”
The signatories of the letter are Nobel Laureates Kenneth Arrow, Peter Diamond, Eric Maskin, Charles Schultze, William Sharpe and Robert Solow; Alan Blinder, former Vice Chair of the Federal Reserve System’s Board of Governors and former member of the Council of Economic Advisors; and Laura Tyson, former Chair of the Council of Economic Advisors and former Director of the National Economic Council.
I’ll let former Reagan economist Bruce Bartlett have the last word here. He looks at the recent debate in Congress on the BBA.
Next week, House Republicans plan to debate a balanced budget amendment to the Constitution. Although polls show overwhelming public support, it is doubtful that many Americans realize that the measure to be debated is not, in fact, a workable blueprint to enforce a balanced budget. In fact, it’s just more political theater designed to delight the Tea Party.
We really need improved economic literacy in this country. I genuinely can’t get over what some of the morons in congress can get away with saying. Economists call them on it but it appears no one every listens.
There’s a very big debate between economists that’s beginning to spill on to the pages of major newspapers. Suddenly, people that I usually only read in scholarly articles are attending conferences where they give papers in what passes off more as the lessons of theory and empirical evidence instead of the theory and evidence itself. So many folks are coming down out of the ivory towers these days that I think some kind of tipping point about the financial crisis has been reached. The only thing I can think that may have caused this escalation is the back and forth that is now the blogosphere and the financial crisis which is making a lot of folks defend their models.
Many, many academic economists keep blogs now. The readership of these blogs was originally every one’s students or the adopters of your textbook. It then became a way to pass your working papers and pubs back and forth to avoid the journals. Even a few folks have actually put their databases up for use by doctorate students. Believe me, both a blessing and a curse having been in the position of having to reproduce a bunch of stuff I’d rather have not. Many finance folks keep blogs because they make money giving advice to Wall Street Types and investors. But their blogs have taken an interesting twist too. Maybe it’s because I live blocks from the Mississippi and a few miles from a salt water lake but watching this back and forth is like watching the world’s longest intellectual and philosophical tennis match. Do we really have to repeat the Great Depression for the Chicago School to get it this time?