26 June 2013

Scalia is Really a Snake

One day after signing onto an opinion invalidating key provisions of the Voting Rights Act - an act, mind you, that passed the House 390-33 and the Senate 98-0, Scalia begins his dissent today in the DOMA case with the following statement:
We have no power to decide this case.  And even if we did, we have no power under the Constitution to invalidate this democratically adopted legislation.
How does this man sleep at night?

18 June 2013

The Implications of the NYU Story

Pam Martens at Wall Street on Parade has published several posts on the excessively lavish perks that New York University has been providing to its administrators and elite professors (ht Paul Campos).  The genesis for this series of articles is the revelations during the confirmation hearing for Jack Lew as Treasury Secretary where his finanical arrangements while working for the University came under scrutiny.  But that is just the tip of the iceberg.  And yesterday she had more

Along these same lines, Yves Smith linked to this post in the Homeless Adjunct, regarding what is happening to our university system.

You should read all of these items.  If you're like me, you'll be disgusted.

To me, the fact that this issue is being raised now is fortuitous on two different fronts.

First, remember that private universities like NYU are tax-exempt organizations.  By coincidence, last Thursday the Senate Finance Committee came out with its proposals for reform of the tax-exempt and charitable giving rules as part of their larger review of the tax code for the forthcoming tax reform.  Interested readers can read the whole thing here.  Now regular readers know that I strongly believe that Subchapter F of the tax code should be repealed wholesale - there should be no such thing as a tax-exempt organization.  My reasoning for this is two-fold:  (i) people make money doing all kinds of things, some that are good for society and some that are bad for society, and the government should not saying that what some people do is so "extra good" that they shouldn't have to pay tax like everyone else; (ii) our tax is an income tax, and if there are organizations out there that truly are "non-profit", then they don't need an exemption from tax (since the tax only applies to profits).  And as far as the charitable deduction is concern, nobody should be able to accumulate huge amounts of wealth tax-free, and then place it in a private foundation that they control like a tax-exempt purse to pursue their personal pet projects.  I don't care what good Bill Gates is doing with his Foundation, the tax subsidy he got from setting it up far outweighs any public benefit he is providing.

Yet when you read the SFC options paper, you see that no real serious consideration is being given to paring back the amount of exemptions we grant in the tax code.  Oh, yeah, well maybe we can repeal the tax exemption for professional sports leagues (yes, seriously, the NFL is tax-exempt, although it does have some subsidiaries whose business is subject to tax). And maybe we can have a requirement that tax-exempt hospitals must dedicate 5% of their operating expenses to charitable purposes. Five percent of operating expenses?  The corporate income tax benefit we are giving them is 34-35% of their profits!  This is a effective deal for the American People?  Are you kidding me?

The Senate is just pussy-footing around with this issue.  We need more stories like these to highlight the fact that the so-called "non-profit" sector is no such thing and the exemptions we grant them need to be scaled back dramatically.  Even if you think that it's okay to have exempt organizations, there is a lot more that can be done to actually reform the sector than is listed in this paper. But the SFC paper really betrays a notion that, except for the political activity issue, our elites really don't have a problem with they way things are.  And considering how they are being free rein to feed at the trough, why should they?

My second main thought is raised in the Homeless Adjunct post, which is entitled "How the American University Was Killed in Five Easy Steps:"
To explain my perspective here, I need to go back in time. Let’s go back to post World War II, 1950s when the GI bill, and the affordability – and sometimes free access – to universities created an upsurge of college students across the country. This surge continued through the ’60s, when universities were the very heart of intense public discourse, passionate learning, and vocal citizen involvement in the issues of the times. It was during this time, too, when colleges had a thriving professoriate, and when students were given access to a variety of subject areas, and the possibility of broad learning. The Liberal Arts stood at the center of a college education, and students were exposed to philosophy, anthropology, literature, history, sociology, world religions, foreign languages and cultures. Of course, something else happened, beginning in the late fifties into the sixties — the uprisings and growing numbers of citizens taking part in popular dissent — against the Vietnam War, against racism, against destruction of the environment in a growing corporatized culture, against misogyny, against homophobia. Where did much of that revolt incubate? Where did large numbers of well-educated, intellectual, and vocal people congregate? On college campuses. Who didn’t like the outcome of the 60s? The corporations, the war-mongers, those in our society who would keep us divided based on our race, our gender, our sexual orientation.

I suspect that, given the opportunity, those groups would have liked nothing more than to shut down the universities. Destroy them outright. But a country claiming to have democratic values can’t just shut down its universities. That would reveal something about that country which would not support the image they are determined to portray – that of a country of freedom, justice, opportunity for all. So, how do you kill the universities of the country without showing your hand? As a child growing up during the Cold War, I was taught that the communist countries in the first half of the 20th Century put their scholars, intellectuals and artists into prison camps, called “re-education camps”. What I’ve come to realize as an adult is that American corporatism despises those same individuals as much as we were told communism did. But instead of doing anything so obvious as throwing them into prison, here those same people are thrown into dire poverty. The outcome is the same. Desperate poverty controls and ultimately breaks people as effectively as prison…..and some research says that it works even MORE powerfully.

So: here is the recipe for killing universities, and you tell ME if what I’m describing isn’t exactly what is at the root of all the problems of our country’s system of higher education. (Because what I’m saying has more recently been applied to K-12 public education as well.)
I emphasized this last point, because it is really important.  We see how people are now impoverishing themselves to get an elaborately expensive advance degree that has increasingly smaller returns, and there is little doubt in my mind that this is the direction K-12 education is heading.  In district after district, especially big urban ones like Philadelphia and Chicago, our government leadership seems intent on dismantling the public school system we have in favor of a private, corporatized system.  That's why it's so important to stop move toward charter schools and privatization in general.  It's going to destroy public education at the primary and secondary levels, just as corporatization is destroying our university system.


13 June 2013

Interesting Items

Interesting things I read yesterday:

This story really bothers me.  It really bothers Kevin Drum as well.  Not sure why it doesn't seem to bother Felix Salmon, except, of course, for who is employer is....

It's unconstitutional if the Supreme Court says its unconstitutional.  Hell, I knew that, and I went to law school!  Of course, there are some nutjobs out there that think the 16th Amendment is unconstitutional, and its part of the Constitution!

Charlie Pierce on more incredibly unnecessary secrecy.

They are starting to have town hall meetings talking about how the ACA is going to work.  Jonathan Bernstein has more.  You know, if you just sit people in a room and explain things instead of crying wolf all the time, people generally will get it....

Today's must read:  Josh Marshall on Snowden and PRISM.  Very interesting and honest take on what it's really all about.  I don't agree with a lot of it, and am working on my reply.

Today's theme song:


Just because I'm in that kind of mood....

12 June 2013

It's All Just So Complex These Days...

Commenter Barry Friedman on Charlie Pierce's Blog:
None of this secret data collection would be necessary if intelligence weren't so tricky, so tough to unearth... if our enemies weren’t so diabolically stealth-like. It would have been a different story, for instance in 2001, if someone had come to the president while he was playing golf--and stay with me, because it's farfetched--and say, "Mr. President—Hello to you, Mr. Vice President, Ms. Rice—we have word that Al-Qaeda is preparing to attack us. What should we do?”


But this is the real world: that doesn’t happen. The old ways of intelligence don't apply anymore.

Here We Go Again....

Bloomberg:
Traders Said to Rig Currency Rates to Profit Off Clients
Jesus, when will it stop?

More on Booz Allen

As a follow up to my post two days ago, I just have to link to this post by Richard on Booz Allen, Carlyle, and our growing surveillance state.  Read the whole thing.

Systemically important?  You betcha!

Love this line:  "Booz Allen Hamilton's corporate slogan is "Delivering results that endure." Results that endure? That's exactly what should worry us."

11 June 2013

Interesting Items

Things I read today I thought were interesting:

Brad Delong's review of Nicholas Eberstadt's A Nation of Takers.

Charlie Pierce, reacting to the Snowden Affair, has a simple but eloquent plea:  Tell Me What is Being Done in My Name.

Kevin Drum on the financialization of, well, just about everything.  I have my own ideas about this which I will get to expressing....eventually I guess.

Via Paul Campos at Lawyers Guns and Money, I came across this article about what some foundations supposedly supporting the educational mission at NYU are actually doing with their money.  In one way this is stunning, but actually I was not terribly surprised.  In fact, I'd be shocked if the same kind of thing wasn't happening at Columbia, Harvard, and other elite universities with endowments larger than they know what to do with.  Just another example of why we need the rethink the whole concept of what it means to be a "non-profit" entity entitled to tax exemption.

And Today's must read:  Aaron Carroll on the 10 year-old needing a lung transplant.  Really poignant, and I agree with everything he says.

And I must point out, the girl's father is a senior executive at SAP, the global management software company.  Is it any wonder she was able to get the kind of attention that other similar kids haven't gotten?

Today's theme song:



Intermediaries

Earlier I linked to this post by Charlie Pierce, which in turn links to an interview with law professor Tracey Maclin about the legal aspects of the government monitoring our communications.  There are a lot of interesting issues raised in the interview, but I just want to focus on the issue raised by Charlie in his post - the role of intermediaries. 

The Fourth Amendment provides: "The right of the people to be secure in their persons, houses, papers and effects against unreasonable search and seizure shall not be violated..."

When it comes to protecting the privacy of our communications, perhaps the best way to think about it is to consider how private communications took place at the founding of our country: letters sent by mail. This involved the act of writing your communication, putting it in a sealed envelope, and giving it to the post office for delivery to the recipient. At that time, you could expect that the contents of your letter would remain private, but other aspects of your communication would not be: namely, who you were communication with and where that person was located. If you were the recipient, again you could expect that the content of the communication was private, but the source of the communication might be known if there was a return address on the envelope. 

So here are the basics: the content of your communications are private and protected by the Fourth Amendment, but who you are communicating with and where they are located (and where you are located when you send your communication) are not. 

Over time, this same notion has become infused in other forms of communication. For example, when you speak on the phone, you have a reasonable expectation that your conversation is private, and the Supreme Court has held that a warrant is required for the government to listen in on your conversations. However, who you call is not private - the Supreme Court has held that people have no expectation of privacy in the numbers they dial. In effect, a phone number is the same as the address on the envelope - you are telling the phone company - the intermediary - who to send the information to and where they are located, and you should have no expectation that that information is private. 

100 years ago, when the telephone company routed calls using live operators, perhaps this was a reasonable way of looking at telephone communications. But today, with everything automated, I seriously doubt that's how people view telephone communications.  I think most people have an expectation that when they dial a number, they aren't communicating to anyone other than the recipient of their call, including the identity of who they are calling. 

This is the reasoning behind permitting the collection of metadata. The Constitution protects the contents of my communications - the government cannot examine them without a warrant based on probable cause. But it does not protect information about who I communicate with and where they are.

The Internet complicates matters in that you are providing the intermediary not only information about who you are communicating with, but the contents of the message as well. This is true with email as well as posting on social networking sites.  Do people have an expectation that the contents of an email are like the contents of a written letter - and can only be read by the government based on probable cause?  I think they do, but (while I'm not certain about this) my guess is that that the law disagrees. 

Systemic Failure

Another shocker:
The Chicago Board Options Exchange has agreed to pay a $6 million fine relating to what regulators call "various systematic breakdowns" in the policing of its own procedures.

The Securities and Exchange Commission announced the charge Tuesday and accused CBOE of "a failure to enforce or even fully comprehend rules to prevent abusive short selling."
And another slap on the wrist.

Feeding at the Trough

I'm shocked, shocked, I tell you....
Snowden was reputedly taking home $200K which is considerably more than a system admin would normally make $100K is a good salary for a UNIX admin.


Like many people he is described as a consultant but he really wasn’t. He was an NSA employee who was being paid through a contract with Booze Allen. He was what we used to call a ‘Temp’. But in many government offices they can’t pay a commercial salary for a position so they pay twice to three times as much to hire them as a ‘consultant’.
So the government won’t pay a commercial rate for employing technical staff and they pay double to hire them through an agency.


Interesting Items

Things I read yesterday I thought were interesting:

Booman linked to this article this article in the Denver Post about some conservative rural counties in Colorado that are considering seceding from the rest of the state.  Question of the day: Why is secession considered a legitimate option by conservatives but not by liberals?

Pierce on how support for reining in the TBTF banks is dropping like a stone.  Not a surprise.

More on the Snowden Affair:


Today's must read:  A law school professor talks about campus health care.

Today's theme song:


10 June 2013

What's Really Scary about the Snowden Affair

There has been a lot written over the last few days regarding the revelations of the extensive government surveillance programs being conducted by the NSA.  Besides the posts of Glenn Greenwald of the Guardian, some of the stories I would recommend reading are:

Yves Smith on the public coming out of Edward Snowden, the whistleblower behind the revelations (including the Youtube video of Greenwald's interview with Snowden, which is really a must see)..

David Corn on the mind-numbing process of trying to get information out of the FISA Court about these programs.

Timothy B. Lee on Americans seeking foreign asylum - not something I ever thought would be necessary.

And Digby on why protecting our privacy is such a big deal.

But I want to focus on one particular aspect of this that really bothers me.  It is really very scary the amount of power that was entrusted to Snowden - obviously something he was bothered by as well.  But what is really scary is this:  he wasn't working for the government.  He was working for Booz-Allen Hamilton, a multinational IT consulting firm acting as a private contractor. 

Digby points out that the NSA is a bureaucracy, and like all bureaucracies, it will always seek "more tools, more resources, more power to do its job."  And what is the job of the NSA?  To protect the United States.  While I am somewhat cynical of the concept of "national security" - more often than not it seems our national security apparatus acts to protect, preserve and expand our business interests - I have little doubt that the employees of the NSA (employees mind you - not the leadership) take their jobs seriously, and sincerely believe that what they are doing is important from a national security perspective (I believe the same thing of our people in uniform).

But what is the job of Booz-Allen?  Well, it is a private company, and like all private companies its job is to make a profit for its owners, pure and simple.  [It's not encouraging that. as Yves points out, they are majority owned by the Carlyle Group, but that's a whole 'nother angle of this story].

I am sure there are rules that exist to make it illegal for Booz-Allen to misuse the information they have access to.  But does anybody really think that they are above breaking those rules when it serves their bottom line?  How many stories have we seen over the past few years of criminal conduct by "systemically important" companies that essentially goes unpunished.  Like this, this, this, this and this, just to name a few...

Is Booz-Allen as "systemically important" to our intelligence apparatus as HSBC is to our financial system?  Has there been an incident where information has been misused but at most the company has received a slap on the wrist?  And if the answer to either of these questions is yes, how would we every know?

But of course the answer to the first question is yes.  They have been hip-deep in this business for years now, and they have access to all of our secrets.  Go back and look at the Snowden interview.  He had access to everything, all of our black sites, all of our ops, etc.  Do you really think that there is any way for Booz to "return" these secrets to the government when and if, heaven forbid, the contract with the government is terminated? 

There is little doubt that Booz and other companies with similar contracts have our government over a barrel.  They know every dirty little secret.  And don't think they won't be willing to use those secrets if they see a threat to their gravy train.  Obviously, companies like this are not above breaking the law when it serves their bottom line.

Look, I'll admit I have never been a big fan of contracting out government functions to private companies.  I think that the organizational motives of companies are fundamentally in conflict with their organizational motives of governments.  A company's motivation is to make as much revenue with as little expense as possible.  There are very few of what I would consider essential government functions that I would trust in the hands of private companies, because I have little doubt that a company will provide a crappy product if it is more profitable than providing a quality one.  I simply don't trust them with my schools, my roads, my prisons, etc. 

But I really don't trust them with my law enforcement and my national security.

07 June 2013

Shorter David Atkins

Shorter David Atkins:

Maybe if we spent fewer resources sifting through all the phone calls and emails sent by Americans hoping to a needle in a cubic-mile haystack, and spent more resources following up on tips like the one we got on Tsarnaev that we dropped the ball on, we'd actually do a better job of protecting Americans.

Yeah, I'll buy that.....

05 June 2013

Smears

Digby links to this post by Brendan Nyhan, listing a bunch of times prominent Republicans have made statements questioning our President's loyalty to the United States.  My guess is that it represents about 1% of all such statements...by prominent Republicans I mean....

The sad thing is, I know a number of people - highly educated people - who wouldn't view these as "smears."  They actually think this stuff.  Nothing I say to them - let alone any actions or statements of the President - will persuade them otherwise. 

In all of our history we have had two presidents - only two - that weren't WASPs.  One was assassinated.  The second is our current President.

Both times a substantial portion of our country was convinced the end of the world was at hand.

These people will always believe that.

Until we have another male WASP as president.

03 June 2013

Please just stop!

Ted Cruz is calling for the abolition of the IRS.  What a shock!

Here are some facts:

1.  Unless we finally achieve the communist or libertarian utopia, we are going to need a government.  Frankly, in some 7 millenia of recorded human history we haven't achieved this yet, and I doubt it's going to happen any time soon.

2.  If we have a government, we will need to have taxes to pay for it.

3.  If our government needs taxes, some mechanism has to be set up to collect them, and some mechanism is going to have to be set up to make sure people pay what they owe.

4.  Hence, the IRS.

You can talk tax returns with 3 lines on them all you want, we're still going to need an IRS. 

Nobody likes to pay taxes and nobody likes it when the taxman audits you.  It's unpleasant, it's intrusive, and if you don't do what you're supposed to do, it can be expensive. 

But it's unavoidable.  And that's a fact.

So can we just stop the BS?

IRS Training Conferences

There's a lot of talk the last couple of days about a Wall Street Journal report on how much the IRS has been spending training its employees.  I haven't read the report (it's behind a pay firewall, and on principle I refuse to pay for anything published by the WSJ now that I don't need to for my work anymore), but the following was highlighted by Ezra Klein in his description of the report:
Republican lawmakers briefed on the report on conference spending released details from select portions, highlighting a $4 million gathering for 2,600 managers at three hotels in Anaheim, Calif., in August 2010. Several IRS employees stayed in presidential suites, the House Oversight and Government Reform Committee said. About 15 outside speakers were paid $135,000.
Hmm, $4 million for a training session for 2,600 employees works out to about $1,540 per employee, apparently including food and lodging for them and the people providing the training.

Let's put this into perspective.  Here is a link to a course seminar that I attended two weeks ago here in New York City, involving using partnerships and joint ventures in tax structuring.  This is an area where much of the cutting edge tax planning (a la Apple that was so highly publicized last week) is rampant.  It is run by one of the legal institutes in the country and is taught by some of the highest level players in the business.  Cost?  $2,700.  This is just the cost for the course.  To attend it you have to pay for food and lodging yourself (assuming you do not live in the three cities where it was or will be presented live - New York, Chicago or San Francisco).  You don't have to attend in person of course - you can take the course live on line, but the cost is the same.  But many of the advantages of these courses - interacting with other participants, being able to ask questions during (and before and after), networking - are lost if you attend online.

Here is where some of the more sophisticated tax lawyers get their training.  And I am sure their employers have no problem incurring this expense to attend these kinds of seminars (certainly my employer never has).

So a seminar that costs half the price for IRS employees whose job it is to pick apart these kinds of structures and make sure they don't cross the line?

Sounds like money well spent to me.