June 19, 2024

U.S. Confirms That It Gathers Online Data Overseas

The confirmation of the classified program came just hours after government officials acknowledged a separate seven-year effort to sweep up records of telephone calls inside the United States. Together, the unfolding revelations opened a window into the growth of government surveillance that began under the Bush administration after the terrorist attacks of Sept. 11, 2001, and has clearly been embraced and even expanded under the Obama administration.

Government officials defended the two surveillance initiatives as authorized under law, known to Congress and necessary to guard the country against terrorist threats. But an array of civil liberties advocates and libertarian conservatives said the disclosures provided the most detailed confirmation yet of what has been long suspected about what the critics call an alarming and ever-widening surveillance state.

The Internet surveillance program collects data from online providers including e-mail, chat services, videos, photos, stored data, file transfers, video conferencing and log-ins, according to classified documents obtained and posted by The Washington Post and then The Guardian on Thursday afternoon.

In confirming its existence, officials said that the program, called Prism, is authorized under a foreign intelligence law that was recently renewed by Congress, and maintained that it minimizes the collection and retention of information “incidentally acquired” about Americans and permanent residents. Several of the Internet companies said they did not allow the government open-ended access to their servers but complied with specific lawful requests for information.

“It cannot be used to intentionally target any U.S. citizen, any other U.S. person, or anyone located within the United States,” James Clapper, the director of national intelligence, said in a statement, describing the law underlying the program. “Information collected under this program is among the most important and valuable intelligence information we collect, and is used to protect our nation from a wide variety of threats.”

The Prism program grew out of the National Security Agency’s desire several years ago to begin addressing the agency’s need to keep up with the explosive growth of social media, according to people familiar with the matter.

The dual revelations, in rapid succession, also suggested that someone with access to high-level intelligence secrets had decided to unveil them in the midst of furor over leak investigations. Both were reported by The Guardian, while The Post, relying upon the same presentation, almost simultaneously reported the Internet company tapping. The Post said a disenchanted intelligence official provided it with the documents to expose government overreach.

Before the disclosure of the Internet company surveillance program on Thursday, the White House and Congressional leaders defended the phone program, saying it was legal and necessary to protect national security.

Josh Earnest, a White House spokesman, told reporters aboard Air Force One that the kind of surveillance at issue “has been a critical tool in protecting the nation from terror threats as it allows counterterrorism personnel to discover whether known or suspected terrorists have been in contact with other persons who may be engaged in terrorist activities, particularly people located inside the United States.” He added: “The president welcomes a discussion of the trade-offs between security and civil liberties.”

The Guardian and The Post posted several slides from the 41-page presentation about the Internet program, listing the companies involved — which included Yahoo, Microsoft, Paltalk, AOL, Skype and YouTube — and the dates they joined the program, as well as listing the types of information collected under the program.

The reports came as President Obama was traveling to meet President Xi Jinping of China at an estate in Southern California, a meeting intended to address among other things complaints about Chinese cyberattacks and spying. Now that conversation will take place amid discussion of America’s own vast surveillance operations.

Reporting was contributed by Eric Schmitt, Jonathan Weisman and James Risen from Washington; Brian X. Chen from New York; Vindu Goel, Claire Cain Miller, Nicole Perlroth, Somini Sengupta and Michael S. Schmidt from San Francisco; and Nick Wingfield from Seattle.

Article source: http://www.nytimes.com/2013/06/07/us/nsa-verizon-calls.html?partner=rss&emc=rss

Economix Blog: Bruce Bartlett:How Politics Came to Dominate Payroll Tax Debate

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Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of the coming book “The Benefit and the Burden: Tax Reform – Why We Need It and What It Will Take.”

Virtually all of the coverage of the debate over extending the temporary cut in the payroll tax has centered on the politics. Almost none has examined the economics of the issue. Indeed, it is nearly impossible to tell exactly why Republicans were so adamantly opposed to extending the tax cut. I’m still not sure.

Today’s Economist

Perspectives from expert contributors.

The first thing to know is that the payroll tax cut was not originally part of the $787 billion stimulus bill enacted in February 2009. Another tax cut, the Making Work Pay credit, was the principal tax cut in the legislation. It provided a $400 to $800 tax cut for every person or family with a positive tax liability and an income below $75,000 for individuals and $150,000 for couples.

The stimulus legislation also contained a number of other tax cuts for individuals and families that consumed 30 percent of the budgetary cost of the legislation. All tax provisions taken together, including those for businesses, added up to $326 billion – more than 40 percent of the total cost of the stimulus package, according to the Joint Committee on Taxation.

At the end of 2010, all of the tax cuts enacted during the George W. Bush administration were scheduled to expire, as well as the Making Work Pay credit. Although President Obama wanted the tax cuts for the rich to expire on schedule, Republicans insisted on an all-or-nothing strategy. Republicans also asked that the Making Work Pay credit be replaced by a temporary two-percentage-point cut in the employees’ share of the payroll tax.

Cutting the payroll tax fit better with Republican economic theory, because the rate of taxation would be reduced. Tax credits, by contrast, which are subtracted directly from one’s tax liability, generally don’t affect economic decisions at the margin because tax rates are unchanged.

(Of course, the phasing in and phasing out of tax credits such as the earned income tax credit can have marginal rate effects. But Republican economic policy tends to ignore such effects and focuses almost exclusively on statutory tax rates.)

Since the beginning of the economic crisis, many Republican economists had insisted that a temporary payroll tax cut was the best possible stimulus, including the former chairmen of the Council of Economic Advisers, Michael J. Boskin and N. Gregory Mankiw, and the former director of the National Economic Council, Lawrence B. Lindsey.

Economists at Morgan Stanley predicted that the payroll tax cut would help power the economy to 4 percent growth in 2011. (Real gross domestic product growth has actually been less than half that rate.)

The following distribution table from the Tax Policy Center, on Dec. 14, 2010, shows more clearly why Republicans favored the payroll tax cut over the Making Work Pay credit – the benefits are much more skewed toward those with upper incomes.

It also shows why the Obama administration went along – the average tax saving was almost doubled, thus increasing the aggregate fiscal stimulus. The administration also thought the payroll tax cut would be more apparent to workers than the largely invisible Making Work Pay credit.

Tax Policy Center

When the legislation was debated in the House of Representatives on Dec. 16, 2010, the House majority leader, Eric Cantor, pointed to the abolition of the Making Work Pay credit as a key reason why Republicans should support it.

In short, the payroll tax cut was a Republican initiative. So why did they turn against it? The answer is unclear.

To be sure, some Republicans were unenthusiastic about the payroll tax cut in the first place, as were some Democrats who feared damage to the Social Security trust fund. (The Treasury has reimbursed the trust fund for the lost payroll tax revenue.)

As early as last summer, Republican leaders began trashing the payroll tax holiday. House Speaker John Boehner called it a short-term gimmick and Paul D. Ryan, chairman of the House Budget Committee, branded it “sugar-high economics.”

In August, The Wall Street Journal editorial page came out against extending the payroll tax cut. A Heritage Foundation study in September argued that it was ineffective because it was oriented toward average workers rather than wealthy job creators.

Yet, there is precious little evidence that the payroll tax holiday did much, if anything, to stimulate growth or job creation. The Congressional Budget Office rated it as among the least stimulative fiscal policies. Some economists have argued that the Making Work Pay credit provided more bang for the buck.

In the end, economic arguments had little to do with how the payroll tax cut extension played out.

Republicans were in a weak position arguing against it because, historically, they have never opposed any tax cut, no matter how ill-designed or costly. And it was too easy for Democrats to press their political advantage, even though many had doubts about the efficacy of the payroll tax cut.

Sadly, we will probably go through the same exercise this time next year.

Article source: http://feeds.nytimes.com/click.phdo?i=4aefc03ce4240d2f93165b267e58d393

Economix Blog: Do Congress and the White House Deserve an AA+ Rating?

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Uwe E. Reinhardt is an economics professor at Princeton.

There now appears to be general agreement that the downgrade issued a week ago by Standard Poor’s on the “Political Risks and Rising Debt Burden” of long-term United States debt was not a statement on the probability of default on Treasury bonds at all. Instead, it appears to have been intended as a reminder that something has gone seriously wrong with the style of governance put in place by the Founding Fathers.

Today’s Economist

Perspectives from expert contributors.

Whether the current style of federal governance deserves the second highest grade S.P. assigns (AA+) can, of course, be debated. I would be more inclined toward a plain B rating, that is, the governance equivalent of a junk bond.

Be that as it may, one manifestation of the decay in the federal style of governance has been the discovery that American voters can be pleased by providing them with a growing array of government services and financial transfers and by underwriting these with deferred taxes — that is, current deficits. The deferred taxes are to be paid off by generations not yet born or still too young to vote.

In the words of Doug Elmendorf, current director of the Congressional Budget Office, in a presentation last year, “The United States faces a fundamental disconnect between the services that people expect the government to provide, particularly the benefits for older Americans, and the tax revenues that people are willing to send to the government to finance those services.”

To make politicians comfortable with this approach to governance, a theory was needed that “deficits don’t matter.” That theory reportedly was proposed by Vice President Dick Cheney to Paul O’Neill, then Treasury secretary, who in late 2002 had protested the Bush administration’s evident addiction to debt. A fascinating account of the debate surrounding this proposition can be found in Jonathan Weisman’s “Reagan Policies Gave Green Light to Red Ink” in The Washington Post, written in 2004.

The economics profession did not entirely endorse Mr. Cheney’s theory; neither, however, did it line up against it. Instead, as usual, it had a nice intra-professional, two-handed debate on the issue, accompanied by learned papers. Then, as now, the pronouncements of macroeconomists add up to confusion.

The footprints of this new style of federal governance can be seen in the following chart, which is featured in updated form year after year in the Congressional Budget Office’s well-written long-term budget outlook.

Source: Congressional Budget Office

It is instructive to reflect on this chart, along with the two charts shown below. The data for those charts can be found in Table B-79 of the Economic Report of the President, February 2011.

The first shows the gross federal debt as a percentage of gross domestic product from 1976 to 2011. It is the most inclusive measure of the Treasury’s obligations, which ultimately are, of course, the obligations of the American taxpayer. The colors of the bars indicate presidential terms.

Source: Economic Report of the President, February 2011

The gross federal debt includes debt owed to other government accounts — for example, the Social Security Trust Fund, the Medicare Trust Fund and other retirement or government trust funds. Cash surpluses accumulated in these funds are invested in Treasury securities.

Of the total gross federal debt of $13.6 trillion in 2010, $4.6 trillion was owed by the Treasury to these government trust funds and only $9 trillion to the public, which included international investors (47 percent), domestic private investors (36 percent), the Federal Reserve (9 percent) and state and local governments (8 percent).

The next chart shows how the fraction of publicly held debt as a percentage of total gross federal debt has fluctuated over time. Note again that purchases by the Federal Reserve of Treasury debt, of which there have been many in the past few years, are counted as debt held by the public rather than intra-governmental debt.

Source: Economic Report of the President, February 2011

Readers of this blog will draw their own inferences from these three charts. My own is that recklessness in United States fiscal policy is not a recent phenomenon, especially if one considers the devastating effect that the recession, starting in 2007-8, has had on federal tax revenues, now at a historical low as a percent of G.D.P., and on federal spending, now at a historical high. In fact, the federal deficit for 2009 had been projected by the Congressional Budget Office at $1.2 trillion even before the current administration moved into the White House.

The problem is much less the current budget deficits, which can be explained by the current recession, but that budget balance does not seem to be in sight long after the recession, we hope, is over.

It is that problem that the White House and the Congress must solve. We must hope that care for the nation’s future — evidently now taking a holiday — will return someday soon to their minds and souls. Perhaps then they will merit an AA+ rating.

Article source: http://feeds.nytimes.com/click.phdo?i=fbeaeae9c9545d7cc9e07563b671cdea

Budget Office Warns About Debt

The report, released Wednesday by the nonpartisan agency that calculates the cost and economic impact of legislation and government policy, offers a fresh reminder of what is at stake as Congress considers whether to raise the federal debt ceiling. Vice President Joseph R. Biden Jr. is leading discussions aimed at slashing more than $2 trillion from the federal deficit over the coming decade as the price for permitting the government to take on more debt to pay current obligations.

Most ominously, the report warned of a “sudden fiscal crisis” in which investors would lose faith in the United States government’s ability to manage its fiscal affairs. In such a fiscal panic, investors might abandon United States bonds and force the government to pay unaffordable interest rates.

At that point, it warned, policymakers would have to win back the confidence of the markets by imposing spending cuts and tax increases far more severe than if they were to act now.

The findings are not significantly new, but the budget office’s analysis underscores the magnitude of the nation’s fiscal problems as negotiators struggle to raise the current $14.3 trillion debt limit and avoid a first-ever default on United States obligations.

With the government now required to borrow more than 40 cents of every dollar it spends, the budget office predicted that without a change of course the national debt would rocket from 69 percent of gross domestic product this year to 109 percent — the record set in World War II — by 2023.

Those projections are based on the assumption that tax cuts from the Bush administration are extended and that other current policies, like maintaining doctors’ fees under Medicare, are continued as well.

Article source: http://feeds.nytimes.com/click.phdo?i=0568ba25432681e3e36390aefd5d8e18

Economix: Bruce Bartlett Joins Economix

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Bruce Bartlett, an economist who specializes in budget and tax issues, is joining our panel of Daily Economists.

Mr. Bartlett worked in public service for many years, including for Representatives Ron Paul and Jack Kemp and Senator Roger Jepsen; as executive director of the Joint Economic Committee of Congress; senior policy analyst in the Reagan White House; and deputy assistant secretary for economic policy at the Treasury Department during the George H.W. Bush administration.

Lately he has broken ranks with many Republicans, however, by arguing that tax increases are necessary to reduce the deficit. David Leonhardt wrote about Mr. Bartlett’s book on this subject in a 2009 column.

We’re looking forward to having Mr. Bartlett weigh in every Tuesday about the intersection of politics and economics. His first column, on the real problems with Social Security and Medicare, will run tomorrow.

Article source: http://feeds.nytimes.com/click.phdo?i=524e6f4f5fe09d3b610d75ce783bdd5e